Summary
You earn money two ways: rental income (monthly cash from tenants) and capital appreciation (property value growth realised when you exit). Together, these are your total return.
Two Types of Returns
Return Type | What It Is | When You Receive It |
Rental Income | Your share of tenant rent | Typically Monthly |
Capital Appreciation | Property value growth | When you exit |
1. Rental Income
How It Works
Tenants pay rent
Expenses deducted
Your share calculated
Paid to your wallet monthly
What You Earn
Your rental income = Net rental income × Your ownership %
Example | Amount |
Monthly rent collected | 10,000 AED |
Expenses and fees | -2,500 AED |
Net rental income | 7,500 AED |
Your ownership | 1% |
Your monthly income | 75 AED |
Key Features
Passive — money arrives without any work from you
Regular — paid once every month when your property is Rented
Proportional — based on your ownership percentage
Net of expenses — all costs already deducted
Rental income is often called "yield" and expressed as an annual percentage.
2. Capital Appreciation
How It Works
You invest at Value A
Property value grows over time
You exit at Value B
Your gain = Value B - Value A
What You Earn
Your capital gain = Exit value - Original investment
Example | Amount |
Original investment | 10,000 AED |
Value at exit (3 years later) | 13,000 AED |
Your capital gain | 3,000 AED |
Key Features
Growth potential — Dubai real estate has historically appreciated
Realised at exit — you receive it when you sell
Not guaranteed — values can also decrease
Tax considerations vary — depends on your country of residence
Total Return
Your total return combines both:
Total Return = Rental Income + Capital Appreciation
Example: 3-Year Investment
Component | Amount |
Original investment | 10,000 AED |
Net Rental income (3 years) |
|
Year 1 | 650 AED |
Year 2 | 680 AED |
Year 3 | 710 AED |
Total net rental income | 2,040 AED |
Capital appreciation |
|
Exit value | 13,000 AED |
Less: Original investment | -10,000 AED |
Less: Exit Fee (3% of the greater of Sales Price or Funded Amount less Arvo Fees) | -390 AED |
Less: Performance Fee (7% of profit — the gain after deducting the Exit Fee: 7% × 2,610) | -183 AED |
Net capital gain | 2,427 AED |
|
|
Total return | 4,467 AED |
Total return % | ~45% (44.7%) |
Income vs. Growth
Different properties may offer different balances:
Property Type | Rental Yield | Growth Potential |
High-yield property | Higher | Moderate |
Growth property | Moderate | Higher |
Balanced property | Moderate | Moderate |
Check each property listing for projected yield and growth estimates.
Factors That Affect Your Returns
Rental Income
Factor | Impact |
Occupancy rate | Vacancies mean no rent |
Rent levels | Market-driven |
Expenses | Higher costs mean lower net income |
Property management | Good management means stable income |
Capital Appreciation
Factor | Impact |
Location | Prime areas tend to appreciate more |
Market conditions | Economic factors affect all properties |
Property quality | Well-maintained equals higher value |
Timing | When you exit matters |
Common Questions
Which return is larger — rental or appreciation?
It varies by property and holding period. Typically, longer holds benefit more from appreciation.
Is rental income guaranteed?
No. It depends on tenants. Vacancies mean no income for that period.
Is appreciation guaranteed?
No. Property values can decrease. This is a key risk of real estate investing.
Can I get rental income without waiting for appreciation?
Yes. You receive rental income monthly regardless of property value changes.
What's a good total return?
This depends on market conditions and risk. Check property projections before investing.
Summary
Return Type | Source | Timing | Guaranteed? |
Rental Income | Tenant rent | Monthly | No (depends on occupancy) |
Capital Appreciation | Property value growth | At exit | No (values can decrease) |
All investments carry risk. Real estate price can increase and decrease in value. Past performance is not a guarantee of future returns. Arvo is regulated by the DFSA.