Service charges, explained
The cost that decides your real yield.
- Reading time
- 5 min
- Reviewed
The short answer
Service charges are the annual cost of running your building, charged per square foot and set per project. In Dubai they range from single digits per square foot to well over thirty, and they come straight off your rental income, which is why a gross yield quoted without them is close to meaningless. Get the actual figure for your building before you buy.
Ask Noor to explain this simplyWhat they pay for
Service charges cover the building's shared costs: maintenance, security, cleaning, insurance, the pool and gym, chilled water infrastructure, and a reserve fund for major works. They are charged per square foot of your unit, per year.
They are approved per project and published by the Dubai Land Department, which means the figure for a specific building is a matter of record rather than something to be estimated.
Why the range is so wide
A simple low-rise block with a small lobby costs a fraction of a serviced tower with a concierge, multiple pools, a chilled-water plant and extensive shared amenity. Both are legitimate; they are simply different products with different running costs.
The trap is comparing two properties on price per square foot without comparing what they cost to hold. A cheaper apartment in an expensive building can easily be the worse purchase.
What it does to yield
Service charges come off rental income before anything reaches you. On a typical apartment they can account for one to two percentage points of yield, sometimes more, which is often the entire difference between the yield quoted in a listing and the yield you actually receive.
Our yield calculator takes them off explicitly for exactly this reason. Put the real figure for your building in and the answer changes.
What to ask
Ask for the current approved figure per square foot, the last three years of it, and whether any major works are anticipated. A building that has under-collected for years and faces a large reserve contribution is a liability that does not show up in the asking price.
- The current approved rate per square foot.
- The trend over the last three years.
- The state of the reserve fund.
- Any anticipated major works.
Asked and answered
How much are service charges in Dubai?
They vary from single digits per square foot per year to well over thirty, depending entirely on the building and its amenities. There is no useful average, the figure that matters is the one for the specific building you are buying in, and it is published per project.
Can service charges go up?
Yes. They are reviewed and approved periodically, and they generally rise over time. A building facing major works can see a sharp increase, which is why the reserve fund is worth asking about.
Who pays them, the owner or the tenant?
The owner. That is precisely why they matter to your yield, the rent your tenant pays is not what you keep.
Ask the specific version of this question.
A guide describes how something works in general. Your answer depends on the property, the building and your circumstances, which is a conversation, not an article.
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