Reducing fees for real estate services in development projects in Abu Dhabi contributes to motivating more investors to buy real estate units in the capital, and enhances the attractiveness of the real estate sector, according to officials and dealers in the real estate market in Abu Dhabi.
The Department of Municipalities and Transport in Abu Dhabi approved, about 3 years ago, a mechanism to monitor and regulate service fees for residential units and complexes, and to define a clear framework for pricing these fees to protect the rights of owners and developers alike, contributed to reducing real estate fees over the past years, which strengthened the The competitiveness of the real estate sector, especially since service fees are one of the most important elements that determine the decisions of investors wishing to purchase real estate.
The Abu Dhabi Real Estate Center, affiliated with the Department of Municipalities and Transport – Abu Dhabi, recently revealed that the real estate sector in the Emirate of Abu Dhabi witnessed during the year 2023 a 6% reduction in service fees and residential complex fees for owners of real estate units and investors in development projects compared to the year 2022, bringing the total value of the reduction to 39.7 Million. Dirham.
The center revealed that the total value of the budgets for jointly owned development projects for which approvals were issued in 2023 amounted to 685 Million Dirhams.
Service fees are used to cover the costs of managing and maintaining shared facilities in real estate development projects, which maintains the quality of real estate complexes and achieves the luxury of living in them. No real estate unit owner may give up his share in the shared spaces in the project to avoid paying his share of service fees, and it is not permissible to impose Service fees charged to owners of real estate units in jointly owned real estate development projects, unless approved by the Abu Dhabi Real Estate Center of the Department of Municipalities and Transport in the Emirate of Abu Dhabi.
It is noteworthy that the Department of Municipalities and Transport revealed in 2020 a mechanism to monitor and regulate service fees for residential units and complexes in support of the sustainable growth of the real estate sector in Abu Dhabi, and to define a clear framework for pricing these fees to protect the rights of owners and developers alike, which resulted in reducing service fees in 2020 by a percentage 18.1%, 8.3% in 2021, and more than 6% in 2022.
Investment climate
Saeed Al Fahim, CEO of Stratum Real Estate Management Company, explained that implementing the mechanism of approvals for the budget, service fees, and their updates had a significant impact in enhancing the protection of the rights of all parties dealing in the real estate market, noting that establishing clear regulatory mechanisms for fees contributed to enhancing the transparency of the real estate sector. He stressed that the recent period witnessed the issuance of many regulatory and supervisory mechanisms in Abu Dhabi, which contributed to improving the investment climate in the emirate, explaining that the decline in fees for real estate services contributes to attracting more investors to the real estate sector, as fees are one of the most important items that those wishing to buy real estate care about.
It is noteworthy that service fees were determined and approved before the implementation of the new mechanism, by the developer company or the real estate and facilities management company, which used to set them according to its own estimates and vision, while the new system is more accurate and detailed and is based on clearer and more transparent standards, as the owner has the right to know the details of the fees that are imposed. Driven by its purpose.
Currently, developers or entities responsible for real estate management may not approve the annual budget allocated for service and maintenance fees for real estate facilities shared in real estate development projects except after approval by the municipality.
Sector competitiveness
In turn, Ijlal Al-Jamal, Sales Director at ITW Real Estate, said that the approval by the Department of Municipalities and Transport in Abu Dhabi about 3 years ago of a mechanism to monitor and regulate service fees for residential units and complexes, and defining a clear framework for pricing these fees to protect the rights of owners and developers alike, contributed to reducing fees. Real estate over the past years has enhanced the competitiveness of the real estate sector and attracted more investors to the real estate market. She pointed out the importance of such measures in supporting activity in the real estate market, which is actually reflected in the increase in the volume of trading in the market during the current period, and the market’s attractiveness to investors.
The real estate market in Abu Dhabi recorded record growth in the value and volume of real estate transactions until the end of the third quarter of 2023, with the total value of real estate transactions in the emirate reaching 67.76 Billion Dirhams, which represents a qualitative leap equivalent to 56% compared to the same period last year.
Attract investors
Eida Mahmoud, owner of Arika Real Estate Management Company, said: “The recent period has witnessed a noticeable decline in service fees in most real estate projects in Abu Dhabi, which encourages many investors to buy real estate.” She added that, for example, the service fees for the Sun and Sky Towers, the Gate Towers in Shams Abu Dhabi, and Marina Square on Reem Island are estimated at about 12 to 13 Dirhams per square foot, compared to more than 15 Dirhams previously, and the fees for residential towers on Yas Island and the beach area range. Comfort between 12.5 to 13 Dirhams per square foot.
She explained that the value of real estate services fees in residential apartments in Abu Dhabi currently ranges between 12 and 14 Dirhams per square foot, while in villas they range between 3 and 6 Dirhams per square foot, noting that the value of villa fees on Yas Island is estimated at an average of 4 Dirhams per square foot, and in Saadiyat from 4 to 6 Dirhams, and on Al Reem Island 5.5 Dirhams per square foot.
Eida stated that many developers are interested in offering more offers and discounts on service fees to attract investors, explaining that, for example, the service fees in one of the penthouse apartments on Al Reem Island decreased from 70 to 28 Thousand Dirhams.