By Claire Ferris-Lay
Pools in Nakheel project are three years overdue and tenants may now be charged for access
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.
When will these developers learn? More bad press....who is making these bad decisions?
At the time of concocting decision like these, Nakheel should not only think about its impact upon its own reputation but also its impact upon the state of real estate market in UAE where costly surprises keep coming in after the signing of the contracts and hand over of the property.
Lets start charging for the air around the development as well. Another attempt to squeeze any amount of money from what is already a poor development with poor maint, cracks appearing after 1 year and the list goes on.
Maybe the money should be spent taking Nakheel to established markets to learn how to woo and maintain business as opposed to make people seek alternatives
I am a tenant of The Garden's which is another Nakheel community and last week I received a circular which is dated 20/10/2011 where they announce the increase on district cooling charges. The notice starts from 1/11/2011 and the cooling charges have gone from Aed 4000 to Aed 10,632 per annum. Is this a daylight robbery? I have just signed my contract in October and this increase came the following month and of course there was no mention about the increase. The first I heard about the increase when I received my DEWA bill and then contacted DEWA who told me it's Nakheel who has increased the charges. What can we do about this?
How can they reduce the service charges as a result of charging this fee.
The service charges paid are for services rendered, as they have not been rendered or will be rendered in the future this should have no change to the current (high) service charges.
Well done Nakheel, add another nail to the coffin of Dubai's real estate reputation. I am sure the latest changes in Nakheel's charges around Dubai will help reestablish confidence in the market....???
I just canâ€™t believe Nakheels attitude. Instead of building up the very badly damaged reputation of the company and instil confidence in the market, no they keep going. I suggest they should look at their strategy and how to build up customer confidence to attract new business
What can you do about this...?
Nothing. Welcome to Dubai!
I just renewed my rent in the Gardens, and got a letter 2 days later informing me of the increase. Again no mention before i had paid!
Do what I did... leave and take your money with you.