Dubai: Dubai’s Real Estate Regulatory Agency (Rera) will be issuing a service fee index next month, top Rera official told Gulf News.
Marwan Bin Galitah, CEO of Rera, said: “The service index will define fair service fees and will analyse not only cost but also quality, providing a sliding scale for basic to premium service.”
“While the implementation of the index would not compulsory, it will bring more transparency into the market and reduce the disputes about service fees.”
“Investors and end-users are now seriously considering the kind of service charges being levied before making a decision to buy a property in Dubai, or not,” he said.
“Also, an increasing number of owners are unhappy with the high service charges they have to pay as it is eating into the rental yield, which has come down considerably after the price correction in the property market.”
“This year we could decrease the service fees by 17 per cent in different areas in Dubai to an average of Dh11.5 per Square feet.”
Moreover, Rera approved the services fees of 541 projects in 17 different areas in Dubai this year including, Dubai Marina, JLT, Business Bay, International City, TECOM, Dubai Silicon Oasis, Down Town Burj Khalifa, Motor City, Emirates Hills, The Greens, Arabian Ranches, Discovery Gardens, Dubai Media City, JBR, Jumeirah Village, Jumeirah Palm, Dubai Sport City.
Bin Galitah said that the service fees fund the upkeep of a building, from utilities to security to cleaning and should be regulated.
“The goal would be to counter pressure to simply slash costs and possibly quality, especially as competition in the growing facility management industry intensifies.”
Owner associations, real estate companies and services providers in the market will take part in setting up this index.
“If you are paying a high rent. you’re probably happy to pay a higher service charge because you would expect higher services, however, there is no consistency as the developers concerned about returns more.”
“Nowadays, there are different parameters in the cost per square foot as well as solving disputes over service charge has no standard,” Bin Galitah said.
Communities such as Downtown and The Palm have high service fees because of their high construction quality, amenities, facilities and common areas that are available across the properties within this development. Communities such as International City and Discovery Gardens have the lowest due to the lack of parking, facilities and amenities; however, properties such as The Greens and buildings in Dubai Marina and JLT tend to charge high service fees without the support services to justify the figures.
These charges vary for a number of reasons. Some projects charges are low but it has many units to share the cost and Discovery Gardens for instance has the District Cooling charges included. Others like Burj Khalifa are paying high charges because of the quality of service, it is a prestigious building and because of its height, is more costly to maintain and operate
Decision to purchase
Muhannad Al Wadiya, managing director of Harbor Real Estate, told Gulf News, that there is no doubt that service fees have a great influence on the decision to purchase. However, it has witnessed humongous declined this year.
Since Rera is regularly working hard to upgrade its legislative infrastructure as well as there are more service provider are coming into the market, Al Wadiya is expecting further decline in the service fees.
According to Rera all real estate service fees should be approved by Rera otherwise has the right to complaint.
He highlighted that all real estate community should set up owners’ association to be registered for Rera and ta have the top hand to manage and protect the assets and service fund of the property from A to Z.
He said that the Land Department recommends the establishment of property owners’ associations to properly manage the service fees and to fast-track solutions to disputes between property owners, developers and tenants.
“In Dubai, we have around 291 property owners’ associations while it should be around 1,900. But we plan to increase the number and promote this concept,” he said. “These associations will maintain relations between all parties concerned and reduce the number of disputes by clarifying the rights and duties of each stakeholder.”
Moreover, it would represent property owners at government departments as well as in court.