How to Calculate ROI on Rental Property in Dubai

Gross rental yield is annual rent ÷ purchase price × 100. Net rental yield subtracts running costs and empty months from the rent and divides by the price plus your purchase costs, which gives a truer picture of what you earn.

Those two cover income only. If you use a mortgage or want to count what you make when you sell, you need two more measures: cash-on-cash return and total return. This post explains all four with one worked example, then shows where to get real figures for your own property.

• Gross yield = annual rent ÷ purchase price × 100. Quick to work out, but it ignores every cost, so it always looks higher than what you actually earn.
• Net yield = (annual rent − vacancy allowance − service charges − maintenance − other running costs) ÷ (purchase price + purchase costs) × 100. Use it to compare properties on the same basis.
• Cash-on-cash return = (rent − vacancy − running costs − 12 × monthly mortgage repayment) ÷ cash you invested × 100. It shows the yearly income return on your own money when you borrow.
• Total return = (all the cash flow while you hold + what you keep on sale after selling costs and repaying the loan − cash invested) ÷ cash invested × 100. It is the only one of the four that counts a change in price.

Most mistakes come from leaving costs out. Split them into one-off purchase costs, which go on the bottom of the net yield sum, and yearly running costs, which come off the rent.

• DLD transfer fee: 4% of the price. The DLD lists it as 2% from each side, but by market convention the buyer often pays the full 4%; agree it in writing.
• Registration trustee fee: AED 4,000 + VAT for properties of AED 500,000 or more (AED 2,000 + VAT below), plus AED 250 for the title deed.
• Agency commission on a resale: about 2% + 5% VAT is customary, not fixed by law.
• Mortgage costs, if you borrow: DLD mortgage registration of 0.25% of the loan plus AED 250, bank fees, and the interest you pay each year.
• Service charges: in Dubai the owner pays these, not the tenant, unless the lease says otherwise (Law No. 6 of 2019, Article 16). Look up your building's approved rate in the DLD Service Charge Index.
• Maintenance and repairs, plus any furnishing, insurance or property management fees you pay.
• Vacancy: rent you lose between tenants. How much to allow is your judgement; as a reference point, the UAE Central Bank requires lenders to deduct at least two months' rent when assessing a loan on an investment property.
• Tax on rental income depends on your own situation, so take advice if you're unsure. Our buying cost calculator adds up the purchase costs.

Illustrative figures only, not market data. These round numbers are chosen to show the arithmetic, not to suggest what any Dubai property costs or earns. A ready apartment bought for AED 1,000,000 in cash and let at AED 60,000 a year:

• Purchase costs: DLD fee 4% AED 40,000 (buyer paying all of it) + trustee fee AED 4,200 (AED 4,000 + 5% VAT) + title deed AED 250 + agency 2% + VAT AED 21,000 = AED 65,450.
• Running costs for the year: vacancy of one month AED 5,000 + service charges AED 10,000 + maintenance AED 3,000 + other costs AED 2,000 = AED 20,000.
• Net annual income: AED 60,000 − AED 20,000 = AED 40,000.
• Gross yield: 60,000 ÷ 1,000,000 × 100 = 6.00%.
• Net yield: 40,000 ÷ (1,000,000 + 65,450) × 100 = 3.75%.
• Costs take more than two points off the gross figure. Two flats with the same gross yield can end up far apart once their service charges are included.

Same illustrative flat, now bought with a 60% loan, the Central Bank's cap for an expatriate's second home or investment property. The interest rate of 5% over 25 years is an assumption for the arithmetic, not a quoted rate; ask banks for real offers.

• Loan AED 600,000; down payment AED 400,000.
• Cash invested: AED 400,000 + purchase costs AED 65,450 + mortgage registration AED 1,750 (0.25% of the loan + AED 250) = AED 467,200. Bank fees are left out here.
• Repayment at the assumed rate: about AED 3,508 a month, or AED 42,090 a year.
• Cash flow: AED 40,000 net income − AED 42,090 repayments = about −AED 2,090 a year.
• Cash-on-cash return: −2,090 ÷ 467,200 × 100 = about −0.45%.
• About AED 12,370 of the first year's repayments reduces the loan rather than paying interest, so that part becomes equity, not a loss. But it is still cash you have to find each year.

Total return adds what you keep when you sell. Using the cash purchase above, held for five years with rent and costs flat, and selling costs assumed at 2% of the sale price:

• If the price is unchanged at AED 1,000,000: 5 × 40,000 cash flow + (1,000,000 − 20,000 selling costs) − 1,065,450 cash invested = AED 114,550 profit, a total return of 10.75% over five years.
• If the price falls 10% to AED 900,000: 200,000 + (900,000 − 18,000) − 1,065,450 = AED 16,550 profit, a total return of 1.55%.
• Neither is a forecast. Prices can fall as well as rise, so always test a fall. A mortgage magnifies both results relative to your cash, and a price fall hits your equity harder.
• Run your own scenarios in our ROI calculator, which starts at 0% price change so the answer doesn't rest on growth.

Swap every illustrative figure for one you can check. The Dubai Land Department publishes the main sources for free.

• Rent: the DLD Rental Index (rent increase calculator) shows the average rent for a property type and area, and since January 2025 the Smart Rental Index rates buildings to set average rents. Registered rents are also searchable in DLD Real Estate Data.
• Price: DLD Real Estate Data lets you search and download registered sale transactions by area and date. Older years are on Dubai Pulse.
• Service charges: the DLD Service Charge Index shows the approved rate for a project, by use and year. You can estimate the yearly bill with our service charge calculator.
• Rent growth: in Dubai, rent can rise at renewal only within the brackets in Decree No. 43 of 2013, tied to how far the rent sits below the index average. See the rent increase rules before you assume any increase.
• The Dubai REST app brings valuations, the rental index and service charge data together on your phone.

• Comparing one property's gross yield with another's net yield. Use net for both.
• Using an advertised or asking rent instead of what similar units are actually registered at.
• Leaving out the DLD fee and agency commission, which in the example above add 6.5% to the cost.
• Assuming a tenant pays the service charges. In Dubai the owner does, unless the lease says otherwise.
• Treating any price growth figure as certain. If a deal only works with growth, test it at 0% and at a fall.
• For off-plan, forgetting that there is no rent until handover. Instalments paid during construction earn nothing; see the buying off-plan guide.

• Dubai Land Department, Property Sale Registration (fees)
• Dubai Land Department, Mortgage Registration
• Dubai Land Department, Rental Index
• Dubai Land Department, Smart Rental Index announcement
• Dubai Land Department, Real Estate Data
• Dubai Pulse, DLD transactions dataset
• Dubai Land Department, Service Charge Index
• Dubai Land Department, Dubai REST
• Law No. 6 of 2019 Concerning Ownership of Jointly Owned Real Property, Article 16
• Decree No. 43 of 2013 on rent increases
• UAE Central Bank, Regulations Regarding Mortgage Loans, Article 3
• UAE Central Bank, Resolution No. 31/2/2020 amending Circular No. 31/2013
• Bylaw No. 85 of 2006 (broker commission), in Dubai Land Department, Dubai Real Estate Legislation
• UAE Ministry of Finance, Value Added Tax