News
Lower service charges will help property market recover
Dubai housing market can recover faster than anticipated if service charges are more rational, according to experts.
Many landlords in the city complain of irrational amounts of service charges being levied by the developers. This not only reduces the rental value for them, but also deters potential investors from investing in the market, they say.
According to Laura Adams, Manager, Residential Sales & Leasing, Head Office at Better Homes, service charges can be one of the important factors to determine how fast the property market will move north.
“Yes, of course. It’s [service charge] certainly a contributing factor especially now that rents have become more affordable and owners are finding it hard to get a return on investments,” she told this website.
“Service charges are a concern for many property owners, however the real question is do service charges represent good value for money? This is a question investors need to ask themselves. First of all, will properties be well maintained? If investors or end-users are confident they are getting better value for money from their service charges, this in itself will attract better rental rates, improve the value of the property, which in turn will stimulate the market,” Vineet Kumar, Head of Business Development, Asteco Property Management, Dubai, told Emirates 24|7.
Of late, a few developers have reduced their charges on some of their developments but investors say the money being taken from them is still way too much for the quality they deliver.
“I pay around Dh8,000 per annum as service charge for my one-bedroom apartment in International city. On the other hand, an owner of a two-bedroom villa in The Springs is paying less than me. The two communities don’t even compare,” said a disgruntled resident of the Nakheel development.
With rents coming down considerably, service charges are eating into the rental income of landlords. “In some of the developments, service charges take away half of the rent of the owner. Many are caught in a situation when the rental income is barely above the annual service charge payments. They don’t know what to do?” said Zakir, an independent real estate agent in Dubai.