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Wed 15 Oct 2014 09:33 AM

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Exclusive: Villa owners forced to scrap extension plans as Nakheel hikes approval fees by up to 233%

Palm Jumeirah residents must pay $544,501 for a 1,000 sqft addition, on top of building costs

Exclusive: Villa owners forced to scrap extension plans as Nakheel hikes approval fees by up to 233%
Image for illustrative purposes only.

Dozens of Dubai residents living in luxury villa communities such as Palm Jumeirah, Jumeirah Village and Al Furjan, have been forced to scrap extension plans after master developer Nakheel last month increased its application fees by up to 233 percent.

Under the terms and conditions laid out in Nakheel’s ‘Guidelines and Procedures for Villa Extension Applications’, residents are required to pay an application fee as part of the approval process before they can start construction.

Previously, the fees ranged from AED150 ($40) per square foot in Jumeirah Village and Al Furjan, to AED200/sq ft in Jumeirah Park, AED300/sq ft in Jumeirah Island and up to AED600/sq ft in Palm Jumeirah.

However, residents were last month informed that the government-owned developer had increased the fees by more than 150 percent, effective immediately, and any applicants whose paperwork had expired would be required to reapply under the new terms and conditions and pay the higher fees.

In Jumeirah Village rates increased from AED150 to AED380 per sq ft, an increase of 153 percent. This means that any residents looking to add an extension of around 1,000 sq ft will be required to pay Nakheel a fee of AED380,000, on top of the construction and utility costs, which averages at around AED400,000. As a result of the surge in fees, many disgruntled residents have been forced to scrap their plans.

“This means that for an extension of 1,000 sq ft you will end up paying over $100,000 to Nakheel. For what? We have been told that the decision came from the board and that they took it overnight and it was effective immediately,” a Jumeirah Village resident told Arabian Business.

In Palm Jumeirah, Nakheel’s flagship manmade island project, the increases have been even steeper, increasing from AED600 to AED2000 per sq ft, an increase of 233 percent. This puts the fee for a 1,000 sq ft extension at over half a million dollars, even before a single brick of construction has been paid for.

By comparison, rival developer Emaar states in the terms and conditions of its ‘Alternations & Home Improvement Fact Sheet’ that, in addition to submitting the standard paperwork, homeowners are required to pay a refundable deposit of AED5000 to cover any damages to common areas and a flat fee of AED2000 per application.

The residents Arabian Business spoke to said around 60 to 70 homeowners planning extensions to their properties in Nakheel developments had been impacted and had been forced to downsize or reconsider their plans as a result of the surge in fees.

“Nakheel’s propaganda when we all bought the property was that major extensions up to three additional bedrooms were allowed thanks to the big plot area... All of us are obviously now reconsidering the possibility of extending our villas. We feel our rights completely ignored and trampled on… We feel deprived of our rights of ownership,” one resident said.

* Nakheel no longer responds to media enquiries from Arabian Business, nor does it grant Arabian Business access to any of its media events or announcements.

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george osborne 5 years ago

Sad to see that the only way Nakheel can make a profit is by adding more fees and charges on tenants.

Their MO is build cheap, and pile on all maintenance charges to the tenants.

Reflects lack of management skills and ingeunity in this company

Mohammed 5 years ago

So Nakheel is charging AED 2M (1000 sq. ft extension) for something Emaar would charge AED 2,000, making Nakheel mathematically 1,000 times worse than Emaar.

Nakheel property owner 5 years ago

Shameful of Nakheel! I hope Sheikh Mohammed sees this article and does something about this greed and injustice!

Dubai Mike 5 years ago

Truely unbelievable and even more so - there are still people who buy property from them.

markie 5 years ago

Rip off Dubai at its worse and this comes just after they have announced record profits for the first 9 months of this year! are we surprised that they (Nakheel) are not talking about all the owners that they still owe money to?

Richard 5 years ago

seriously why would anyone buy in Dubai.........

Anonymous 5 years ago

Another shining example of how far behind Emmar they really are. A pathetic attempt from unimaginative management to drive revenues in the short term with little thought as to the long term implications. You would think they would take note from Emaar's practises.

david cameron 5 years ago

i think if you are looking for an investment property try Abu dhabi:

1. No Nakheel to deal with
2. transfer costs 2% not 4%
3. Electricity costs cheaper
4. structured and tempered release of projects
5. no wild west speculators and developers promoted

Mark Renton 5 years ago

Given Nakheel's history of holding its suppliers to ransom, underdelivering to customers, and using tenants as pawns in their disputes with property owners over their service charges, one would have to ask:

- who in their right mind would buy a Nakheel property?
- who in their right mind would rent a Nakheel property?
- who in their right mind would act as a supplier to Nakheel?

Hopefully, they will eventually work out that stiffing their customers and suppliers is bad for business in the long run, but I am not expecting this revelation to hit them anytime soon.....

Mohamed 5 years ago

very sad - first we had to wait for nearly 6 years to get possession of a villa which was of far lower standard that what was promised. No Park in the area nor a mosque - now that we want to build an extension to the place we own, we need to shell out much more/as much as we paid for the entire villa. What a dilemma indeed. Is there no one anywhere that can actually speak with Nakheel and knock some sense into them???