Out of the box

Building fees ... the never-ending story

Ismail Al Hammadi

August 18, 2020

Perhaps the story of construction fees and its costs in the real estate sector does not end. In a previous topic, I referred to the value of service fees that have exhausted the owners and buyers of real estate, and in another aspect of those fees and their mysteries, there is another aspect that affects the real estate development process.

The issue is a little thorny as it is troubling to anyone who wants to develop and build a plot of land for a project of housing units for sale, or a commercial project “office spaces or retail spaces”. The equation is difficult when someone thinks about buying a plot of land to build a building with the aim of selling or renting its units .. meaning More clearly, "the equation is difficult when thinking about entering the world of real estate development" because of the many barriers that will stand in the way of everyone who practices the profession of real estate development under the umbrella of construction fees and costs.

When someone intends to buy a plot of land through real estate development, regardless of its type and purposes for its use (residential, commercial, industrial), then he faces these questions:

What is the local circuit fee and how much is each fee?

What are the additional costs?

What is the appropriate amount to build?

Is there a contingency reserve amount?

Let us focus only on the first point, local circuit fees. Whoever buys a plot of land today pays at least 10% as circuit fees without counting the value of the costs related to construction and development operations "from a consultant, contractor, building materials, supplies, etc." !!

The truth is very disturbing, given that I personally went through this experience through my work, and closely examined those barriers made by construction fees, as they were and still are a source of concern for everyone who wants to set foot in the field of real estate development, so once you buy a piece of land, the individual finds himself facing challenges It had not occurred to him before, what might push his real estate project to another direction that negatively affects the stages of completion, if he does not seek the help of someone to guide him to the best methods and practices in this aspect.

We have many, many fees related to departments, infrastructure and issuance of licenses, in addition to other additional fees related to cases of exceptions of various forms and diversity, which are imposed on the owners of real estate development projects, so the owner of a land does not spend the value of a certain fee until he finds himself in front of the value of another fee, and it is obligatory On paying them to start the implementation process, and the matter did not depend on the speed of completion but on the total cost of completion, because the value of these fees combined is very high and often they are not among the total sums allocated for that project "especially for beginners".

The fees imposed on real estate development operations are a point that deserves to be reconsidered, and we have to find a solution and perhaps a set of solutions for them if we count these fees and legalize them, so that they are not a source of concern for those who are about to enter the real estate development world, and so that the construction processes are facilitated for everyone, as We cannot ignore or deny that there are hundreds of plots of land sold, awaiting their turn in construction.

The abundance, bifurcation, and multiplicity of fees calls for creating an effective mechanism to shorten and calculate them. It also calls for collecting them under one umbrella or one application, which saves customers effort, time and money.

To read the previous articles of the writer please click on its name .

Fees imposed on real estate development operations, a point that needs to be reconsidered.