How total return is built
Total return = (sum of net rent received) + (sale price − purchase price − transfer costs). The first part comes from the rental-yield analysis; the second part depends on Downtown Dubai market direction over your hold period. Both numbers compound, so even modest assumptions produce meaningful 5-year totals.
Worked example — 1-Bedroom, 5-year hold
Assumptions: purchase at AED 2.2M (typical 1BR median per YallaValue), gross rent AED 135,000/year, net rent ~AED 105,000/year after OA, management, maintenance and insurance, capital appreciation modelled at 4% per year (within the long-run Downtown range — Dubai property has historically run cyclically between 0% and 8%+ annual moves). Sell at year 5 at ~AED 2.68M, less ~4% transfer/agency fees.
| Purchase price | 2,200,000 |
|---|---|
| Net rent, 5 years total | ~525,000 |
| Sale price (year 5, ~4% p.a.) | ~2,677,000 |
| Less transfer / agency at sale | ~107,000 |
| Total return | ~895,000 |
| Approximate ROI on equity | ~40% (5 years, ~7% annualised) |
Worked example — 3-Bedroom, 5-year hold
Assumptions: purchase at AED 5.2M (above the building average; reflects upper-floor 3BR with view), gross rent AED 341,000/year, net rent ~AED 265,000/year, capital appreciation 4% per year, transfer/agency 4% at exit.
| Purchase price | 5,200,000 |
|---|---|
| Net rent, 5 years total | ~1,325,000 |
| Sale price (year 5, ~4% p.a.) | ~6,326,000 |
| Less transfer / agency at sale | ~253,000 |
| Total return | ~2,198,000 |
| Approximate ROI on equity | ~42% (5 years, ~7.3% annualised) |
Caveats and how to stress-test
These examples assume continuous rental, no major vacancy, stable OA charges, and modest appreciation. Real-world variability runs wider in both directions. To stress-test for your own circumstances, run two alternative scenarios: a "flat" case at 0% capital appreciation (where return is yield only — roughly 22-25% over 5 years on these assumptions), and a "Dubai cycle" case using a 0% year-3 reset (where you re-base the year-5 sale price). The yield base provides a buffer; capital appreciation is upside.