Commercial vacancy: build a cash-flow stress test
A commercial vacancy affects more than rent. The owner may still pay building charges, insurance and other property costs while funding preparation for the next occupier. Build a monthly cash schedule before deciding how much reserve an investment needs.
Separate three cash flows
First, record income that would disappear during vacancy. Second, list cash expenses that continue. Third, identify one-off works and leasing costs triggered by a change of tenant. This distinction prevents lost income from being counted as an additional cash bill.
Consider a hypothetical property with expected rent of AED 50,000 per month, continuing owner costs of AED 8,000 per month and AED 90,000 of reletting works. Ignore borrowing and taxes only for this teaching example.
| Vacancy assumption | Rent not received | Continuing costs plus works |
|---|---|---|
| 2 months | AED 100,000 | AED 106,000 |
| 4 months | AED 200,000 | AED 122,000 |
| 6 months | AED 300,000 | AED 138,000 |
The last column shows the illustrated cash requirement during the gap. The lost rent is a separate reduction in the investment's income. If debt payments continue, add them explicitly to the cash requirement.
Build the timing from the property
Ask when the existing occupier would leave, when access for works becomes available, how approvals affect the programme and when a new tenant would start paying. Completion of a fit-out and the first rental receipt are different milestones.
Use the current building charges and an itemised works quotation where available. The DLD Service Charge Index can support the charge check for a Dubai project, but overdue balances and property-specific obligations still need their own evidence.
Keep the reserve available
Decide which funds remain liquid after acquisition. An amount included in the purchase budget cannot simultaneously serve as your vacancy reserve if it will already have been spent on the transfer or fit-out.
Review the scenario against your lease-expiry calendar. Several units becoming vacant together may require more accessible cash even when the annual average return appears acceptable. The worksheet does not predict vacancy; it shows the consequences of the assumptions you choose and helps identify the documents that would make those assumptions more reliable.
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Related guide: How Much Cash Reserve Does a Rental Property Need?.
Sources and scope
Official references checked on 29 October 2026: DLD: Service Charge Index. The comparison methods and hypothetical examples are Livrichy planning aids. Official sources do not endorse the examples; confirm current requirements for the actual transaction.