Key takeaways
- Gross yield = annual rent ÷ purchase price. It is a screening number, nothing more.
- Net yield subtracts service charges, management, voids and maintenance — usually 1.5–2.5 points below gross.
- Cash-on-cash return divides net income after mortgage interest by cash actually invested, including the 6–8% acquisition costs.
- Total return adds appreciation over your hold period; underwrite it at 0% and let it be upside, not the thesis.
- Stress every model at 10% lower rent and 20% higher service charge before you sign.
The four ROI numbers that matter
Gross yield tells you whether an asset is worth a second look. Net yield tells you what the asset earns. Cash-on-cash return tells you what your money earns, which is different once leverage and acquisition costs enter. Total return — net income plus capital movement over the hold, divided by cash invested — tells you whether the deal beat the alternative.
Run all four. A property with an 8% gross yield and AED 28 per square foot service charges can easily be a worse investment than a 6.5% gross asset at AED 12.
A full worked example
Take a ready one-bedroom in Jumeirah Village Circle: AED 1,200,000, 780 sq ft, achievable rent AED 92,000. Gross yield is 7.67%.
Costs: service charge at AED 15/sq ft = AED 11,700; management at 6% = AED 5,520; void allowance at 5% = AED 4,600; maintenance at 0.4% of value = AED 4,800. Net income AED 65,380, a 5.45% net yield.
Cash purchase: acquisition costs at 7% = AED 84,000, so total cash in is AED 1,284,000 and cash-on-cash is 5.09%. Hold five years with 4% annual appreciation and the exit at AED 1,460,000 (less 2% selling cost) lifts total return to roughly 11.5% a year.
Leveraged at 50% LTV and 5.25%: cash in becomes AED 684,000, mortgage interest AED 31,500, net cash flow AED 33,880 — a 4.95% cash-on-cash return, but appreciation now works on twice the asset value, which is where leverage earns its keep and its risk.
The assumptions that break models
Using the developer's projected rent instead of the DLD rental index figure for that exact building. Ignoring service charges entirely. Assuming 100% occupancy from month one. Forgetting that off-plan produces zero income until handover, so a three-year build is three years of dead capital in the return calculation.
For off-plan, model the payment plan month by month. Capital deployed in year three is not the same as capital deployed today, and an 80/20 post-handover plan can beat a lower headline price on an IRR basis.
Run your own numbers
Our investor calculators cover ROI, rental yield, mortgage payments and Golden Visa eligibility so you can test a deal in under two minutes. Then bring the output to an advisor and we will replace your assumptions with building-level evidence: actual service-charge history, actual DLD rents, actual forward supply for the district.
Frequently asked questions
How do you calculate ROI on Dubai property?
Divide annual net rental income — rent minus service charges, management, voids and maintenance — by the total cash invested including the 6–8% acquisition costs. Add capital appreciation over your hold period for total return.
What is a good ROI on Dubai property?
A net yield of 5–7.5% is a realistic target, with total returns of 9–13% a year once modest appreciation is included. Anything projecting more than that is usually ignoring service charges or voids.
What is the difference between gross and net yield?
Gross yield is rent divided by price. Net yield deducts service charges, management fees, void allowance and maintenance — typically 1.5–2.5 percentage points lower in Dubai.
Should I include service charges in ROI?
Always. At AED 10–30 per square foot per year they are the single biggest recurring drag on Dubai returns and vary hugely between towers in the same district.