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Service charges: the number nobody quotes you
Two apartments with identical rents can return very different yields. Usually it is the service charge doing the damage.
· 4 min read · Ivory Crest
Gross yield is the number everyone quotes. It is also the number that tells you the least. An apartment producing 8 percent gross in a tower with heavy amenities can net less than one producing 6.5 percent in a simple mid-rise.
Where the money goes
Service charges are an annual per-square-foot levy covering building maintenance, security, insurance and shared facilities, set under a RERA-approved budget. Rates vary widely by building. A serviced tower with a pool deck, concierge and valet costs considerably more per square foot than a building with a gym and a car park.
The charge is levied on your unit's area, so a large apartment in an amenity-heavy tower carries it twice over — more square feet, higher rate.
What to do about it
Ask for the actual figure for the actual building before you offer, not a district average. Then deduct it, plus management and a realistic vacancy allowance, and look at what is left. That is the number that matters. If nobody will give you the figure, treat that as information.
Written by Ivory Crest. Figures are illustrative and change — check anything you are about to act on, or ask an advisor.
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