All About Service Charges in Dubai

 

Property Service Charges have never been a unanimously favored subject when it comes to talking real estate. They affect a buyer/ landlord and a tenant in different ways and thus there have always been different opinions on how beneficial or otherwise, they prove to be in a transaction.

A buyer, for instance, invests in a property to create a solid profiteering asset over a period of time as its value keeps increasing given the market conditions remain suitable. However, different types of service charges affect the property value by increasing the cost and makes the long-term investment seem less attractive.

To better analyze this, let us quickly understand what these service charges really are.

A service charge is a fee paid by a property owner to either a developer or an owners’ association (OA), primarily for maintaining the common areas of a building or community, including indoor and outdoor elements like corridors, elevators, landscaping, security, swimming pools, etc.

So basically they are paid against the costs to keep a real estate entity functioning properly on a regular basis. In addition, it also includes a certain calculated sum called the Sinking Fund or Reserve Fund which is allocated for major long-term expenses that may arise out of general wear and tear of the building and related assets.

Landlords or buyers pay these charges to the building or community owner in exchange for stress-free property management. If the property is leased to a tenant, short-term or long-term, a portion of these charges is computed in the rental price that the tenant pays to the landlord. In both cases, both the landlord and the tenant reap the benefits of clean, well-maintained common spaces, waste disposal management, security, landscaping and other related management costs.

The counter-argument often stated is that do service charges impact the marketability and rentability of a property?

Well, if the services provided for the charges being levied appear justified, those communities and properties will continue to thrive and remain popular. However, unscrupulous practices have at times led to extremely high service charge levels, not justified by the operating costs for maintenance, thereby impacting the return on investment negatively. An unregulated service fee level with low quality of service can be detrimental to the property valuation and to its leasing or sale potential.

To state the facts, the price of an apartment, villa or a commercial unit is regulated not just by its size, floor plan, and location but also the cost of maintaining it correctly. This is where service charges affect the potential of an investment. You might pay for a stunning villa with a swimming pool but with lousy and ineffective maintenance, you might end up burning a hole in your pocket when things come crashing down. Inevitably ruining your investment’s health.

On the other hand, paying a fairly calculated service fee accompanied with qualified and ethical property management will actually add to your investment by increasing its sale or rental value over time.

Having said that, let us take a quick look at fäm's personalized Service Charge Index below that allows clients and potential buyers to inquire about the approved and accurate service charges and fees of all projects across Dubai. It provides the minimum charges and maximum charges of the community as well as detailed rates on service charges, sinking fund, and AC of each project.

Community Minimum Charges Maximum Charges
Al Barari Service Charges 6.82 6.82
Al Furjan Service Charges 2.24 28.42
Al Waha Service Charges 4.27 4.38
Arjan Service Charges 9.81 17.75
Burj Khalifa District Service Charges 9.33 112.18
Business Bay Service Charges 1.39 35.12
Culture Village Service Charges 9.74 20.13
Discovery Gardens Service Charges 7.42 29.28
Downtown Jebel Ali Service Charges 28.66 29.79
Dubai HealthCare City Service Charges 20.43 34.36
Dubai Investment Park Service Charges 4.55 19.82
Dubai Marina Service Charges 1.62 55.77
Dubai Production City Service Charges 4.16 24.14
Dubai Silicon Oasis Service Charges 2.02 35.58
Dubai Sports City Service Charges 2.27 676.10
Dubai Studio City Service Charges 11.12 12.24
Dubai Water Front Service Charges 15.78 15.82
Dubai World Central Service Charges 14.89 14.90
Emirates Hills Service Charges 1.70 4.14
Festival City Service Charges 4.10 22.42
International City Service Charges 1.89 26.80
Jumeirah Heights Service Charges 15.08 15.10
Jumeirah Lakes Towers Service Charges 1.23 212.80
Jumeirah Village Service Charges 0.98 17.93
Jumeirah Village Circle Service Charges 0.65 22.35
Jumeriah Beach Residence - JBR Service Charges 3.55 17.78
Legends Service Charges 3.01 14.88
Liwan Service Charges 5.71 11.33
Majan Service Charges 14.88 18.92
Meydan Service Charges 4.52 13.29
Motor City Service Charges 5.40 23.92
Mudon Service Charges 0.83 6.66
Palm Jumeirah Service Charges 0.05 57.80
Remraam Service Charges 13.92 16.81
Residential Complex Service Charges 3.90 16.79
The Greens Service Charges 1.58 28.25

 



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