Service charges are the single most overlooked cost in Dubai real estate. They can make the difference between a profitable investment and a money pit.
What Are Service Charges?
Annual fees covering common area maintenance, building insurance, security, elevators, pool/gym, pest control, and sinking fund (reserve for major repairs). Charged per square foot of your unit.
How Much Are They?
Apartments
| Category | AED/sqft/year | 1,000 sqft example |
|---|---|---|
| Budget | AED 8-12 | AED 8,000-12,000 |
| Mid-range | AED 12-18 | AED 12,000-18,000 |
| Premium | AED 18-25 | AED 18,000-25,000 |
| Ultra-luxury | AED 25-40+ | AED 25,000-40,000+ |
Villas
| Category | AED/sqft/year | 2,500 sqft example |
|---|---|---|
| Community | AED 2-4 | AED 5,000-10,000 |
| Premium | AED 4-6 | AED 10,000-15,000 |
| Luxury estates | AED 6-10 | AED 15,000-25,000 |
How They Affect Your Yield
Two AED 1M apartments compared:
- JVC (AED 12/sqft): AED 60K rent – AED 9K charges = 5.1% net yield
- Palm (AED 25/sqft): AED 80K rent – AED 22.5K charges = 5.75% net yield
Despite AED 20K more rent, the Palm apartment only nets 0.65% more because service charges eat the premium. Always calculate net yield after service charges.
Who Sets Them?
- Developer initially sets the rate
- Owners' Association takes over once formed
- RERA regulates and publishes the Service Charge Index
Can They Increase?
Yes. New buildings (years 1-3) often see 10-20% increases. Ageing buildings (10+ years) may face spikes for major repairs. RERA requires OA approval for significant increases.
Red Flags
- No breakdown provided — You're entitled to detail
- Unusually low on new buildings — Developer may be subsidising
- No sinking fund — Emergency levies coming
- Outstanding dues from previous owner — Can transfer to you
- Hotel-serviced apartments — Highest charges; verify the premium justifies it
How to Check Before Buying
- Ask for service charge statements (past 3 years)
- Check RERA Service Charge Index
- Ask about the sinking fund
- Check for outstanding dues
- Read OA meeting minutes
- Calculate net yield using actual charges
Need Help Evaluating Service Charges?
We run the numbers before you buy — so you know your true yield.