Gross yield vs net yield
Gross yield is the number you see in adverts: annual rent divided by the price. It is quick to work out but it ignores everything you spend to earn that rent. Net yield takes those costs off and divides by everything you actually put in, including the fees you paid to buy. It is the honest measure of how hard your money is working.
Costs that eat into yield
- Service charges. Paid to the building or community, often AED 12 to 25 per sq ft a year for apartments.
- Maintenance. Repairs and AC servicing between tenants.
- Vacancy. Even a few weeks empty between tenancies costs a noticeable share of rent.
- Management. Agents usually charge around 5% of rent to manage a property.
- Purchase fees. The 4% DLD fee and other costs increase what you invested.
Worked example
| Item | Amount |
|---|---|
| Annual rent | AED 110,000 |
| Gross yield (110,000 / 1,500,000) | 7.33% |
| Less service charges, maintenance, 2 empty weeks, 5% management | AED 27,519 |
| Net income | AED 82,481 |
| Net yield on AED 1,596,220 invested | 5.17% |
Two points of yield disappear once costs are counted. When comparing properties, compare net yields, since a cheaper building with high service charges can earn less than a pricier one with low charges.
Frequently asked questions
What is a good rental yield in Dubai?
Gross yields of 6% to 8% are common for apartments, with villas usually lower at 4% to 6%. After service charges and other costs, net yields are typically 1.5 to 2.5 points lower.
What is the difference between gross and net yield?
Gross yield is annual rent divided by the price. Net yield subtracts service charges, maintenance, management and empty periods, and divides by the total you invested including purchase fees. Net yield is the one that shows your real return.
Do I pay tax on rental income in Dubai?
There is no personal income tax on rental income for individuals in the UAE. Corporate tax rules can apply if you own property through a company or run it as a business above certain thresholds.
Which areas have the highest yields?
Lower priced communities such as JVC, Dubai Silicon Oasis and International City often show higher gross yields, while prime areas trade lower yields for stronger price growth.