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The result in three sentences
An apartment of 701 sqft bought in 2024 for AED 1,500,000 with a 40 per cent deposit at 6.49 per cent over 24 years, let for two
years at AED 105,000 in four cheques: 5.57 per cent first-year total return on equity from a 7.00 per cent gross yield. Refinancing
to today's 5.99 per cent would only pay back after seven years; the lever on this property is not the rate but the use. So the apartment, with a
full view of the Burj Khalifa, is being converted into a premium holiday home; from about AED 500 a night at 70 per cent occupancy it beats
the long-term rent, and from October 2026 we publish whether it does.
Disclosure. The owner in this case comes from within the firm. It is not a client mandate but
an internal case from 2024, and the mortgage still runs unchanged on the terms stated. All amounts are the actual ones; instalment, returns and
costs have been recalculated. The refurbishment is carried out by an architecture partner we do not name here; its cost will be published on
completion. The owner's income stays out, as on every page of this site. Community, tower and unit number are omitted. As of 5 September 2026.
The property and the numbers
| Item | Value |
|---|---|
| Owner | from within the firm, not a client mandate |
| Property | Apartment in a Dubai tower, 701 sqft, full Burj Khalifa view |
| Year of purchase | 2024 |
| Price | AED 1,500,000 (AED 2,140 per sqft) |
| Financing | 60 per cent loan to value, 40 per cent deposit (AED 600,000) |
| Rate / term | 6.49 % / 24 years, unchanged since 2024 |
| Annual rent 2024 to 2026 | AED 105,000 in four cheques (AED 150 per sqft) |
| Service charge | AED 12 per sqft = AED 8,412 a year (8.0 per cent of rent) |
| From October 2026 | premium holiday home after a full refurbishment |
Two years as a long-term let
| Item | Amount |
|---|---|
| Purchase price | AED 1,500,000 |
| Deposit (40 %) | AED 600,000 |
| Loan (60 %) | AED 900,000 |
| One-off acquisition costs (about 7.4 %, shown separately, not in the return) | about AED 110,400 |
| Total cash required (deposit plus one-off costs) | about AED 710,400 |
| Monthly instalment | AED 6,173 |
| Annual debt service | AED 74,080 |
One-off costs per our standard model: DLD transfer fee 4 % (AED 60,000), agency 2 % plus VAT (AED 31,500), mortgage registration 0.25 % plus AED 270 (AED 2,520), trustee, valuation and arrangement fee (about AED 16,400).
What the apartment did in a year
| Item | Per year | Share of rent |
|---|---|---|
| Rental income | AED 105,000 | 100 % |
| Debt service (12 instalments) | − AED 74,080 | 70.6 % |
| Service charge (701 sqft × AED 12) | − AED 8,412 | 8.0 % |
| Management (5 % of rent) | − AED 5,250 | 5.0 % |
| Cash surplus | AED 17,258 | 16.4 % |
| Principal repaid in year one | + AED 16,145 | interest AED 57,935 |
| Total return, year one | AED 33,403 | 5.57 % on equity (4.70 % if one-off costs are counted) |
- Gross rental yield: 7.00 per cent
- After service charge: 6.44 per cent
- After service charge and management: 6.09 per cent
- Cash surplus on equity: 2.88 per cent
- Rent coverage of instalment, service charge and management: 120 per cent
Worked example No price growth is assumed. After two years AED 33,369 of principal has been repaid and AED 114,791 of interest paid; the balance stands at AED 866,631.
Leverage works slightly against the owner here. Net yield after service charge and management is 6.09 per cent, the rate
6.49 per cent. Every borrowed dirham costs 0.4 points more than it earns, which is why the return on equity, 5.57 per cent, sits below the
property's own yield. Bought for cash it would have been 6.09 per cent. The same pattern as in case study 01, the opposite of
case study 02, where the net yield sits above the rate.
Why 6.49 per cent, and why it still stands
Bank practice In 2024 offers to non-residents in our practice ran between 6 and 7 per cent; 6.49 per cent at 60 per cent loan to value was a normal rate, not a bad one. Non-resident pricing follows EIBOR plus the bank's margin, with an initial fixed period and a variable rate afterwards; how that works is set out in the rates guide. The rate stands unchanged today because nobody has touched it: no end of the fixed period, no refinance, no partial repayment. Whether that was wise is the next section.
