Tensions high in Jumeirah Village service fees row

Homeowners already furious over the stalled completion of Nakheel’s Jumeirah Village housing complex in Dubai have said the developer is now demanding service charges for incomplete infrastructure.

Ahmed Fathy, an owner of a villa in the project, said he was considering appointing a lawyer after refusing to pay what he says is an exorbitant AED13,500 community service fee – without which Nakheel will not hand over his villa.

According to residents, the fees have not been approved by Dubai real estate watchdog RERA, as the village remains still under construction without promised roads, parks and other community facilities.

Instead, approval for the annual service fees – cash which is used to maintain communal facilities - been granted by Dubai Port Authority.

A spokeswoman for Nakheel did not confirm or deny the AED13,500 charge.

“Settlement statements contain the normal service charges that are contractually payable,” the developer said in a statement.

Fathy said he was considering legal action, but that the high cost of hiring a lawyer was stopping him – he said he had been quoted AED6,000 to get an initial consult.

According to Jonathan Davidson, managing partner of Dubai-based law firm Davidson and Co, who successfully won a recent ruling against Nakheel on late fees, homeowners could club together to take action through the Dubai World Tribunal.

The panel was established to hear claims related to Nakheel’s parent company, Dubai World.

“The tribunal affords claimants the opportunity to join forces and make a joint claim against Dubai World entities, including Nakheel, to be heard as one case with payment of a single court fee,” said Davidson. “This is something which would not be available in Dubai Courts where joint actions – often called class actions - are not permitted.  Doing it alone is very difficult.

As for a group legal action, or class-action suit, Jumeirah Village “does have the makings,” he said. “You’ve got communities with hundreds of residents who are being faced with the same demands and same problem. They’ve got to take a stand whether they’re going to pay it or negotiate. If they don’t work then the final opportunity is we can try to enforce our rights against Nakheel.

Though the skeletons of hundreds of villas are complete, Jumeirah Village – which had been billed as a lush oasis with children’s parks, paths and convenience stores – remains a dusty wasteland of empty streets and villas. Fathy said he believed that just 300 of 2,000 residences had been completed and were currently inhabited.

“My villa is ready but the community is not – just one road, no shared area, no security,” Fathy said. “And after all this Nakheel is still asking for a service charge – the amount of money that will be used for common facilities, landscaping. They won’t give me my villa until I give them 13,500 AED for the year.”

Fathy and his family are currently living in their old flat in Springs, though he had originally been told he could move in by March of this year. He said his annual service charge there is less than AED3,000.

According to Fathy, a labour camp to house the Jumeirah Village workers remains on the site.

“Even the schoolbus won’t go there,” he said. “You cannot find a single plant, a single tree. I was buying a villa in a community, not buying a villa just to live. I was buying a community. “The nearest supermarket is 10km by car because the road’s not ready,” he added. “If the community’s not ready I can just live elsewhere.”

He said his 3,000 sq ft property was unfinished, with no vegetation and no working essentials like plumbing and electricity. It has been under construction for two years.

“It’s out of my control,” Fathy said.

In a statement, Nakheel said work on the project remained ongoing.

“Nakheel is currently engaging contractors in the short-term projects. Some of the short term projects will be completed in 2011 and we expect that all short term projects will be delivered by early to mid 2012.”

Dubai’s government said in March it will provide $8bn in cash to Nakheel to repay trade debts and complete outstanding real-estate projects.

RERA did not respond to requests for comment.