How do I calculate rental yield in Dubai?

Rental yield is the annual rental income your property generates as a percentage of its purchase price or current market value. It is the most common metric for comparing investment properties in Dubai.

Gross yield formula

Gross Rental Yield = (Annual Rent / Purchase Price) x 100

Example: You buy a studio in JVC for AED 550,000 and rent it for AED 38,000 per year. Gross yield = (38,000 / 550,000) x 100 = 6.9%

Net yield formula

Net yield is more useful because it accounts for your actual costs:

Net Rental Yield = ((Annual Rent - Annual Costs) / Purchase Price) x 100

Annual costs typically include:

• Service charges
• Property management fees (if using an agent - usually 5% of annual rent)
• Insurance
• Maintenance and repairs
• Any periods of vacancy (budget 2-4 weeks per year for tenant turnover)

Example using the same JVC studio: Annual rent: AED 38,000 Service charges: AED 8,000 Management fee: AED 1,900 Maintenance allowance: AED 2,000 Vacancy allowance: AED 1,500 Total costs: AED 13,400

Net yield = ((38,000 - 13,400) / 550,000) x 100 = 4.5%

Typical gross yields by area (2025 estimates)

Area	Studio/1-bed	2-bed	3-bed+
JVC	7-9%	6-8%	5-7%
Dubai South	7-9%	6-8%	5-7%
Dubai Marina	5-7%	5-6%	4-5%
Business Bay	6-8%	5-7%	4-6%
Downtown Dubai	5-7%	4-6%	3-5%
Palm Jumeirah	4-6%	4-5%	3-5%

What affects yield?

• Purchase price timing: Buying during a market dip increases yield potential. Buying at peak prices compresses yields.
• Unit size: Smaller units (studios and one-beds) generally deliver higher percentage yields because per-square-foot rents are higher relative to purchase prices.
• Service charges: High service charges erode net returns. Always factor these in before purchasing.
• Location demand: Areas near metro stations, business hubs, and popular amenities maintain stronger occupancy and rental demand.

Realistic expectations

Dubai consistently delivers higher gross yields than most mature property markets - London, New York, and Singapore typically offer 2-4%. However, Dubai does not currently have capital gains tax, which makes net returns even more competitive.

That said, yield is only one part of the picture. Capital appreciation, currency risk, and personal circumstances all matter. A high-yielding property in a poorly managed building is not necessarily a good investment.

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