What the yield looks like after service charges

By Ben Barsoum · Reviewed 15 September 2026 · General information

Compare the rent with the recurring costs before comparing properties. Gross yield is a starting point; the assumptions underneath it matter.

An illustrative apartment assessment

This is a worked example, not a property listing, client result or verified market transaction. Assume a price of AED 1,600,000, annual rent of AED 110,000 and an area of 850 square feet.

• Service charge assumption: AED 20 per square foot, or AED 17,000 a year.
• Property-management allowance: 5% of rent, or AED 5,500.
• Maintenance, insurance and registration allowance: AED 4,000.

That leaves AED 83,500 before borrowing costs and tax: approximately 5.22% of the purchase price. Gross yield is approximately 6.88%.

What the example leaves out

There is no vacancy allowance in the figure above. It also excludes purchase costs, loan interest, principal repayments and any tax applicable to the owner. For a complete comparison, use total acquisition cost as well as purchase price, and model vacancy and unexpected maintenance separately.

Test the service-charge assumption

With everything else unchanged, a service charge of AED 15 per square foot would reduce annual costs by AED 4,250 and lift the illustrated return to approximately 5.48% of price. That is arithmetic, not a forecast or a claim that either charge is typical.

Confirm the actual building’s published service charge, what it covers, and recent bills. Ask about major works and any additional cooling or community charges.

Build a useful comparison

Use current evidence for comparable rent, the property’s condition, realistic letting costs and a cash reserve. Keep projected rent separate from an existing tenancy. Compare a consistent holding period and cost basis.

Our buyer’s advocacy service can include a written comparison within an agreed research scope. Use the purchase-cost calculator for a separate illustration of deposit and financing needs.

References: DLD purchase fees; FTA real-estate investment guidance. Example assumptions reviewed 15 September 2026; not market observations.