Dubai property owners who fail to pay service charges will not be allowed to register or renew rental contracts on their property.
Tougher measures are being enforced to address the problem, with property management companies issuing a warning that the matter could be brought before the courts.
"If an owner fails to pay his contribution of the service fees or any part thereof within 30 days of being notified, the management company shall refer the matter to the executive judge, who has the right to sell the unit for which the fees have not been paid at a public auction to reimburse the fees," a copy of the notice seen by The National states.
The Dubai Land Department confirmed that legal notices had been filed “against those who failed to pay for service charges or common facilities”, citing a law passed last year that governs the joint ownership of property.
The Real Estate Regulatory Agency, an arm of the DLD, said that if the charges were not settled within 30 days of owners being notified, complaints would “be escalated to the Rental Disputes Centre for a final decision”.
While it has yet to receive any such requests, Rera said management companies were reporting that owners in arrears were "being responsive".
Homeowners are expected to pay their service charges on a quarterly basis.
“We have to send the legal notice as a last step to receive the payments,” said Varghese Daize, operations manager of Dubai's Amal Owners Community Management.
"Many people are not paying service charges citing job losses and [a] reduction in salaries."
The company issued notices to more than 500 property owners in seven buildings across the emirate.
“The notices were issued through Mollak, a new feature on Dubai Land Department’s website, that was created to monitor service charge payments by owners," Mr Daize said.
"Many people are coming back to us seeking clarification and with a positive response.”
The DLD said its property regulations were intended to protect “the rights of all real estate parties, including owners, tenants and investors, to achieve a safe investment environment”.
Although some property management companies have sent legal notices, others are still negotiating with landlords in arrears.
“We fully understand that things have not been easy for them over the past months,” said Alan Rowlands, general manager of property management company Three60 Communities.
"This is the reason we have been in regular communication with all of our unit owners to know how we can give them the right assistance."
His company came up with an instalment programme and offered unit owners a chance to adjust payment terms.
However, he stressed that the money still needed to be paid to ensure that buildings are properly serviced and maintained.
“We may be forced to reduce or discontinue these services if the unit owners fail to meet their obligations, which will affect everyone, including those who have already paid the charges," Mr Rowlands said.
"It is not within our mandate to lower the amount or offer discounts because we have to comply with the rate issued by the DLD.”
Landlords have “limited leeway” in delaying payments, with one of the options being to ask Rera to conduct a forensic audit of the fees to ensure that they are fair, according to Hesham El-Samra, a senior associate at law firm Abdulla Alawadi & Associates.
Apart from that, they could also “escalate the issue directly with the authorities and pursue other legal options”, he said.
The law firm is currently handling more than a dozen disputes related to the non-payment of service charges.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Global state-owned investor ranking by size
|
1.
|
United States
|
|
2.
|
China
|
|
3.
|
UAE
|
|
4.
|
Japan
|
|
5
|
Norway
|
|
6.
|
Canada
|
|
7.
|
Singapore
|
|
8.
|
Australia
|
|
9.
|
Saudi Arabia
|
|
10.
|
South Korea
|
Why seagrass matters
- Carbon sink: Seagrass sequesters carbon up to 35X faster than tropical rainforests
- Marine nursery: Crucial habitat for juvenile fish, crustations, and invertebrates
- Biodiversity: Support species like sea turtles, dugongs, and seabirds
- Coastal protection: Reduce erosion and improve water quality
