Investment profitability · 27 July 2026
What reduces the return on a Dubai property?
The property price is not the complete investment amount. Five additional factors can materially affect the result from acquisition through an early off-plan exit.
Acquisition
The first costs arise when the property is purchased
In Dubai, the DLD tax is 4% of the property value and is paid by the buyer. This payment increases the capital invested in the property.
On the secondary market, the agent commission is usually another 2% of the property value. The agent commission is not charged on the primary market.
A simple acquisition example
On a property priced at AED 1,500,000, the 4% DLD tax is AED 60,000. The investment amount becomes AED 1,560,000.
A usual 2% agent commission is AED 30,000. Together with the DLD tax, the investment amount becomes AED 1,590,000.
During ownership
Service fees reduce rental income
Property service fees depend on the area, building, developer and Emirate. They can reach up to 15% of annual rental income.
This cost should therefore be included when the investor assesses the income generated by a specific property.
Short-term rental
Management can take a substantial share of income
For a short-term rental, the property management fee can in some cases reach up to 20% of rental income.
The expected rental income should therefore be considered together with the management fee.
Off-plan exit
Plan the financial capacity to continue the payment plan
In most cases, the resale of a property under construction is permitted only after at least 50% of the property's value has been paid.
If the investor sells the property before handover, the discount may reach up to 20% of the original value. An early sale should not be assumed to be available without a discount.
Davima framework
Five factors to check before paying a deposit
DLD tax
In Dubai, the DLD tax is 4% of the property value and is paid by the buyer.
Agent commission
The commission is usually 2% of the property value on the secondary market. It is not charged on the primary market.
Property service fees
The amount depends on the area, building, developer and Emirate, and can reach up to 15% of annual rental income.
Short-term rental management
In some cases, the property management fee can reach up to 20% of rental income.
Early off-plan exit
Resale is often permitted only after at least 50% has been paid. A sale before handover may require a discount of up to 20%.
Our conclusion
The return should be assessed using the complete investment amount and the costs that apply to the selected strategy. Davima reviews these five factors for the selected property before the investor makes a decision.