Refinance or keep?
Official rule The Central Bank caps the early settlement fee at 1 per cent of the outstanding balance, at most AED 10,000. That sounds like a cheap exit, but the exit is not the only line. Switching banks adds re-registration of the mortgage at the Dubai Land Department (0.25 per cent plus AED 270), a new valuation and the new bank's arrangement fee, usually up to 1 per cent. On a balance of AED 866,631 that is about AED 22,400 together.
| New rate (22 years remaining) | New instalment | Saving per month | One-off costs | Pays back after |
|---|---|---|---|---|
| 6.49 % (keep) | AED 6,173 | - | - | - |
| 5.99 % | AED 5,915 | AED 259 | AED 22,389 | 7.2 years |
| 5.49 % | AED 5,661 | AED 512 | AED 22,389 | 3.6 years |
| 4.99 % | AED 5,414 | AED 759 | AED 22,389 | 2.5 years |
Our rule of thumb from this case
Below half a percentage point of difference a refinance in Dubai almost never pays, because the switching costs eat three to four years of savings.
From a full point it becomes interesting, from a point and a half it is mandatory. At 0.5 points, as here against 5.99 per cent, keeping is the
right call, and the energy belongs in how the property is used.
Nexus Bridge experience What we recommend instead when liquidity is available: partial repayment. It falls under the same 1 per cent cap, cuts the interest bill immediately and needs no re-registration. Repaying AED 100,000 early saves about AED 6,500 of interest a year at 6.49 per cent, with no change of bank.
Switching to a holiday home: what changes
An apartment with a full view of the Burj Khalifa has a different price list in the short-term market than in the long-term market. That is what the refurbishment is built on: epoxy resin floors, microcement, a new bathroom, a new kitchen and a complete premium fit-out, carried out by an architecture partner. Marketing starts in October 2026. Before the first night is booked, the rulebook changes:
| Point | Long-term let | Holiday home |
|---|---|---|
| Permit | Ejari registration of the tenancy | DET permit per unit via the Holiday Homes portal; private owners up to eight units |
| One-off fees | Ejari, minor | about AED 1,520 registration plus AED 320 inspection |
| Running fees | none | AED 300 per bedroom plus AED 70 per unit a year; Tourism Dirham AED 10 to 15 per bedroom per night, paid by the guest, remitted monthly |
| VAT | residential rent exempt | mandatory from AED 375,000 annual turnover, voluntary from AED 187,500 |
| Utilities | DEWA, cooling, internet paid by the tenant | paid by the owner |
| Fit-out | unfurnished or basic | complete, linen, consumables, smart lock |
| Insurance | building via the owners' association | plus contents and guest damage |
| Check first | - | community rules, loan agreement, insurance; cleared before the refurbishment in this case |
| Rent regulation | RERA rental index caps increases | nightly rate is free |
The nightly rate at which it pays
Worked example The long-term let left AED 91,338 a year after service charge and management. That is the bar. For the holiday home we assume a platform fee of 3 per cent, optionally an operator at 20 per cent, the service charge unchanged at AED 8,412, and about AED 23,500 a year of costs that move to the owner (DEWA and cooling, internet, consumables and linen, insurance, DET fee). Cleaning is paid by the guest per stay. The refurbishment itself is an investment in the fabric and stays out of this table; we will add it.
| Average nightly rate | 60 % occupancy | 70 % occupancy | 80 % occupancy |
|---|---|---|---|
| AED 600 | AED 95,576 with operator AED 69,296 | AED 116,819 with operator AED 86,159 | AED 138,062 with operator AED 103,022 |
| AED 800 | AED 138,062 with operator AED 103,022 | AED 166,386 with operator AED 125,506 | AED 194,710 with operator AED 147,990 |
| AED 1000 | AED 180,548 with operator AED 136,748 | AED 215,953 with operator AED 164,853 | AED 251,358 with operator AED 192,958 |
| AED 1200 | AED 223,034 with operator AED 170,474 | AED 265,520 with operator AED 204,200 | AED 308,006 with operator AED 237,926 |
Annual surplus after platform fee, service charge and owner costs; small figure: with an operator (20 %). Long-term benchmark: AED 91,338.
