How to Judge Rental Yield on a Property Abroad

Start by deleting the gross number

Gross yield is annual rent divided by price. It ignores everything that actually happens to the money. Begin instead with expected annual rent, then subtract in order: management, service charges or strata fees, local property and income tax, insurance, maintenance reserve, and an honest void allowance.

For short-let markets, the void allowance is the decisive input. A villa marketed at 85% occupancy that achieves 62% will miss its projected return by a third, and no amount of design compensates for that arithmetic.

Currency is part of the return

An Indian buyer earning dirhams or euros and spending rupees carries currency exposure in both directions. Over a ten-year hold, the currency path can matter as much as rental performance — which is one reason hard-currency income is often the actual objective, not yield.

Rental guarantees deserve suspicion

A guaranteed return is a promise from a company, priced into the purchase. Ask who stands behind it, for how long, what happens at expiry, and what the property earns without the guarantee. If the un-guaranteed number is unattractive, you are buying a bond with a building attached.