When an agent quotes you 8%, ask one question: gross or net? Almost always it is gross. Gross yield is annual rent divided by price, nothing taken out. It is the headline number on every portal, and it overstates what you keep because it ignores every cost the property carries. The net yield calculator closes that gap.
Gross is the headline, net is the truth
The calculator starts from two inputs: property value and annual rent. Those give you the gross yield instantly. Then it subtracts the cost lines a portal listing never mentions:
- **Service charge** - the annual building fee. The single biggest drag on Dubai yields, and the one most buyers forget.
- **Property management** - 5 to 8% of rent if you use an external manager. Switch it off if you self-manage.
- **Vacancy reserve** - a buffer for the weeks a unit sits empty between tenants. 2 to 4 weeks a year is realistic.
- **Maintenance reserve** - 8 to 10% of rent for minor repairs.
Management, vacancy and maintenance are each a percentage of rent, so they scale with income. Service charge is a fixed annual figure. Add them up, subtract from rent, divide by price, and you have your net yield. That is the number I work from with clients. For the background, read yield explained.
A worked example
Take a Dh1,000,000 apartment renting at Dh80,000 a year. The portal shows 8% gross. Now say the service charge is Dh15,000 for the year. Subtract it: Dh80,000 minus Dh15,000 is Dh65,000. Divide by the Dh1,000,000 price and you get 6.5% net.
That is a full 1.5 points gone to one cost line, before you add management or vacancy. This is why I never let a client decide on the gross number alone.
The 25% balcony rule and per-sqft mode
Most buyers do not know you pay service charge on only 25% of the balcony area in Dubai. The calculator handles this. Flip the service charge input to **Per sqft** mode and enter the rate per sqft, your living area, and your balcony area. With the 25% balcony rule on, the tool charges the full living area plus a quarter of the balcony. So a 900 sqft unit with a 120 sqft balcony is charged on 930 sqft, not 1,020.
Use per-sqft mode when you have the building rate card but not the lump sum. Use lump-sum mode when you have the annual invoice. Net yield is one half of the return. The other half is price growth. See how they trade off in ROI vs rental yield, then run your own numbers.
Source: hoomanjt.com/tools/yield
#DubaiRealEstate #RentalYield #PropertyInvesting #DubaiProperty #NetYield