The building you buy decides your yield

Property portals advertise 8% rental yields in Dubai. After service charges, the real number is often much lower. Here’s what the Mollak index does to that headline figure, and why the most expensive homes aren’t bought for rental income at all.

Property portals advertise Dubai yields of 8% to 10%. Those are gross figures, before costs. Once you factor in service charges — tracked by the Mollak index, Dubai’s official service-charge register — the real return is much lower. Take a 4,500 sq ft apartment in Downtown Dubai. At AED 26 per square foot, the maintenance and cooling charge alone comes to AED 117,000 a year, whether or not anyone is living there. The most expensive homes on Palm Jumeirah and Jumeirah Bay Island aren’t bought to rent out. Buyers want them because so few exist. Over the past three years, price growth in these areas has outpaced rental income by roughly four to one. When I build a client’s portfolio, I usually split it: about 60% into branded residences — Armani, Bulgari, SLS — which hold a net yield near 7.8%, and about 40% into beachfront property, where the return comes from land value, not rent.