RERA’s Index opens a window on Dubai service and maintenance charges

Over the past few years, Dubai property has offered some of the best returns in the world, so with the eyes of international investors firmly fixed on the area, the Real Estate Regulatory Agency (RERA) has recently launched a new Service Charge and Maintenance Index, designed to bring more transparency to these charges.

RERA, the regulatory arm of the Dubai Land Department, has compiled a list of itemised annual service charges for 300 buildings located in 22 property hotspots – with data verified by owners’ associations and real estate developers - so property investors can get an overview of the rates being paid.

The level of charges has been determined by a formula calculated in dirhams-per-square-foot and service charges have been found to vary widely, between 8.12 AED per square foot and 20.88 AED per square foot. Following the index’s recent launch, newspaper The National used RERA’s data to calculate the highest area charges and discovered that properties located in the Burg Khalifa area paid the highest rates, while Dubai Marina came in second highest. At the other end of the spectrum, owners at International City (Phase 1) paid some of the lowest rates.

Service and maintenance charges have caused much controversy in the past, with property owners complaining that developers charged excessively and developers countering that reducing charges would lead to poor maintenance standards, adversely affecting the condition of buildings in the long term.

In recent years, property owners have faced steep increases after developers kept service charges low to attract buyers, then raised them to reflect their true costs. Disputes have led to developers cutting off air conditioning, shutting gyms and draining swimming pools as they attempted to force owners to pay outstanding bills.

RERA’s index, which will be regularly updated, is divided into four main property categories: apartments, shops, offices, and villas. Updates will be carried out via the “Mollak” system, which was set up specifically to help property developers and owners’ associations comply with RERA’s registration and management requirements.

It has so far included properties in twenty-two major development areas, including Business Bay, Jumeirah Beach Residence, Jumeirah Lakes Towers, Dubai Marina, International City, Motor City, and Silicon Oasis. It’s a positive start for RERA’s new Index and it's Senior Director, Mohammed Khalifa bin Hammad, is determined to extend its reach in the coming months: “In the near future we aim for the index to cover all of the Emirates’ urban areas.”

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