The two numbers
Gross yield = annual rent ÷ purchase price. It is the number in the marketing, and it is only useful for a first sort of a long list.
Net yield = (annual rent − service charge − vacancy − management − maintenance) ÷ (purchase price + transaction costs). It is the number you actually earn. The gap between the two is routinely two percentage points or more.
Worked through on a real shape of deal
A AED 1,400,000 one-bedroom in a mid-market marina-side building, let at AED 105,000 a year.
| Line | Amount | Note |
|---|---|---|
| Gross rent | AED 105,000 | 7.5% gross on the price |
| Service charge | −AED 14,000 | ~AED 17 per sq ft on ~825 sq ft |
| Vacancy | −AED 8,750 | One month between tenancies is a normal, not pessimistic, assumption |
| Management | −AED 7,350 | 5% + VAT if you are not managing it yourself |
| Maintenance and renewals | −AED 4,000 | Chiller, appliances, repainting between tenants |
| Net rent | AED 70,900 | — |
| Net yield on cost | ≈ 4.7% | AED 70,900 ÷ AED 1,491,000 (price plus ~6.5% costs) |
Same flat, same rent, and the headline 7.5% has become 4.7%. That is not an argument against buying it — it is the argument for pricing service charge into the decision, which is why every ready listing on this site carries the charge per sq ft alongside the guide yield.
Where the yield differences actually come from
- Service charge per sq ft. The single most controllable variable: two similar flats can differ by AED 6–10 per sq ft a year, which is most of a percentage point of yield.
- Size efficiency. Smaller units usually show a higher gross yield and a higher charge per sq ft. Studios and one-beds let faster and turn over more.
- Building age and tenancy mix. A tenanted flat with a long lease is a known income stream; a vacant one is a project. Both are legitimate buys at different prices — which is why our ready listings state occupancy.
- Supply arriving nearby. A handover wave in the same community competes with you for tenants. Check what is completing in the next 24 months before assuming today’s rent holds.
- Short-term letting. Higher gross in the right building, plus permits, management of 15–25%, furnishing and more vacancy risk. Compare net, never gross.
Comparing an off-plan launch with a ready flat
Off-plan has no yield today: your return for the first two or three years is the payment plan, not rent. The comparison that matters is the price you pay now against the price of the same kind of home at handover, minus the rent you did not collect. That is a view about the market, and it should be stated as one.
A ready flat gives you a yield today, a service charge you can read off a statement, and tenants you can meet. It gives you no launch discount. If cash flow is the goal, the ready side of this site is where to filter on yield; if capital growth is the goal, compare the off-plan price against what exists next door.