Dubai: Property service charges may rise after record rains

Developers and community managers conduct free cleaning and repairs for residences, helping areas that have been severely damaged


Waheed Abbas

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Published: Tue 7 May 2024, 3:16 PM

Last updated: Tue 7 May 2024, 10:16 PM

Property service charges could go up in Dubai after the unprecedented rains recorded last month, prompting developers to offer free maintenance and carry out cleaning services.

“With the government mandating all developers and community managers to conduct the cleaning and repairs for residences free of cost, it is expected to alleviate the inconvenience caused to residents, particularly in communities that have been severely damaged by the rains. We would see this impact be reflected in higher service charges and insurance premiums over the near term,” said Prathyusha Gurrapu, director and head of research and consultancy at Cushman & Wakefield Core.

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As reported by Khaleej Times earlier, Dubai’s top developers, Emaar Properties, MAG, Damac Properties, Nakheel, Dubai Holding, Union Properties and Dubai Investment Park, offered free services to tenants affected by the heavy rains that lashed the city in April.

This means people residing in the major freeholder areas in Dubai, such as Business Bay, Downtown, Jumeirah Beach Residence (JBR), Jumeirah Lake Towers (JLT), International City, Palm Jumeirah, Damac Hills, Dubai Marina, Mudon, Discovery Gardens, Remraam, Arabian Ranches and many others will benefit from these initiatives driven by the government and private developers.

Gurrapu added that how the community management challenges were handled in the aftermath of heavy rains “are expected to affect overall decision-making in addition to location and pricing for buyers and tenants when looking at locations to buy or rent".

According to Cushman & Wakefield Core, over 8,351 units were handed over in the first quarter of 2024, while an additional 29,690 units are expected to be handed over between Q2 to Q4 2024, bringing the yearly forecast for 2024 to nearly 38,000 units.

Data from the Dubai Statistics Centre reveals that from January to March 2024, the population rose by 25,776, with the supply numbers being delivered being absorbed by the population growth.

No oversupply fear

Gurrapu stressed that there is no concern about oversupply in the residential property market in Dubai.

“The overall residential supply delivery figures remain in line with our forecasts with no major headwinds of oversupply in the near term. However, significant project launch volumes may impact the supply-demand equilibrium after 2 to 4 years when most of these projects are scheduled for delivery, provided they are delivered on time,” she said.

According to Cushman & Wakefield Core, city-wide rents increased for the 13th consecutive quarter, rising by 20 per cent year-on-year increase. The rents are higher by 72 per cent than in Q1 2020.

"Household incomes aren’t increasing in line with the rising rents, further contracting disposable incomes," Gurrapu said.

She added that the rising rents and rental yield levels are also expected to trigger end-user purchases, particularly in the ready market as mortgage costs are expected to moderate over the coming quarters, while rents are Gurrapu to continue their upward trajectory.

Gurrapu also added that the Real Estate Regulatory Authority’s (Rera) rent calculator, which was recalibrated on March 1, 2024, to be better aligned with open-market pricing, will help reduce the disparity between renewals and new rents.

“The calibration of the calculator is expected to result in a sharp slowdown in disputes over rental increases,” she said.


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