Cushman & Wakefield Middle East Insight: Service charge models, a waste of time/money??

By: Mike Moore

NO!!!! Sadly, there are many well documented cases across the Middle East where the developer has not benefitted from a professionally assessed service charge and has suffered significant financial loss as a result.

All too often we have witnessed the ‘10% of rent’ rule applied to the assessment of service charge.  This ‘rule of thumb’ approach can and generally does lead to somebody being unhappy either the occupying tenant who suffers as service standards are cut back to fit the inadequate budget available or the honorable developer who takes the hit on the overspend required to deliver the promised service standards.

Companies such as Cushman & Wakefield, will work with the developer to create a bespoke service charge cost model which meets the requirements of the development within the framework of the RICS code of practice.

Realistically, the service charge cost model/estimate should be developed at the earliest stages, so it can be built into sales literature/sale agreements.  Again, all too often commission led sales staff will state a low service charge figure which will eventually be quoted back to the developer with the same bitter end result.

So, in, conclusion, when it comes to the need for a service charge cost model/estimate we have 3 pieces of advice;

  • Do It
  • Do it right
  • Do it as early as possible

Or pay the price for the next 50 years plus.

If you would like to talk to a member of the Cushman & Wakefield Middle East team regarding our cost consultancy services, please contact us at enquiries@cushwakesa.com