What is ROI on property? Explained simply

Updated 21 Oct 2026

ROI is short for "return on investment". It answers one question: for every dirham you put into the property, how many dirhams come back each year? Put in AED 100, get AED 5 back a year, and your return is 5%. The trouble is that people quote four different numbers and call them all "ROI". This page explains each one with one example, then you can put your own numbers in the rental yield and ROI calculator.

Not a valid document. Estimate for information only — not financial advice, not an offer of credit and not a bank document. Errors are possible. Only your bank's or finance company's official offer letter, contract and statements are binding.

The example

A flat in Dubai for AED 1,500,000, rented at AED 100,000 a year. It stands empty one month a year. Service charges, maintenance and insurance come to AED 25,000 a year, and a property manager takes 5% of the rent collected. The buyer is an expat who puts 40% down and borrows the rest at 5% over 25 years. The cash on the day — down payment plus every buying cost — is AED 712,565.

1. Gross yield: the number agents quote

Rent divided by price: AED 100,000 ÷ AED 1,500,000 = 6.67%. It is easy to compare between flats, but it pretends you keep every dirham of rent. You don't.

2. Net yield: the honest version

Start from the rent you actually collect: 11 of 12 months, AED 91,667. Take off the yearly costs — service charges, maintenance, insurance and the manager's 5% — AED 29,583 in total. The rent leaves you AED 62,083. Divided by the price, that is 4.14%. This is what the flat earns on its price before any mortgage.

3. Return on your own cash: what matters if you borrow

You did not pay the whole price, you paid AED 712,565 in cash and the bank paid the rest. The mortgage costs AED 5,261 a month, AED 63,136 a year. The rent left you AED 62,083, so after the mortgage you are AED 1,052 short every year and top it up from your own pocket. Divided by your cash on the day, the return on your own cash is -0.15%.

This is the number many people are surprised by. With today's mortgage rates, a flat bought with a loan often does not pay for itself from the rent alone. The money then has to come from the price going up — and that is a guess, not a fact.

4. Profit if you sell: the whole story

Say you keep the flat 7 years and then sell. Nobody knows how rents and prices will move, so the calculator lets you try several guesses side by side. With rent and price both flat (0% a year), you top up the mortgage every year, sell for the same price minus 2% selling costs, pay off what is still owed, and end up with a profit of only AED 1,696 on your AED 712,565 — a yearly rate of 0.03% on your cash, practically nothing. With rent and price both rising 3% a year, the profit is AED 397,300 and the yearly rate 6.60%. The difference between the two is entirely the guess.

"Yearly rate your cash earned" is the one number you can compare with a savings account or any other investment: it counts when each dirham went out and came back, so a profit that arrives after 7 years is worth less per year than the same profit after 3.

What is not in the numbers

• Tax: none. Rent from a home you own privately, without a business licence, is not subject to Corporate Tax, and residential rent carries no VAT.
• The tenant's fees: in Dubai, Abu Dhabi and Ras Al Khaimah the 5% fee on the lease is paid by the tenant, so it is not your cost. In Sharjah the landlord pays the lease certification fee.
• Your time, and the risk that a tenant stops paying or the flat stands empty longer than you guessed.

Put your own numbers in the rental yield and ROI calculator. For the cash you need on the day, see costs of buying a home.