Turnover rent: read a retail income calculation properly
A retail lease may link some rent to the tenant's sales. To evaluate the investment, identify the exact formula, the definition of turnover and the evidence available to verify it. Similar marketing descriptions can produce very different payment amounts.
Read the formula before using the percentage
Two common structures to investigate are a base rent plus a percentage component, and the higher of a base rent or a percentage of turnover. These examples describe possible contract structures, not a statement that any particular Dubai lease uses them.
Assume hypothetical annual sales of AED 5 million, a base rent of AED 300,000 and a turnover percentage of 7%.
| Illustrative structure | Calculation | Annual amount |
|---|---|---|
| Higher of base or 7% of turnover | Higher of 300,000 or 350,000 | AED 350,000 |
| Base plus 7% of turnover | 300,000 plus 350,000 | AED 650,000 |
The difference is AED 300,000. A phrase such as “7% turnover rent” is therefore insufficient for underwriting. Thresholds, caps, concessions and the treatment of VAT can change the calculation further.
Define the sales being measured
Ask how the lease treats online orders, deliveries, refunds, discounts, sales through related businesses and tax. Review reporting periods, access to records, audit rights and the process for settling discrepancies. Use the signed wording rather than a spreadsheet assumption.
Have the tax treatment checked separately. The FTA's real-estate VAT guidance provides the regulatory starting point; it does not define the turnover clause in your private lease.
Separate contracted minimums from variable scenarios
Model any enforceable fixed minimum separately from variable rent. Use documented historical turnover only where the buyer is entitled to receive it, and label future sales estimates as assumptions. Protect the tenant's confidential commercial information.
Before offering on the property, request a reconciliation for at least one complete reporting period: declared turnover, formula, rent invoice and receipt. Ask what happens if trading stops or reported sales fall. The purpose of the calculation is to understand the source and variability of income, not to present the tenant's sales forecast as guaranteed property return.
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Related guide: How to check a commercial property's rent roll.
Sources and scope
Official references checked on 29 October 2026: FTA: Real Estate VAT Guide. The comparison methods and hypothetical examples are Livrichy planning aids. Official sources do not endorse the examples; confirm current requirements for the actual transaction.