Debt-ridden Dubai developer Nakheel has hit residents with a 60 percent rise in fees to bring guests to beach clubs at its Palm Jumeirah Shoreline development, it was revealed on Tuesday.
On the opening day of the Cityscape Global real estate event in Dubai, residents and tenants at Shoreline - the residential development already the subject of an ongoing dispute over service charges - were informed that guest fees had increased from AED50 to AED80 (US$21.77) effective October 1.
The notice to residents added that the fee was “inclusive of sun lounger and towel… [while] security deposit for towel still applies”.
Previously guests had the option to purchase sun loungers for AED25 and towels for AED5. Under the new scheme, they are effectively forced to pay for both.
The move was met with harsh criticism from residents. One told Arabian Business while on the way to Cityscape Global on Tuesday: “I’m so angry… This is a kick in the teeth for residents who bought into the glossy pictures in the brochures.”
A British tenant who currently has guests visiting from the UK complained: “This means we may have to resort to using the public beaches like everyone else.”
The move is the latest revelation in an ongoing dispute with residents on the artificial island development, with some real estate agents claiming tenants were shunning apartments on the palm-shaped development as the row over fees rumbles on.
Master developer Nakheel’s long running battle with its customers on the Palm Jumeirah started last December, when it banned more than 1,300 residents from using the beaches and gyms at its Shoreline Apartments residences and claimed it was owed US$20m in unpaid service charges.
The row escalated when Nakheel drained all six swimming pools at another development, its prestigious Marina Residences towers after it was revealed over US$4m in service charges remained unpaid.
While Nakheel soon refilling the pools, real estate agents said the ongoing negative publicity has meant renters are now shunning its developments on the Palm and some existing tenants are demanding a rebate on their rent or are seeking to relocate.
“The articles written recently about the problems of service charges or lack of payments to properties on the Palm are, I am sure, having a negative effect,” said Mario Volpi, head of residential sales and leasing at Cluttons said in June.
Patricia Fernandes, assistant manager of residential sales and leasing at Better Homes, echoed this sentiment and said tenants were now “being extremely cautious” about renewing leases on the Palm.
“It’s been noticed that quite a few tenants who have been renting on the Palm for a while now are extremely frustrated and no longer wish to renew their leases, or are looking to break their lease for the obvious reasons of limited or no access to on-site amenities," she said.
Agents have warned that the ongoing negative publicity might have a negative impact on Nakheel’s reputation.
Nakheel, Dubai’s biggest developer by assets, was hit hard by the global economic downturn, which saw property prices in the emirate decline by more than 65 percent from their 2008 peak.
The slump forced Nakheel to write down the value of its real estate by US$21bn and prompted a bailout from the Dubai government.
The firm's decision to ban residents from using its facilities has been heavily criticised earlier this year by UAE business leader Khalaf Al Habtoor, chairman of Al Habtoor Group.
“It was 100 percent [damaging] and unacceptable. If I am buying a house and using the beach and later told I have to pay for the beach, this is abnormal. This is damaging the reputation of my country,” he said.
“I am 100 percent sure that the higher authorities were not aware of such a thing because they would not have accepted it…. They would never have [agreed to] it but some people try to show they are making money for the government - they are damaging its reputation 2m times [over] for a few dirhams,” Al Habtoor added.