Nakheel is in early talks with homeowners in its Discovery Gardens project to charge an annual fee for access to the development’s swimming pools in exchange for a cut in service fees, sources have told Arabian Business.
The proposed plan would see owners and tenants in properties asked to pay an annual fee to access the pools – which have yet to be handed over, more than three years after the project’s completion.
The plan has enraged some tenants who argue Nakheel does not own the rights to common property and that the existing service charges should already include access to the pool.
“This is just another thing in the enormous list of things that are unfair and wrong about Nakheel’s management of Discovery Gardens,” one homeowner told Arabian Business.
“We haven’t had pools for three years and now they may charge for access to them. What are my AED19,000 service charges a year for? I am very angry at the whole situation.”
A spokesperson for Nakheel said there had been "no decision" to charge for the use of swimming pools in the development and said the pools remained "free and exclusive".
There was no clarification on when the pools would be handed over.
State-owned Nakheel, whose real estate ambitions spurred Dubai’s 2009 debt crisis, is already in dispute with owners on its Shoreline development over its plans to privatise beach club facilities.
Nakheel has said it plans to charge residents up to AED5,000 a year to access the building’s pool and gym facilities and to open the clubs up to outside members.
Dubai’s Land Department has asked owners on the luxury Palm development to pay service charges into an escrow account, rather than to Nakheel, as it moves to determine who owns Shoreline’s common property.
The move to privatise facilities raises questions over the legality over the developer’s right to retain ownership of common areas, said lawyer Brent Baldwin.
“If rights to common facilities have been sold to owners as part of purchase of the unit then it’s going to be legally very difficult for a developer – any developer – to deny access to those facilities to an owner or to rent them out and open them for public access without the permission of the concerned owners,” said Baldwin, associate at Dubai-based law firm Handed & Partners.
For Discovery Gardens’ tenants, the project’s delayed swimming pools are a particular bone of contention. Nakheel said in April 2010 that work had resumed on the pools, which were then two years behind schedule, and said the first six were slated for handover within weeks. The remaining seven pools were expected to be handed over a month later.
Residents have said their service fees still specify charges for lifeguards, despite the lack of pools.
“Three years on from moving into Discovery Gardens the swimming pools remain empty, yet an item on the service charges invoice includes lifeguards,” said one resident.
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.
Nakheel was at the centre of Dubai's property collapse in 2008 when house prices plunged by more than 60 percent, forcing many developers to abandon projects.
The developer wrote off up to AED78.6bn ($21.4bn) of its real estate assets due to the crisis, according to a bond prospectus released earlier this year. Some of its projects, including Nakheel’s Waterfront and Jebel Ali development, are yet to complete.
Nakheel said in August it would slash its maintenance fees at real estate developments across Dubai by nearly a third and pledged owners in its properties will pay the city’s lowest service charges.
In projects such as Discovery Gardens and Palm Jumeirah default rates on service charges among homeowners are estimated to be as high as 50 percent.
The developer has now issued letters to homeowners in Discovery Gardens that threaten legal action if outstanding maintenance charges are not paid.
“Rather than work with the residents to solve the problem swiftly and effectively for both sides, Nakheel have chosen to threaten and ignore everyone. The move doesn't inspire me to pay my bills and I am certainly not handing over AED19,000 until I know what it is for and why it is needed,” said one resident.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.