Calculating the Return on Your Real Estate Investment

Real estate return is measured mainly by rental yield: the net annual rental income divided by the property's total cost, expressed as a percentage.

For an accurate figure, subtract the actual costs from the rent (maintenance, fees, vacancy periods, property management) to reach the net, not the gross. Then factor in the expected capital growth (the property's appreciation), which you read from the market trend.

Before investing: compare the yield against alternative areas, study rental demand in the district, and don't build your expectations on best-case scenarios. Use the official Real Estate Price Index to understand the general trend.

Source: Real-estate valuation principles and the Real Estate Price Index, General Authority for Statistics — stats.gov.sa