What is Net IRR?
Внутренняя норма доходности инвестиции, рассчитанная после вычета всех комиссий за управление, carried interest и расходов фонда, отражает фактическую доходность инвестора.
Description
Net IRR (Internal Rate of Return) is the annualized return an investor actually receives after all fees and expenses have been deducted. Unlike gross IRR, which shows returns before fees, net IRR reflects the true economic outcome for the limited partner or individual investor. It accounts for the timing and magnitude of all cash flows, contributions, distributions, and the final exit.
The gap between gross and net IRR is the total cost of fund management. A fund advertising 18% gross IRR might deliver 13% net IRR after a 2% management fee and 20% carried interest. This 5-percentage-point difference is significant over a 5-7 year hold period and can represent hundreds of thousands of dirhams on a large investment.
Core funds: 6-8% net IRR
Value-add funds: 10-14% net IRR
Opportunistic funds: 15-20%+ net IRR
Dubai real estate has historically delivered strong net IRRs, particularly in well-timed off-plan investments. An investor who purchased a Dubai Hills unit off-plan in 2019 at AED 1.2M and sold post-completion in 2024 at AED 2.1M, after fees and holding costs, might have achieved a net IRR exceeding 15%.
Формула
Net IRR = IRR of all investor cash flows (contributions and distributions) after all feesHow to interpret
Always ask for net IRR when evaluating a fund or platform. Gross IRR flatters managers and does not reflect what you actually earn. When comparing investments, use net IRR as the primary metric because it is the only number that accounts for the full cost of accessing the returns.
Net IRR is sensitive to timing. A fund that earns 20% gross IRR but charges 3% per year in fees will deliver 17% net IRR at most, before performance fees. A fund that earns 15% gross with 1.5% fees and efficient exit timing may actually deliver comparable or better net returns to investors.
Контекст рынка Дубая
Dubai's strong price appreciation cycle from 2020 onwards has produced exceptional gross IRRs, particularly for off-plan investors. However, transaction costs in Dubai are high by global standards: the 4% DLD transfer fee, 2% broker commission, and mortgage costs can consume 7-9% of capital on entry and exit, compressing net IRR notably on short hold periods.
DIFC-regulated fund managers must disclose fees clearly in offering documents. Comparing net IRR track records across managers is the most reliable way to assess real performance. Be skeptical of fund managers who only present gross IRR without breaking down how fees affect investor returns.
Frequently asked questions
The internal rate of return on an investment calculated after deducting all management fees, performance fees, and fund-level expenses, reflecting the investor's actual annualized return.
The standard formula is: Net IRR = IRR of all investor cash flows (contributions and distributions) after all fees. Applying it consistently lets you compare projects on a like-for-like basis, which is the point of the metric.
Always ask for net IRR when evaluating a fund or platform. Gross IRR flatters managers and does not reflect what you actually earn.
Dubai's strong price appreciation cycle from 2020 onwards has produced exceptional gross IRRs, particularly for off-plan investors. However, transaction costs in Dubai are high by global standards: the 4% DLD transfer fee, 2% broker commission, and mortgage costs can consume 7-9% of capital on entry and exit, compressing net IRR notably on short hold periods.
Oliva feeds Net IRR into a proprietary 6-dimension score that rates eparticularly Dubai project on Financial Value, Market Dynamics, Location, Developer Trust, Risk, Macro Context, and Liquidity. This keeps comparisons consistent across hundreds of listings.
Core funds: 6-8% net IRR Value-add funds: 10-14% net IRR Opportunistic funds: 15-20%+ net IRR Dubai real estate has historically delivered strong net IRRs, particularly in well-timed off-plan investments. An investor who purchased a Dubai Hills unit off-plan in 2019 at AED 1.2M and sold post-completion in 2024 at AED 2.1M, after fees and holding costs, might have achieved a net IRR exceeding 15%.
Stop reading theory. See net irr on real Dubai projects.
Oliva shows this metric live on 1,000+ Dubai projects, alongside 7 other data points that actually predict returns. DLD and RERA licensed, free to browse.
This content is for educational purposes only and does not constitute investment, financial, legal, or tax advice. Yields, returns, and market data referenced are historical or estimated and are not guaranteed. Capital is at risk. Seek independent professional advice before making investment decisions. Oliva is a licensed Dubai real estate advisor (DLD Broker Card: 92025, RERA BRN: 1573501). Read our Key Risks Disclosure and Disclaimer.