Every jointly owned building or community in Dubai has a service charge: the annual fee owners pay, per square foot, for security, cleaning, landscaping, lifts, pools, gyms, insurance, management and a reserve fund for major works. The budget is prepared by the management company, approved each year by RERA through its Mollak system, and invoiced to owners — usually quarterly or annually in advance. It is not optional, it does not wait for a tenant, and it is the single biggest reason advertised yields do not survive contact with a bank statement.
For a ready property the charge is a known figure with a history. For an off-plan purchase it is a projection, and this article is mostly about why the projection deserves scepticism and how to replace it with something better.
What the numbers typically look like
Ranges move, and a budget is specific to a building, but as a working guide: villa communities with modest shared amenities currently tend to charge in the region of AED 3 to 6 per square foot a year; mid-rise apartment buildings with a pool and a gym somewhere around AED 12 to 18; high-rise towers with extensive amenities AED 18 to 28; and hotel-branded or serviced residences more again, sometimes considerably. District cooling is frequently billed separately by the cooling provider, as a capacity charge plus consumption, and it can add materially to the running cost of a tower.
On a 1,200-square-foot apartment at AED 20 per foot, that is AED 24,000 a year before cooling — on a unit that might let for AED 120,000. One fifth of the gross rent, gone before management fees, voids or anything else.
Why new buildings are hard to price
The developer's projected service charge at launch is an estimate made before the building exists, before a management company has tendered, and before the first year's actual costs are known. It is often optimistic. In the first years after handover the charge can rise as the real cost of running the amenities emerges, and again when the developer stops subsidising the community to support sales.
The better guide is what comparable delivered buildings by the same developer actually pay, which is a question we can answer from invoices. If the projection for a new tower is meaningfully below its delivered sibling across the road, model the sibling.
The yield in the brochure is calculated before the service charge. The yield you receive is calculated after it. They are different numbers with the same name.
How to read a budget
Owners are entitled to see the approved budget, and a prospective buyer of a ready unit should ask the seller for two years of actual invoices, not the current year's projection. Look at the reserve fund contribution — a low one is a deferred bill. Look at the management fee as a share of the total. Look at whether insurance and cooling are inside or outside the figure. And look at the trend: a charge that has risen faster than rents for three years will keep doing so.
For off-plan, ask the developer three things in writing: the projected charge per square foot, what it includes and excludes, and which management company will run the building. A developer who manages its own communities well — and some do — is worth something here, because the same group that designed the building will be responsible for its running costs.
What you can and cannot do about it
You cannot opt out. You can, as an owner, join or vote for the owners' committee that reviews the budget with the management company, and well-run committees are one reason two similar towers on the same street can differ by a third in what they charge. You can also choose, before you buy, a building whose amenity load matches how you will use it: a rooftop infinity pool, a padel court and a screening room are wonderful and every one of them appears on the invoice.
Our yield calculator asks for the service charge per square foot and the size for this reason, and shows the net figure beside the gross one. If you only take one thing from this article, take that habit.