2017 UAE Real Estate Trends: Is The Convenience Of Serviced Apartments True?

This article was originally published in propertyfinder Trends Report 2017 – click here to read online (Adobe Flash required) or click here to download PDF instead. To request a printed Report, please email us on marketing@propertyfinder.ae

We all know that when you first come to the UAE, the process of finding somewhere to live is hard. Of course, having property under assisting you every step of the way makes it much easier, but as a newcomer it’s still a daunting task. Propertyfinder’s Area Guides, Price Trackers, Blogs and the huge range of properties available on the portal all help but let’s be realistic: you’re new, naïve, and possibly never been an expat before. You are settling into a new country, new job and trying to get used to a new life.

Even when you think you’ve done the hard part of finding a suitable property in a desirable neighbourhood and then agreeing a price with the landlord, you soon realise the moving process has really only just begun! The costs keep on rising, the bureaucracy is frustrating and there’s the endless waiting at home for utility connections and deliveries of furniture and other essentials.

Could renting a serviced apartment offer a better, simpler way get settled quickly?

More and more people, especially when new to the UAE, are opting to do just so, at least in the short term. And is this just an option for “newbies” or could serviced apartments be a good alternative for longer term residents too? Are they significantly more expensive? Is there less time-consuming bureaucracy involved? Are what are the drawbacks?

To really understand the issue you have to break down the raw data, add in a dose of reality and then add in personal preferences.

So what does the data tell us about average monthly costs?

(Source: propertyfinder data, 2017. The metric represents the median price per square foot for each category.
Apartment type split: Budget (lowest 20% prices), Mid range (mid range prices between Budget and Luxury – middle 60% of prices) and Luxury (highest 20% of prices).

So at first sight, serviced apartments absolutely look more expensive. That’s to be expected, but let’s add in some additional data on what you need to consider when living in the UAE:

So, we need to add a conservative AED 3,100 per month, or AED 37,200 per year, to your rent. There’s still a gap on a 2 bed 1,500 sq. ft. apartment in the mid-range, but the true costs are getting much closer!

Now let’s add in an extra dose of reality…

As tenants, Dubai Municipality charges you 5% of your annual rental contract. This is spread over 12 months and added to your DEWA bill each month. Brokers also charge a 5% fee, paid upfront, so just when you think you’ve negotiated a great deal and written your 1, 2 or 4 cheques, you have to write another one.

The Security Deposit is another 5% and another cheque… no wonder many banks charge for additional cheque books! Security deposits normally apply to both rental and serviced apartments so no gain or loss here… except maybe until you try and get your deposit back, but more on that later.

The DEWA experience for many is one they will never forget! The creating of accounts, the documents required – and then going back with the documents you never knew you needed! The process takes time and patience and then you find you need a deposit – 2,000 dirhams for apartments, double that for villas! Each month the DEWA bill arrives and you wonder how it can cost that much.

The Chiller… the what? Yes, in many areas there is a separate charge for the air-conditioning chiller in addition to your electricity bill. Chiller fees are meant to be fairer and reduce the big spike in AC costs in the summer, but still you try to keep your consumption to a minimum. Battles between couples can erupt at the AC control! The “it’s too hot” versus “it costs a fortune” discussion is one that can run forever, especially when the monthly bill comes. In a serviced apartment the chiller cost is included so you can keep your AC running all day if you wish without financial repercussions – but only if you’re not a fan of the Paris Agreement! Nevertheless, serviced apartments offer both cost savings and fewer arguments over the AC gauge.

Maintenance – some form of free maintenance is usually included in a standard rental lease, but typically you will need to pay at least a fixed fee, plus extra for a good service or essential repairs out of normal office hours.

Unfortunately, the failed AC, the leaking pipe in the false ceiling and the electrics don’t respect “working hours” and it always seems to be 2am when they go wrong!

Why is that? Serviced apartments usually have their own maintenance teams which are located on site and operate 24 hours a day at no extra cost to you. TV/Internet – we can probably live without the TV, especially when you have so many other things to do here, but we all need the internet. So off you go, armed with every document you ever thought you could need in duplicate, colour copies, cheque book, credit card at the ready – you vow there’ll be no second visit for you because you have all the correct paperwork!

