Dubai property: Up to 10% rise in service charges this year

Khaleej Times

26-02-2025

Service charges in Dubai are expected to jump by up to 10 per cent this year due to a rise in operational costs such as maintenance of common areas, increased district cooling charges and high utility costs among others, say industry executives.
According to industry players, service charges play an important role in decision-making when buying property, and sometimes landlords raise rents to offset the impact of higher service charges.
According to Driven Properties, the highest service charges are at Bulgari Resorts and Residence in Jumeirah Bay Island at Dh53.7 per square foot (sqft), followed by Dubai Marina, Business Bay, Downtown, Bluewaters and others. The lowest rates are in Jumeirah Village Circle, Marjan, Jumeirah Lake Towers and Dubai South.
'On average, service charges across Dubai rose by around 10 per cent in 2024. This increase varies from community to community, often reflecting the specific amenities and upkeep requirements in each development. In many cases, the rise in service charges has been driven by higher operational costs — such as maintenance of common areas, energy consumption, and staffing needs,' said Hadi Hamra, managing partner at Driven Properties.
' We're projecting a 5 to 10 per cent rise in service charges across Dubai in 2025, depending on the age and condition of each development,' he said.
Service charge is a recurring fee that homeowners pay for the maintenance and upkeep of their residential building or area as well as all common amenities. Service charges can include cleaning, maintenance, security, landscaping, waste disposal, repairs, general upkeep of the property and community, management and administration and utilities.
He stressed that older buildings typically require more frequent maintenance such as upgrades to infrastructure or replacements for outdated equipment and that can push fees toward the higher end of the range. 'Newer or well-managed developments may see lower increases, but overall, steady market growth and inflationary pressures will likely keep service charges on an upward trend.'
Anmoll Shroff, founder and chairman of Elton Real Estate Development, said service charges in Dubai have been increasing due to inflation and the rising costs of materials, labour, and utilities.
'Higher Dewa (Dubai Electricity and Water Authority) bills, along with increased district cooling charges, have significantly impacted operational expenses. As buildings age, maintenance costs escalate, requiring more frequent repairs and upgrades."
Regulatory compliance with stricter government safety and sustainability measures further add to the financial burden. Facility management fees for services like security, landscaping, and cleaning continue to rise, while community enhancements such as upgraded gyms, pools, and landscaped areas contribute to higher expenses,' he said.
Service charges influence property buyers
Shroff noted that property owners in Dubai often raise rents to offset higher service charges, but the ability to pass on these costs depends on market demand and the Real Estate Regulatory Authority's (RERA) rental index regulations.
'In competitive areas, landlords may absorb costs to retain tenants, while high-demand locations may allow for rent increases,' he said.
Hamra said that service charges do influence buyers but they're usually not the primary factor in deciding on a property. 'Location, potential return on investment, and a community's overall lifestyle offerings tend to rank higher on most buyers' checklists. Of course, steep or rapidly rising service fees can be a deterrent, but in most cases, they're just one part of the overall equation that potential purchasers consider,' he added.