According to the latest report, high service charges on Dubai property are keeping rental yields low and are thus preventing investors to invest in real estate. As astute investors have entered in the Dubai real estate market, they are keen to consider service charges before investing in any property. Prices already touching bottom level along with the high service charges leave investors with only 4-5 % returns.
Service charges are blamed for eating up the rental yields of the apartments mainly. On the other hand, villas are hot investment options for investors, due to little maintenance cost, leaving returns of around 6-7% for them. This is also one of the main reasons, why villas are showing good recovery in prices as compared to other property units.
Service charges of Dubai property and real estate vary with quality of living, location of property and various other features. Currently, Downtown, Burj Khalifa and The Palm have very high service charges due to quality of construction, provision of the latest amenities and various other luxuries offered in the developments. On the other hand, Discovery Gardens and International City have shown low maintenance charges due to a lack of certain facilities like parking etc.
However, there are also certain communities, which are charging high service charges without justifying any support services. These are JLT, Dubai Marina and Greens, to name a few. The villas are performing well due to high ROI and this is the biggest reason why villa prices have risen more than 10%.
Experts say that to boost all the regions of Dubai real estate uniformly. Government should use service charges as a tool of recovery. The best thing would be to let the owners manage the maintenance of their Dubai properties on their own. In this way, they will choose maintenance companies themselves and it will cost them less amount as compared to that charged by the developers. This will increase their Dubai rental yields on investment and will pass on this economy in price to the end users. In addition, it would also raise the price of Dubai real estate uniformly in all types of units and in all regions.
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