The thresholds
At 70 per cent occupancy the self-managed holiday home draws level with the long-term rent from AED 497 a night, with an operator from
AED 626. At 60 per cent it is AED 580 and AED 731, at 80 per cent AED 435 and AED 548. Everything above that is the reason for the refurbishment.
Whether a premium apartment with a Burj Khalifa view holds those rates across the year is the open question of this case; we publish actual
occupancy and achieved nightly rate quarterly from the first quarter of 2027 in the Dubai Monitor.
Four cases side by side
| Case 01 · Marina | Case 02 · Al Furjan | Case 03 · internal | Case 04 · this purchase | |
|---|---|---|---|---|
| Price | AED 1,300,000 | AED 800,000 | AED 1,900,000 | AED 1,500,000 |
| Size | 591 sqft | 360 sqft | 787 sqft | 701 sqft |
| Deposit | 50 % | 35 % | 35 % | 40 % |
| Rate / term | 5.99 % / 25 y | 5.80 % / 25 y | 5.99 % / 23 y | 6.49 % / 24 y |
| Service charge | AED 17 / sqft = 13.4 % of rent | AED 10 / sqft = 5.7 % | AED 17 / sqft = 9.6 % | AED 12 / sqft = 8.0 % |
| Gross yield | 5.77 % | 7.88 % | 7.37 % | 7.00 % |
| Net yield after costs | 4.71 % | 7.03 % | 6.30 % | 6.09 % |
| Total return, year one, on equity | 3.47 % | 9.41 % | 6.97 % | 5.57 % |
| Leverage | negative | positive | slightly positive | slightly negative |
| Our role | financing and support | purchase support | internal case | internal case, change of use |
Four properties, four results, one rule: leverage only helps when the net yield sits above the rate. Case 02 shows how much that is worth; cases 01 and 04 show what happens when it just falls short. And the gap between 4.71 and 7.03 per cent net yield is, again, not the bank but service charge and rent per square foot.
What we take from it
- An old rate is not an emergency. 6.49 against 5.99 per cent is AED 259 a month and seven years to recover the switching costs. Anyone refinancing needs at least a full percentage point of difference.
- Partial repayment beats refinancing while the gap is small: the same 1 per cent cap, immediate effect, no re-registration.
- A property's return lives in its use, not its rate. Seven per cent gross is the ceiling in the long-term market; the short-term market has a different price list for special locations, against different costs and different work.
- Calculate the threshold before, not after. AED 497 a night at 70 per cent occupancy is the number this refurbishment is measured against. We published it before the first booking.
- Before the refurbishment, check what the refurbishment requires: community rules, loan agreement, insurance, DET permit. In that order.
How financing works for buyers who live abroad, from loan-to-value to bank selection, is covered in our guide to UAE mortgages for overseas buyers.
What this case does not prove. It does not show that short-term letting in Dubai beats long-term letting in general. It
shows a location where the sums can work, and the threshold at which they do. For an apartment without a special view, in a community without
tourist demand, a long-term let in four cheques is usually the better answer. Price your own property in the calculator with PDF analysis
or with us.
Frequently asked questions
Is it worth refinancing an old 6.49 per cent mortgage in Dubai?
Only with a clear rate gap. After two years the balance here is about AED 866,600. Refinancing to 5.99 per cent over the remaining 22 years saves AED 259 a month against roughly AED 22,400 of one-off costs (early settlement fee of 1 per cent capped at AED 10,000, new mortgage registration, valuation, arrangement fee). That pays back after a little over seven years. At 5.49 per cent it is AED 512 a month and 3.6 years; at 4.99 per cent AED 759 and 2.5 years. Below half a point of difference it almost never pays.
How high can the early settlement fee be in the UAE?
The Central Bank caps it at 1 per cent of the outstanding balance, at most AED 10,000. Switching banks adds the release and re-registration of the mortgage at the Dubai Land Department (0.25 per cent of the new loan plus AED 270), a new valuation and the new bank's arrangement fee, usually up to 1 per cent. In this size bracket a refinance costs about AED 20,000 to 25,000 all in.
Can a mortgaged apartment in Dubai be let as a holiday home?
