Portfolio Structuring for Landlords With Multiple Dubai Units, How Service Charges Affect Returns

Dubai landlords who hold multiple residential units are usually focused on income stability and long term value. At that level, returns are shaped less by any single purchase and more by costs that repeat across the portfolio each year. Service charges are one of the few costs that apply regardless of how a property is financed or let, and their effect grows as unit numbers increase.

This article looks at how service charges influence portfolio structuring for landlords with multiple Dubai units, and why understanding their cumulative effect is essential when assessing real returns over time.

Understanding service charges in Dubai

Service charges are the ongoing costs owners pay to keep a building or community running. They cover shared services such as cleaning, security, maintenance and management. In Dubai these charges are regulated and disclosed, but they vary widely between developments and don’t behave uniformly over time.

For landlords with multiple units, the key point isn’t what service charges include, but how they scale. Charges are usually calculated per square foot and billed annually. Larger units therefore carry higher costs regardless of how intensively shared facilities are used. Over several properties, those differences accumulate quickly and begin to shape overall portfolio performance.

How charges are set and adjusted

Service charge budgets are overseen by the Dubai Land Department through RERA. Approved figures give landlords a useful reference when assessing a building, but they are a snapshot rather than a guarantee. Charges reflect past costs and planned works, not future surprises.

As buildings age or regulations change, costs can rise. Major maintenance, upgrades or higher utility prices are typically passed through to owners. For a single unit this may feel manageable. Across several units, even modest increases can materially change annual cash flow.

Why service charges matter more at scale

With one property, service charges are usually treated as a reduction to net yield. If rents are strong, the impact may feel contained. With multiple properties, the same logic no longer applies. Charges repeat across every unit and every year, so their effect compounds.

That’s why two portfolios with similar gross rental income can perform very differently in practice. A portfolio concentrated in high amenity buildings may look attractive on paper but deliver thinner net returns. A simpler portfolio with lower recurring costs often produces steadier results, even if headline rents are lower.

Buildings, communities and concentration risk

Charges are also influenced by building design, age and management quality. Newer developments often carry higher costs due to complex systems and extensive shared areas. Older buildings may appear cheaper day to day but can face sharp increases when major works are required. Community level charges add another layer in master planned areas.

Holding several units in the same building offers predictability. Billing is consistent and budgeting is straightforward. The trade off is concentration risk. When charges rise, every unit is affected at the same time.

Spreading units across different buildings reduces that exposure but increases complexity. Each building brings its own charging structure, billing cycle and management approach. Oversight becomes more demanding, particularly as portfolios grow.

Structuring the portfolio

Ownership structure influences how service charges are monitored and assessed. Some landlords hold properties personally, others use a company or a combination of entities. The right approach depends on scale, tax exposure and administrative tolerance.

Using a company can make cost tracking clearer and separate property expenses from personal spending. It also allows service charges to be assessed alongside rental income in a single structure. The trade off is additional setup and ongoing compliance, which only makes sense once portfolios reach a certain size.

As portfolios expand, grouping properties with similar cost profiles can improve clarity. Separating high service charge assets from lower cost units allows performance to be reviewed more accurately and avoids averages that hide underperforming assets.

Planning for increases and unexpected costs

Costs in multi unit buildings rarely stay flat over time. As properties age, major systems need work and regulatory standards tighten, additional charges or special levies can be introduced with limited notice.

For landlords with several units, the response needs to sit at portfolio level rather than property by property. Setting aside reserves based on overall square footage creates flexibility and reduces the chance of rushed decisions when costs rise unexpectedly.

Aligning charges with rental approach

How a property is let needs to reflect what it costs to hold. In buildings with higher ongoing fees, margins are usually protected through stronger rents, furnished units or tenant profiles that support higher pricing. Short term letting can work in some cases, but it brings greater management effort and income variability.

Lower cost buildings tend to suit longer term leases, where consistency matters more than achieving peak rent. When rental approach and cost base are aligned, portfolios are easier to manage and returns are more predictable.

Location, regulation and long term balance

Different parts of Dubai show consistent patterns. Waterfront and landmark developments tend to carry higher charges. Mid rise and suburban buildings are usually cheaper to run. Regulatory changes, such as safety or efficiency requirements, can also affect certain areas more than others.

As portfolios grow over time, each new acquisition should be assessed for how it alters the overall cost balance. One high charge unit can dilute returns across an otherwise efficient portfolio if its impact is not properly understood.

Ongoing review and decision making

Service charges deserve regular review alongside rents, vacancies and financing. Treating them as static or incidental works for a single unit, but it rarely works at portfolio level.

We often encourage landlords to stress test portfolios using higher charge assumptions and conservative rent growth. If returns still hold under those conditions, the structure is usually resilient.

How Prestige Portfolios can help

Prestige Portfolios is an award winning, locally owned real estate firm, certified by RERA and regulated by the DED, working with international families and family offices with property interests across Europe and the UAE.

We regularly support clients who hold multiple residential properties and want a clearer view of how recurring costs, ownership structures and usage patterns affect long term outcomes. That includes reviewing how service charges, holding vehicles and portfolio composition influence real returns, particularly where assets are spread across different buildings or jurisdictions.

To discuss a current property position or review how ownership structures may affect long term returns, contact info@prestigeportfolios.com.