The most misused number in building advertisements is “return.” Contracted rent divided by price is only an initial gross yield. It does not show what remains after vacancy, collection risk and operating expenses.
Use collected income
Build a unit-by-unit rent roll showing lease dates, contracted rent, amounts collected, arrears, deposits and cheque schedule. Match leases to evidence of payment. Treat vacant units with conservative market rent and a vacancy period.
Core calculations
Effective income = collected rent and other property income minus doubtful arrears.
NOI = effective income minus vacancy and annual operating expenses.
Net yield = NOI divided by total acquisition cost.
Worked example
A hypothetical AED 5,000,000 building with AED 500,000 contracted rent shows 10% gross yield. Deduct AED 25,000 for vacancy and collection loss and AED 80,000 for operating costs: NOI becomes AED 395,000, or 7.9% of price. If acquisition and urgent works add AED 200,000, the return on total cost is about 7.6%. This is an educational example, not a market quotation.
Costs often missed
- Lifts, pumps, cooling and fire systems.
- Common-area utilities, cleaning and security.
- Insurance, management and leasing costs.
- Turnover repairs and a reserve for major works.
Required due diligence
Obtain title documents, unit schedule, authenticated leases, collection history, arrears, deposits, maintenance invoices, supplier contracts, a technical survey and any violation or claim records. An official valuation can establish a value for an official purpose, but it does not replace a rent-roll and expense audit.
Official sources
- Ajman Land Department: Real Estate Valuation Service
- Government of Ajman: Residential Lease Contract Authentication
- Government of Ajman: Commercial Lease Contract Authentication
Links and facts were reviewed on 1 August 2026. Fees and requirements may be amended by the competent authorities; confirm them at the time of transaction.