In you go, take a ticket, you look at your number…. and then read the small print warning “there are 17 people in front of you”. How long can that take?

Two hours later you’re still sitting there, forlornly staring at the screen where the numbers move slower than a glacier and you realise it can take some time! Eventually you walk out after being served, wondering how you have just signed up to $150 worth of internet, a home phone you will never use and a TV package that is at best underwhelming – oh sorry, did I mention the deposit? So it’s time consuming, expensive and we will get to the cancellation process later! In a serviced apartment, you walk in, log on to the internet, switch on your TV and look at the land-line phone that will never ring and know that it’s all included in your charge: no hassle, no queuing, no deposits and no monthly bills.

Maid service – we all think we won’t use one and then we all do! Serviced apartments will typically provide a maid service three times a week, replenishing towels and sheets, cleaning, tidying and ironing. Some offer a daily service, but usually it’s less often. Whatever the frequency, you won’t have to deal with a maid company, monthly bills and of course the additional cost on top of your rent.

It’s also worth mentioning gym and spa facilities, even if this isn’t strictly a cost saving – serviced apartments must be attractive to short-term guests and holiday-makers, so the facilities are typically better and well-maintained. This is especially true in hotel serviced apartments, where all facilities are available to long-term residents. In reality, the cost of these facilities is included in your rent, but you’re not paying an additional fee to a gym which you then feel guilty about not visiting!

Furniture – yes, not all serviced apartment furniture will be to your taste but at least it’s there the day you move in. A normal rental will come with lights bulbs and that is it! No curtains, lamps, TVs, sofa, beds, white goods, knives, forks, glasses, kettle, etc… anything you can think of. Not only is it a hassle to make your rented apartment liveable but it’s an expensive one too!

Overall, the pure financial equation probably still leans towards a conventional rental, but when you consider the hassle factor, the monthly bills for various services and the peace of mind a serviced apartment provides then maybe it does add up. But this isn’t the full story – what about when you come to move to a new home or decide to leave the UAE?

Leaving and closing down the various home services is much, much harder than it sounds. Internet and TV companies force you to visit their shops (and only certain ones) to cancel a subscription, and changing your address is not as easy as it should be either! Getting final DEWA bills in one place, transferring the account back to the landlord and then reopening a new account for a new property… it can feel like groundhog day!

If you are leaving the country, you will need to get your final bills all sorted, sell your furniture and close your bank account. After proving to the landlord you have done all of this, repainted the property and argued over whether the dents and damage were already there when you moved in to the property, you get your deposit cheque back. It’s very rarely the full amount – and then realise you have closed your UAE bank account! Of course, with a serviced apartment you have to give notice and there can be an early fee charged if you leave before you overall commitment ends (as there would be with renting) but that’s it, you pack your clothes, close the door and leave.

So how does it all stack up?

Well much of it is still personal choice, dependent on individual circumstances and preferences. But the hassle- free financial side of serviced apartments certainly makes them an appealing option.

What is my personal opinion?

When I first moved here, I entered the unknown. My family remained in the UK for the first nine months while I established things here business-wise and closed things off in the UK. I moved to an amazing serviced apartment in the Marina. Hassle-free and perfect for someone needing to settle quickly and ensure my professional life got the required attention. Not having to worry about the small stuff made settling into Dubai so easy and allowed me to work out which areas I liked, get bank accounts sorted and understand the true cost of living in Dubai. The monthly charge meant I didn’t need to commit to a year long agreement and outlay – it was perfect. Would I recommend it to other “newbies”? Absolutely!

One final thought, I have seen a few of my friends leave Dubai since I’ve been here and it’s not a simple thing to do. The propertyfinder.ae blog has a great article on moving called “8 steps to make moving a breeze” you may find helpful.

If you are reaching that point of not just moving but leaving the UAE, consider getting out of a rental well before your last day and go into a serviced apartment. That way, you can close everything, go through the arduous processes that always take much longer than expected and place yourself in a serviced apartment for the last month or so. That way, you can also send furniture home, close DEWA, get deposits back and be living in comfort for a monthly fee, knowing that when your last day comes around all you need to do is just pack a suitcase and close the door behind you.

#PFTRENDS2017

Paul Stewart-Smith

Chief Operating Officer, Propertyfinder GROUP