How are service charges calculated?
Service charges in Dubai are calculated per square foot (sqft) per year based on the gross floor area of your unit, including balconies and shared common-area allocations. The rate is set by the Owners Association (OA) or, in its absence, by the master developer. RERA supervises the calculation and publishes the annual RERA Service Charge Index, which lists the rates of thousands of buildings.
The calculation is based on an annual budget covering maintenance, staffing, insurance, utilities for common areas and reserves for major maintenance. This budget is apportioned among all owners in proportion to their floor area.
Payment is generally made in one or more instalments per year, in advance. In the event of non-payment, the Owners Association can place a lien on your property and, in extreme cases, seek a forced sale of the unit through the courts.
Indicative rates by building and community
Rates vary considerably. Below is an indication for sought-after areas (in AED per square foot per year):
Budget-friendly buildings: International City (AED 8–12/sqft), Discovery Gardens (AED 10–14/sqft), Dubai Silicon Oasis (AED 10–15/sqft), standard towers in Jumeirah Village Circle (AED 10–15/sqft).
Mid-market: standard Dubai Marina towers (AED 15–22/sqft), Business Bay (AED 14–20/sqft), JLT (AED 12–18/sqft), Dubai Hills Estate apartments (AED 15–20/sqft), Town Square (AED 12–16/sqft).
Premium: Downtown Dubai (AED 22–35/sqft), Palm Jumeirah apartments (AED 25–40/sqft), DIFC (AED 30–45/sqft), Bluewaters Island (AED 30–40/sqft), Emaar Beachfront (AED 22–30/sqft).
Ultra-luxury: The Address towers (AED 35–50/sqft), One Palm (AED 45–55/sqft), Bulgari Residences (AED 50+/sqft).
For a 1,000 sqft apartment (93 m²), this translates into an annual service charge of AED 10,000 in a budget building up to AED 50,000 in an ultra-luxury tower, approximately USD 2,700 to USD 13,600 per year.
What is included in the service charges?
Service charges cover a wide range of services that vary by building:
Typically included: maintenance and cleaning of the lobby, corridors and lifts. Security and CCTV monitoring (24/7). Maintenance of the swimming pool, gym and other facilities. Waste removal. Pest control. Building fire insurance (not your individual contents). Maintenance of the building exterior, including facade cleaning.
Often included in premium buildings: concierge services. Valet parking. Maintenance of private beaches or pools. Landscaping. Maintenance of playgrounds and parks.
Not included: DEWA (water and electricity) for your individual unit. Chiller costs for air conditioning (billed separately in some buildings, included in others). Internet and television. Individual contents insurance. Repairs inside your own unit.
Note: in some buildings (particularly in older districts and the DIFC free zone), chiller costs are billed separately. This can be a significant additional cost of AED 5,000–15,000 per year, depending on the size of your unit and your usage.
RERA oversight and the Service Charge Index
RERA plays an active role in regulating service charges. Its main instruments are:
The RERA Service Charge Index: an annually published overview of service charges per building in Dubai. Owners can benchmark their rate against comparable buildings. The index is publicly available via the DLD website and the Dubai REST app.
Mandatory budget approval: the Owners Association must present the annual budget to the owners. In buildings with an active OA, owners have voting rights over the budget. RERA can intervene if the budget is found to be unreasonable.
Transparency requirements: the managing agent is obliged to provide a detailed breakdown of costs. Owners are entitled to inspect the accounts and supplier contracts.
Maintenance reserve fund: RERA requires that part of the service charges be set aside for major maintenance (a sinking fund). This prevents owners from later facing unexpected large outlays.
How to dispute unreasonable service charges
If you believe your service charges are unreasonably high, you have several options:
Step 1: Request a detailed breakdown from the managing agent or Owners Association. You are legally entitled to this.
Step 2: Compare your rate with comparable buildings via the RERA Service Charge Index. If your rate is significantly higher, you have grounds for objection.
Step 3: File a formal objection with the Owners Association at the annual general meeting. Gather support from other owners: decisions are taken by majority vote.
Step 4: If the OA does not respond or you disagree with the outcome, you can lodge a complaint with RERA through the Owners Association Regulatory Management System. RERA can commission an audit and require the managing agent to lower the rate.
In practice, most service charge disputes can be resolved by enforcing transparency. High rates often turn out to be the result of inefficient management or overpriced supplier contracts, which the OA can renegotiate.
Service charges and your yield calculation
Service charges are a direct deduction when calculating your net rental yield. A realistic example:
Apartment in Dubai Marina, 1,000 sqft. Purchase price: AED 1,500,000. Annual rent: AED 100,000 (gross yield: 6.7%). Service charges: AED 18,000/year. DEWA and chiller: AED 8,000/year. Insurance and maintenance: AED 3,000/year. Net rental income: AED 71,000/year (net yield: 4.7%).
The difference between gross and net yield is therefore approximately 2 percentage points, of which service charges make up the largest share. At Augusta Properties, we obtain the current service charge documentation as standard before presenting a property to you, so you can always calculate a realistic yield.