Nakheel plan to privatise Palm beach legal, says chairman

Wednesday, 23 November 2011 3:38 PM

The luxury Shoreline apartments on Dubai's Palm Jumeirah

Nakheel is legally permitted to privatise the beach clubs on its flagship development Palm Jumeirah, and doesn’t expect tenants to be happy with its decision, its chairman said.

The state-owned firm developer, which plans to charge homeowners at its Shoreline apartments up to AED5,000 a year to access the building’s pool and gym facilities, would not be pushing ahead with its plans if it did not have regulatory approval, Ali Lootah said on Wednesday.

“There is no issue with that, people want something which they are not entitled to,” he said.

“I cannot make everybody happy. They should read their contract. We checked legally, we went to RERA (Dubai’s real estate watchdog).

“RERA is the regulatory authority [and] we don’t do anything without taking approval from the regulatory. We abide by the law and we respect the law.”

Lootah said he did not see the move damaging Nakheel’s reputation internationally.

Service fees and additional charges have become a particular bone of contention between developers and homeowners since the collapse of Dubai’s real estate market in late-2008.

Developers who once saw millions of dollars in profit during Dubai’s real estate boom have struggled to stay afloat after the emirate’s property bubble burst, leading buyers to accuse companies of charging inflated fees for building upkeep or access to promised facilities in a bid to maintain a revenue stream.

Real estate analysts have said any move to charge for access to beach and pool facilities in buildings would be a further deterrent to investors mulling property deals in the emirate.

“Developers overpromised and under delivered,” Charles Neil, CEO of real estate consultancy Landmark Properties said.

“It’s really bad for the development community because investors in future just aren’t going to trust them and that’s why they’ll never get an off-plan market going again – because investors now want to touch it, feel it and see exactly what’s on offer,” he added.

Residents on the Shoreline have opposed the move. In a letter to RERA homeowners have called for the real estate watchdog to step in and declare them the legal owners of Shoreline’s communal areas, a move that would smooth the way for a housing association to dictate its own service charges for facilities.

“[This] is not what the owners want. All the boards of all the owners associations believe that the clubhouses are part of the common property of the Shoreline,” said one investor, who asked not to be named. “The description laid out in the UAE law [law 27 of 2007] points to them being common property as well.

“All the [owner associations] have written to RERA letting them know what we thought we had purchased - i.e. what we believed we were sold by Nakheel.”

Tenants living at the Tiara Residence on the Palm Jumeirah were told last month their families and guests must pay AED200 to use the pool, gym and beach at the weekends. Developer Zabeel Properties said in a circular to residents that the move was measure to reduce overcrowding.

Dubai Properties Group told Arabian Business in September that tenants in its $1.6bn Jumeirah Beach Residence development would also have to pay for access to its long-awaited beach club when it opens later this year.

Real Estate

Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

Read All 33 Comments

Posted by: Daud Al Zainey Thursday, 1 December 2011 3:29 PM[UAE] - UAE

This reminds me of when the Columbian Captain kicked an own goal that put them out of the World Cup. When the Columbian commentator complained his co-commentator told him to stop complaining, it was one of the few goals they had actually kicked during the whole tournament!

Anyway the position is that the beaches have always remained owned by Nakheel and Nakheel have the obligation to make the beaches available to all Palm J residents and to maintain the beaches and the owners are obliged to pay for the cost of maintenance through the Master Community Service Charges.

This is embodied in the Palm Jumeirah Master Community Declaration that is registered with the DLD and referred to in all title deeds for residential properties on the Palm. Therefore it is contrary to the legal rights of owners, and their tenants, to restrict their access to the beaches.

The contractual and legal rights are clear and unambiguous, the question is, how are you going to enforce your rights?

Reply to this comment.

Posted by: frustrated Palm resident Sunday, 27 November 2011 2:02 PM[UAE] - UAE

Be warned all current & potential landlords, investers & tenants!!!

I have lived on the Palm for 4 years & I have had ongoing issues with security, plumbing & hot water (including being left for over 2 weeks with no hot water at all), having my keys taken by Nakheel & now to be told we need to pay additional fees for facilties when we already pay a premium to live on the Palm?? Nakheel is damaging the reputation of the Palm & residents are getting bored & exhausted with the constant battle to receive basic utilities & services. If they want the Palm to be a deserted island with no human population, they are heading in the right direction!

Posted by: SAM Sunday, 27 November 2011 4:33 PM[UAE] - UAE

I do not know if there is a hidden agenda; Nakheel delibrately frustrating existing owners, prompting them to sell it back to them at a huge discount and then Nakheel wishing to re-sell them for a profit and to a meeker type of owners? Nakheel has seasoned real estate experts and I do not believe that they are not aware of the negative feelings of existing owners of properties and the resulting negative implications. Whatever it is, I find it odd that Nakheel is taking a confrontational stance on the issue, which makes me suspect that there is something else going on.

Reply to this comment.

Posted by: Sid Saturday, 26 November 2011 5:10 PM[UAE] - UAE

'We checked legally' ? That Nakheel still hasn't built the gardens, overcharged on service charges for 2 years while not maintaing anything and not providing audited accounts. They also haven't allowed Golden Mile owners to receive handover of their already completed apartments (because Nakheel want a refund on their investment on the Golden Mile retail units). Nakheel, as reported earlier on this website, owns the Golden Mile retail but hasn't made full payments and is in dispute. Now Nakheel doesn't want to pay the rest of the installments and hence won't give a final NOC for IFA to handover the remaining apartments to waiting owners (who have nothing to do with this dispute). I know Mr Lootah has inherited a mess from Chris O Donnel- but he needs to address these issues fairly.

Reply to this comment.

Posted by: Brian Friday, 25 November 2011 11:18 AM[UAE] - USA

I think the leadership HAS stepped up and that law 27 will be set aside. Nakheel et al has already given up on us arrogant, ungrateful Westerners and will now focus on their GCC friends.

Problem is, other GCC countries now have attractive offerings coming on stream. They will undoubtedly learn from Dubai's debacle and not soak their end users. Sadly, the Emiratis will be left holding the rotting high-maintenance bag :(

Reply to this comment.

Posted by: Nelson Friday, 25 November 2011 1:27 AM[UAE] - UAE

With the recent negative publicity and investor adverse decisions it is almost like some people are actually driving the real estate market lower on purpose - maybe so that they can pick up firesale properties from fed up expats? Just a thought.

Posted by: Telcoguy Friday, 25 November 2011 11:15 AM[UAE] - UAE

We also get a daily dose of positive news. Main difference is that the positive ones (the worst is over) are mostly opinions, while the negative ones are facts (like this one, where owners at going to pay extra for nothing additional)
This one is mor off symbolic one I think. At least for me, The Palm was a special property, truly high end. The fact that the situation there is the same as in other areas (in terms of legal protection) means that there is no safe place in Dubai for foreign investors. I think that is why this article, that should not affect too many people, is getting so many hits.
Having said that, I agree that many people in Dubai would be happy if all thburn out investors went away and all the legal cases and disputes would stop.

Reply to this comment.

Read All 33 Comments

Log in Not registered? Register now!

Retrieve password form

Services:

Related:

Stories

Galleries

Videos

Topics

Companies

Also in Real Estate

Also in UAE

Join the Discussion

Further reading

Features & Analysis

Most Popular

Most Discussed