Dubai's Property Service Charges May Rise Post Unprecedented Rains
In the wake of record rainfall last month, property service charges in Dubai are poised to increase. To mitigate the extensive damage caused, developers have stepped in to offer free cleaning and maintenance for residences, particularly in the hardest-hit areas.
Coordinated Relief Efforts
Government directives have tasked developers and community managers with providing these complimentary services, aiming to ease the burden on affected residents.
Prathyusha Gurrapu, Director and Head of Research and Consultancy at Cushman & Wakefield Core, predicted that such relief efforts could lead to higher service charges and insurance costs in the near future.
Leading real estate companies like Emaar Properties, MAG, Damac Properties, Nakheel, Dubai Holding, Union Properties, and Dubai Investment Park have mobilized to help tenants in prime communities, including Business Bay, Downtown, Jumeirah Beach Residence (JBR), Jumeirah Lake Towers (JLT), and others.
Impact on Future Rental Choices
Gurrapu also emphasized that the responsiveness of community managers in tackling post-rain challenges will influence future choices for buyers and renters. The speed and effectiveness of these efforts will shape how residents evaluate properties alongside location and pricing.
Growth in New Property Supply
In Q1 2024, over 8,351 new units were delivered, with a further 29,690 expected between Q2 and Q4 2024. This will bring the total for the year to nearly 38,000 units. The Dubai Statistics Centre indicated a population growth of 25,776 in the first quarter, suggesting that the rising supply is being absorbed by growing demand.
No Immediate Risk of Oversupply
Despite the increasing supply, experts noted there are no immediate fears of oversupply. While a significant number of new projects are expected to come online within the next two to four years, this will only impact the market balance if projects are delivered on schedule.
Rising Rents and Household Financial Pressure
Dubai's city-wide rents have risen for 13 consecutive quarters, with a 20% year-on-year increase and a 72% surge compared to Q1 2020. This is putting pressure on household finances as incomes are not rising at the same pace, limiting disposable income. This trend is anticipated to push more end-users to buy properties in the ready market, as mortgage rates are expected to stabilize.
Dubai's real estate market is adjusting dynamically to these challenges, with developers and the government working together to balance service demands, natural disruptions, and market trends.
