How to calculate real ROI on a Dubai property

Advertised yields in Dubai are almost always gross. The number that matters is net, and getting to it takes four subtractions most listings leave out.

Start with realistic rent

Use the Dubai Land Department rental index for the exact building and layout, not the district average. A two-bedroom in a tower with a pool deck and a two-bedroom two streets away without one do not command the same rent, and the district average hides that.

Then subtract

• Service charges. Quoted per square foot per year, and they vary by a factor of three across districts. On a waterfront tower they are the single largest deduction.
• Management fee. Typically five to eight per cent of collected rent.
• Vacancy. Even in a tight market, budget for two to four weeks between tenancies.
• Maintenance reserve. One per cent of value per year is a conservative placeholder.

What is left

For a well-chosen apartment, a gross yield in the seven to eight per cent range typically lands between five and six per cent net. That is the number to compare against alternatives — and the number to use when you model whether a post-handover payment plan is actually free money.

The capital side

Yield is only half the return. Off-plan buyers are also underwriting the spread between the launch price and the market at handover. Model both, and model them separately.