Capital invested — the denominator everyone gets wrong
Capital invested = the property instalments you have actually paid by a given date, plus your buying costs. Not the full purchase price. On a payment plan you may have paid 40% when you exit — your return is earned on that capital, not on money you never deployed. Two consequences follow: buying costs (the 4% DLD fee, agency, admin — itemised in the full cost breakdown) belong in your capital, and the remaining balance — price minus instalments paid — is a debt against your exit, not part of your investment.
Gross vs net yield — never let them blur
- Gross yield = annual rent ÷ property value. A marketing number. Useful only for first-pass comparison.
- Net yield = (annual rent − vacancy allowance − service charges − maintenance − management − other recurring costs) ÷ property value. The number you actually live on.
- State your basis. Dividing by the purchase price answers “what does my entry earn?”; dividing by current value answers “what does my capital earn today?” Both are legitimate — silently switching between them is how listings flatter themselves.
The gap between gross and net is where Dubai returns are won and lost — service charges are the single most under-modelled cost in the market (see the tax and costs guide).
Net profit and return on equity — the numbers that decide
Net profit = estimated sale value − remaining payment balance − capital invested − selling costs + net rental income actually received. Each element counted once: the remaining balance comes off the sale proceeds because you still owe it; rental counts only for the months you genuinely collected it, net of the recurring costs above.
Return on equity (ROE) = net profit ÷ capital invested. This is why payment-plan timing matters so much: the same profit on less deployed capital is a higher ROE — the honest reason off-plan can outperform, and the honest reason it carries more risk (see payment plans explained — and, for the pre-handover exit itself, selling off-plan property in Dubai). Two warnings: an ROE with almost no capital invested is arithmetic showing off, not a strategy — and I deliberately do not quote annualised returns from staged payment plans, because a single compounding rate misrepresents cash flows that went in at different times. Until a proper dated-cash-flow calculation is on the table, holding period + total profit + ROE tell the truth better.
Illustrative only, not a forecast: buy at AED 1,000,000 on a plan where 40% is paid by your exit; buying costs AED 40,000; assume resale at 15% above purchase with AED 20,000 selling costs. Capital invested = 440,000. Sale 1,150,000 − remaining balance 600,000 − capital 440,000 − selling costs 20,000 = net profit 90,000 → ROE ≈ 20% on the capital actually deployed. The identical uplift held to 100% paid gives the same 90,000 profit — but ROE ≈ 8.7%, because more capital was in. Same deal, different timing, honest difference.
How to stress-test any opportunity — before you commit
- Re-run the numbers at 0% growth — if the deal only works when prices rise, that is a bet, not an investment.
- Re-run at a negative assumption — know your loss before you know your gain.
- Cut the rent and raise the vacancy — does net yield survive?
- Delay handover a year — can you still fund the plan without a forced exit?
- Assume you must hold to completion — is that survivable, or catastrophic?
If a seller's projection never shows you the downside cases, the projection is the product. The ten most expensive mistakes are mostly this list, ignored.
Independent editorial guide, August 2026. The definitions above are exactly those used in my internal client-modelling tool; all worked numbers are illustrative examples, never market evidence or forecasts. Verify actual prices and rents against DLD records and Property Monitor / DXB Interact for the specific unit. Not financial advice — for a personalised calculation on a real property, message me and I'll run it with you.