Owners budget to build and assume operating cost starts small. The first year of a new building has costs that never appear again, and some that never stop.
A new building is not a finished product but a system entering service. The first year carries the defects period, the first summer, the shakedown of every control setting, the initial letting effort and a maintenance regime that has to be established from nothing. Budgeting for it prevents the familiar pattern of a completed asset starved of the money that makes it perform.
What this number does and does not include
This covers the owner side cost of the first twelve months after handover of a newly completed building in Saudi Arabia. It excludes construction cost, financing principal and the tax treatment of any of these amounts, which should be confirmed with a licensed adviser.
Facilities management and maintenance
Planned servicing of cooling, electrical, water, fire and lift systems, plus reactive repairs and cleaning of common areas.
- Pushes it up: Complex building services, multiple specialist contracts, and equipment with warranties requiring specific service regimes.
- Brings it down: Simple robust systems chosen at design stage, and one competent provider covering several disciplines.
- How to control it: Let the maintenance contract before handover using the commissioning data, so servicing starts on time and warranties are preserved.
Utilities during the shakedown period
Electricity and water consumption while the building is partly occupied and control settings are still being adjusted.
- Pushes it up: Unbalanced systems running continuously, controls left in commissioning mode, and partial occupancy with full plant operation.
- Brings it down: Properly commissioned controls, metering by zone, and a review of settings after the first summer.
- How to control it: Read the meters monthly from day one and compare with the design expectation, since the first year is when a systematic problem is cheapest to find.
Letting and leasing costs
Brokerage, marketing, lease documentation and registration, and any incentives given to secure the first tenants.
- Pushes it up: A soft market, an unusual asset, or handover at the wrong point in the leasing calendar.
- Brings it down: Letting started before completion, and an asset whose specification matches what local tenants want.
- How to control it: Begin letting activity well before handover, and register leases through Ejar as required so the tenancy position is documented from the first day.
Fit out contributions and tenant works
Owner contributions to tenant fit out, supervision of tenant works, and making good after them.
- Pushes it up: Commercial tenants with heavy fit out requirements, and no fit out guide controlling what they may do.
- Brings it down: A clear fit out guide, a deposit regime, and supervision of tenant works by your own engineer.
- How to control it: Issue a fit out guide and require approval of tenant drawings, because uncontrolled fit out damages the systems you just commissioned.
Insurance and statutory compliance
Property insurance in place from handover, plus the periodic inspections and certifications the building requires in use.
- Pushes it up: A building with significant plant, and an owner who never established the compliance calendar.
- Brings it down: A compliance register created at handover listing every recurring inspection and its interval.
- How to control it: Build the compliance calendar from the handover documents and confirm the applicable requirements with the relevant authority.
Management and administration
Property management fees, accounting, collections, and the cost of dealing with tenants from another country.
- Pushes it up: Many small tenancies, a manager paid a percentage with no performance measures, and no reporting format.
- Brings it down: Fewer, larger tenancies and a management agreement with a defined reporting pack.
- How to control it: Agree the reporting format with the manager before handover, exactly as you did with the contractor.
Correcting what the build left behind
The cost of items that should have been the contractor obligation but were not pursued in time, plus early wear where quality was thin.
- Pushes it up: Retention released early, snags closed on paper, and no systematic reporting during the defects period.
- Brings it down: Disciplined use of the defects period with a named person reporting items as they appear.
- How to control it: Keep retention until the defects period ends, and treat the first summer and the first rain as scheduled inspections rather than events.
Costs that never appear on the first page
- Higher consumption for a full year because control settings were never revisited after commissioning.
- Emergency repairs at premium rates because no maintenance contract was in place at handover.
- A warranty declined because the required servicing was not carried out in the first year.
- Rent free periods and incentives that reduce effective income well below the headline figure.
- Travel and management time during the first year, which is far higher than any later year.
Keeping the budget honest
Budget the first year separately from the steady state, and hold a distinct sum for it. Two things drive most of the difference: maintenance and warranty obligations that begin immediately, and letting costs concentrated at the start. Assuming that a new building needs little attention is the most expensive assumption available, because the first year is when every systematic problem is still someone else responsibility.
- Before handover, when the maintenance contract and the compliance calendar can still start on time.
- After the first summer, reviewing consumption and cooling performance against expectation.
- After the first heavy rain, inspecting roofs, drainage and waterproofing while the defects period runs.
- Before the defects period expires, with a full inspection and time remaining for remedial work.
Domira designs, builds and manages projects across Saudi Arabia for owners who are based abroad: land appraisal, feasibility, design, construction, handover and asset management under one accountable contract. Send us the plot or the brief and Domira will put the numbers in front of you before you commit.
Frequently Asked Questions
What should an owner budget for running a newly completed building in the first year?
Build the figure from the lines rather than a percentage: maintenance and servicing from day one, utilities during the shakedown, letting and lease costs, any fit out contributions, insurance and recurring compliance inspections, management fees, and a contingency for items the build left behind. The first year total is normally higher than any later year, and treating it as steady state is how new buildings become neglected ones.
When should a maintenance contract for a new building start?
At handover, and it should be let before then using the equipment schedules and commissioning data. Starting late has two costs: emergency repairs priced at emergency rates, and warranties that may be affected where they require documented servicing at defined intervals. Ask the commissioning engineer to specify the service regime so the contract is written against the systems actually installed.
Why do energy costs in a new building often exceed expectations?
Usually because controls remain in a commissioning state, systems were never properly balanced, plant runs at full capacity for a partly occupied building, and nobody reviews consumption against the design expectation. All four are correctable in the first year and expensive to ignore, which is why monthly meter readings from handover are one of the highest value habits an owner can establish.
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