Dubai Property Owners Face Up to 10%increase in service charges this year
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Service charges in Dubai are projected to rise by up to 10% this year due to increases in operating costs such as common area maintenance, increasing district cooling rates, and high electricity costs, according to industry officials. Service charges are a significant consideration when purchasing property, and landlords may raise rents to counteract their influence of higher service charges.
According to Driven Properties, the highest service charges are at Bulgari Resorts and Residences on Jumeirah Bay Island (Dh53.7 per sq ft), followed by Dubai Marina, Business Bay, Downtown, Blue waters, and others. The lowest rates are found in Jumeirah Village Circle, Marjan, Jumeirah Lake Towers, and Dubai South.
Why are services charges increasing
A service charge is a periodic fee that homeowners pay to cover the upkeep and repairs of their residential building or area, as well as all shared facilities. Maintenance, preservation, safety, landscaping, garbage disposal, repairs, general property and community upkeep, management and administration, and utilities may all be subject to service charges.
Regulatory conformity: Adhering to new regulatory environmental and safety regulations increases the financial burden.
According to Hadi Hamra, managing partner of Driven Properties, “We’re forecast a 5 to 10% rise in service charges across Dubai in 2025, depending on the age and condition of each development.”
“Higher Dewa (Dubai Electricity and Water Authority) rates, along with increasing district cooling charges, have had a substantial impact on operational expenses. “As buildings age, maintenance costs rise, necessitating more frequent repairs and upgrades,” explained Anmoll Shroff, ceo and director of Elton Real Estate Development.
How will the 10% increase impact property owners
Shroff stated that property owners in Dubai frequently boost rents to offset greater maintenance charges, but the ability to pass on these expenses is contingent on market demand and the Real Estate Regulatory Authority’s (RERA) rental index restrictions.
“In competitive areas, landlords might cover costs to retain tenants, while high-demand areas may allow for rent increases,”
According to Hamra, service charges do impact buyers, but they are rarely the most important element in choosing a house. “Most purchasers prioritize location, possible return on investment, and a community’s total lifestyle choices. Of course, hefty or rapidly growing service fees can be a deterrent, but in most situations, they’re just one aspect of the entire equation that prospective purchasers examine.”
How to navigate the changes
The DLD oversees real estate transactions in Dubai and collects fees for each sale, mortgage, and registration. Here are the current rates:
Property Transfer Fee: 4% of the property’s value (typically shared by buyer and seller).
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