How to Estimate Rental Yield on an Off-Plan Unit in Dubai
Gross yield, net yield and the costs between them: how to work out what an off-plan unit is likely to earn once it is handed over.
Most investors buy off-plan for the rent that comes after the keys. Because the unit does not exist yet, that rent has to be estimated - and the estimate is only as good as the method. Here is a simple one.
Step 1: Find comparable rents
Look for units like yours that are already finished and rented: the same area, the same type and size, a similar building standard. Use several sources:
- Current rental listings for similar units nearby - these are asking rents.
- Registered tenancy data and the DLD's rental index - these reflect contracts actually signed.
- Local agents who let units in the area, who know how long units sit empty.
Take a sensible middle figure, not the best listing you can find.
Step 2: Work out the gross yield
Gross yield = yearly rent ÷ total price × 100. Include in the price what you actually pay to own the unit - the purchase price plus the 4% DLD fee and other buying costs.
Step 3: Deduct the costs
- Service charges - often the largest cost; see service charges explained.
- Maintenance - small repairs and replacing worn items.
- Management or letting fees if an agency finds and looks after tenants.
- Insurance for the contents you own.
- Empty weeks between tenants.
A worked example
| AED | |
|---|---|
| Price | 1,000,000 |
| DLD fee (4%) and other buying costs | 45,000 |
| Total cost | 1,045,000 |
| Expected rent per year | 80,000 |
| Gross yield | 7.7% |
| Service charges | -12,000 |
| Maintenance, management and insurance | -6,000 |
| One month empty | -6,700 |
| Net rent | 55,300 |
| Net yield | 5.3% |
The figures are an illustration, not a forecast. The gap between 7.7% and 5.3% is the point: compare projects on net yield.
Risks to allow for
- New supply: if many similar units are handed over nearby at the same time, rents can soften for a while.
- Handover delays: a later handover pushes back the first rent.
- Mortgage costs: if you finance the handover payment, your cash return depends on the repayments as well.
- Furnishing: furnished units can rent for more but cost more to set up and maintain.
Using Listy Map
On Listy Map you can see the area's projects, their prices and handover dates, and what is around each one - the schools, metro stations and malls that tenants ask about. Estimating rent starts with knowing what else will be finished nearby, and when.
This guide is general information, not financial advice. Rents and costs change; base any decision on current figures for the specific unit.
Questions people ask
What is the difference between gross and net yield?
Gross yield is the yearly rent divided by the price. Net yield first takes away the yearly costs of owning the unit - service charges, maintenance, management, insurance and empty weeks - so it shows what the investment really returns.
Where can I find real rents for an area in Dubai?
Look at current rental listings for similar units in finished buildings nearby, and at registered tenancy data and the DLD's rental index. Adverts show asking rents; registered contracts show what tenants actually agreed to pay.
Should I use today's rents for a unit handed over in three years?
Use today's rents as the base and treat any change as a scenario, not a promise. Also count how many similar units will be handed over nearby at the same time, as new supply can hold rents back.