In principle yes. Short-term letting needs a permit from the Department of Economy and Tourism (DET) per unit; private owners may register up to eight units. Three things belong before the first booking: the building's community rules, the terms of the loan agreement and the insurance. In this case all three were cleared before the refurbishment started.
What does the holiday home permit cost?
According to current operator guides, about AED 1,520 registration plus AED 320 inspection once, then AED 300 per bedroom plus AED 70 per unit a year. On top of that the Tourism Dirham of AED 10 (standard) or AED 15 (deluxe) per bedroom per occupied night, paid by the guest and remitted to DET monthly. From AED 375,000 of annual turnover the letting becomes subject to VAT.
At what nightly rate does the holiday home beat the long-term rent?
The long-term let left AED 91,338 a year after service charge and management. At 70 per cent occupancy a self-managed holiday home must average about AED 500 a night to match it; with an operator taking 20 per cent, about AED 630. At 60 per cent occupancy the thresholds rise to AED 580 and AED 730. Only well above those levels does the refurbishment pay, and that is exactly what it is aiming at.
Why convert at all when the long-term let yielded 7 per cent gross?
Because 7 per cent gross at a 6.49 per cent rate nets only 5.57 per cent on equity, and that was the ceiling for this property as a long-term let. An apartment with a full Burj Khalifa view has a different price list in the short-term market than in the long-term market. The refurbishment bets on that difference. Whether it pays is shown by the occupancy figures from October 2026 onwards; we will publish them here.
Which costs move to the owner with short-term letting?
Electricity, water and cooling (DEWA and chiller), internet, consumables, linen, insurance, the DET fees and the platform fee. The service charge is the owner's in both models. We have allowed about AED 23,500 a year for these, excluding cleaning, which the guest pays per stay.
Why publish this case before the outcome is known?
Because a case study with an open ending is worth more than a success story told afterwards. The long-term figures are complete and verified. The short-term figures are a calculation with clearly stated assumptions, and we will add the actual numbers as they come in. Showing only finished results shows no method.
Sources
- UAE Central Bank Rulebook, Regulations Regarding Mortgage Loans, https://rulebook.centralbank.ae/en/rulebook/regulations-regarding-mortgage-loans (accessed 5 September 2026).
- Dubai Land Department, Request for Mortgage Registration, https://dubailand.gov.ae/en/eservices/request-for-mortgage-registration/ (accessed 5 September 2026).
- Dubai Land Department, Property Sale Registration (transfer fee and process), https://dubailand.gov.ae/en/eservices/property-sale-registration/ (accessed 5 September 2026).
- Dubai Land Department, Rental Index, https://dubailand.gov.ae/en/eservices/rental-index/ (accessed 5 September 2026).
- GuestReady, Dubai holiday home licence: complete 2026 guide (DET portal, fees, Tourism Dirham, eight-unit limit for individuals), https://www.guestready.com/guides/holiday-home-licence-dubai/ (accessed 5 September 2026).
- Houst, Dubai holiday home permit: rules, fees and VAT (2026), https://www.houst.com/blog/dubai-holiday-home-permit (accessed 5 September 2026).
- UAE Federal Tax Authority, https://tax.gov.ae/en/ (accessed 5 September 2026).
- Nexus Bridge Capital, Case study 01: financing approved despite a job change, Dubai Marina (German), https://www.nexusbridgecapital.de/fallstudien/finanzierung-trotz-jobwechsel-dubai-marina/
- Nexus Bridge Capital, Case study 02: purchase support, Al Furjan studio (German), https://www.nexusbridgecapital.de/fallstudien/kaufbegleitung-studio-al-furjan/
- German original of this case study, https://www.nexusbridgecapital.de/fallstudien/ferienapartment-statt-langzeitmiete-dubai/
DT
Written by Denise Tanrikul, Managing Partner · Reviewed by Martin Krygier, Manager, himself a property buyer, refurbisher and landlord in Germany and Dubai
Last reviewed 5 September 2026. Regulatory statements come from the primary sources linked at the foot of each page (UAE Central Bank, Dubai Land Department, federal authorities) and are refreshed at least quarterly. Bank terms change at short notice, always confirm the current position with the lender before deciding.