Playbooks / Property
Transaction cost drag and the minimum hold
The rule
Property has a toll booth at both ends. In Dubai the entry costs about six to seven percent of the price and the exit about two to three percent, so the round trip is somewhere between eight and ten percent depending on whether you use an agent on both sides and whether there is a mortgage to discharge.
That cost does not scale with your holding period. It is the same whether you keep the asset for eighteen months or eighteen years. Which means the only variable you control is what you divide it by.
| Hold period | Round-trip cost of 9%, annualised |
|---|---|
| 1 year | 9.00% |
| 2 years | 4.50% |
| 3 years | 3.00% |
| 5 years | 1.80% |
| 7 years | 1.29% |
| 10 years | 0.90% |
Set that against a net rental yield of four and a half percent. At a two year hold, transaction costs consume the entire yield and then some. At seven years they take under a third of one year's income. Nothing about the property changed. Only the denominator did.
What this means in practice
It means the phrase "flipping" describes a strategy that has to overcome a nine percent handicap before it earns anything, which is why it works in rising markets and destroys people in flat ones. It means a purchase you are not confident holding for at least four to five years is a purchase that needs capital growth to rescue it. And it means the single highest leverage decision in property is not which unit you buy but how long you commit to holding it.
The 2026 context
This matters more than usual right now. Dubai residential prices were roughly flat year on year in June 2026, around ten percent off their peak, after several years of exceptional growth. In a market rising fifteen percent a year, transaction costs are noise. In a flat one, they are the whole story: a nine percent round trip on a flat market held for two years is a nine percent loss before you count the service charges.
The honest read of a flat market is not that property is bad. It is that the minimum hold period got longer, and anyone whose plan required a two year exit now needs a five year one.
The arithmetic
Where it breaks
- It treats the round trip as certain. In a strong market a seller may pay no commission, and in a weak one they may pay a discount far larger than any of these fees.
- It ignores the cost of the time itself. Property that takes six months to sell has a holding cost during those six months that does not appear in any fee schedule.
- It is Dubai specific in its numbers. Stamp duty in the UK, notary and registration costs in much of Europe, and US closing costs and agent fees all produce different figures, some considerably higher.
- Amortising a fixed cost over a longer hold does not make the cost smaller, only the annual figure. It is a legitimate way to look at it and a poor way to justify holding an asset you should sell.
When to use it
Before every purchase, as a sanity check on your intended hold period. Also before every sale, to see what the exit actually costs relative to the reason you are selling.
Sources
Last reviewed . Commercial relationship disclosure: the author works in Dubai real estate brokerage. See the disclosure standards. Disclosure standards.