Service charges in Dubai: what they cover and how to assess them

Service charges are one of the costs buyers most often underestimate. They are due every year from the owner, whether the property is occupied, rented or vacant.

What they cover

• Maintenance and cleaning of common areas.
• Security, reception and building management.
• Upkeep of shared amenities: pool, gym, lifts, gardens.
• A provision for future major works (reserve fund).

Private consumption (electricity, water) and, depending on the district, central air conditioning (district cooling) are billed separately.

How they are calculated

They are generally expressed as an annual amount per square foot, applied to the property's area. The level is regulated: building charges are subject to a budget checked by the regulatory authorities, and each owners' association is managed by a licensed company.

Why they vary so much

Charges depend on the building's standard and the number of amenities. A tower with pools, a spa, concierge services and large common areas costs more than a simple building. For the same floor area, two properties can have very different charges.

What to check before buying

• The current charge amount per square foot and how it has evolved over several years.
• The building's forecast budget and the state of the reserve fund.
• Any unpaid dues within the owners' association.
• The quality of the building's management.

The impact on yield

On a rented property, charges can represent a significant share of the rent. An attractive gross yield in a building that is expensive to maintain can translate into a modest net yield. Always compare properties on a charges-included basis.

A practical tip

On an off-plan property, ask for an estimate of charges at handover, and remember that final figures are only known after a few years of operation.

To review your project and check the conditions currently in force, book an appointment with Arzouni Properties.