Dubai tenant associations aim for 15% utility cut

Newly empowered by the strata law, interim homeowner groups around the emirate are looking to reduce maintenance costs.

Newly empowered by the strata law, interim homeowner associations around Dubai are looking to cut energy costs and renegotiate service contracts in the hope of reducing maintenance fees by as much as 15 per cent. The regulations of the strata law have paved the way for owners to elect their associations to oversee the maintenance of jointly owned property such as lifts, lobbies and landscaping. Developers have taken on this role in the past.

Recent notices put up around the Shoreline Apartments on the Palm Jumeirah say the interim owner association expects to achieve energy savings of 15 per cent by reducing the use of lighting in common areas and using less air conditioning. Mohammed Bassit, the interim chairman of the homeowner association at the Mag 214 building in Jumeirah Lake Towers, said he had already presided over a cut in maintenance fees from Dh20 (US$5.44) per square foot in 2008 to Dh14.50 this year.

"We haven't even started to address energy and district cooling. Those account for the majority of the costs for jointly owned property." Energy and district cooling costs at the 40-storey Mag 214 Tower are about Dh2.2 million a year, Mr Bassit said. The owner association is exploring the possibility of installing sensors in the hallways that turn on lights only when somebody is using them. District cooling is a bigger challenge because Palm District Cooling charges the building a set capacity fee in addition to usage fees, which in combination represents 19 per cent of the tower's costs. Residents pay the district cooling fee for their own apartment.

Formal elections for homeowner associations will be held in October, according to the strata law, but the interim members are laying the groundwork for changes that owners will be able to make after the votes. Mr Bassit said homeowner associations were in a difficult position because they did not have the experience of dealing with multimillion-dirham contracts and associated legal documents. He said he spent 20 hours a week in his role as chairman of the association, in addition to his job running the regional office of a Belgian telecommunications company.

A number of new strata management companies, such as Place Strata Management and BCS Strata Management, have been formed in the past two years to take advantage of the demand for professional building management services. Kent O'Brien, the director of Strata Global, said owner associations would be able to increase the efficiency of services in some areas but utility costs were likely to remain a major cost. The average is 40 per cent of total charges.

"There should be more competitive tendering," he said. "By changing the method of engagement for service providers and removing most of the middle-man fees, we feel there will be significant savings to be serviced." Another target for the homeowner associations will be master developer charges. The Dubai Multi Commodities Centre, the master developer of Jumeirah Lake Towers, charges Mag 214 about Dh750,000 a year for services to the building. "Owners' groups need to insist on master developers justifying the costs of maintaining the master community," Mr O'Brien said.

Still, implementing the strata law could be delayed beyond the October 13 deadline for associations wanting to take over building maintenance. Moin Anwar, a member of the interim homeowner association of the ARY Marina View in the Dubai Marina, said the developer of his building had not yet taken any steps to create a legal association in line with the law. The association had not been able to reduce any costs or take any actions, he said.

"The problem is that many developers have entered the facilities management business," Mr Anwar said. "They don't want to lose the fees they are generating as the manager of the buildings." Just up the road at the Trident Marinascape, owners are also trying to wrest control of the building from the developer. Alan Godfrey, the chairman of the interim owner association at the pair of buildings, said he was paying maintenance costs similar to the high-end Chelsea Harbour development in London.

"This isn't central London," he said. The association, which was formed in May, is already challenging many of the costs for the jointly owned space in the buildings. "We want more detailed information," he said. "There are some really odd things on the bill for the buildings. Now we have the right to ask for information." Mr Godfrey said one of the residents' complaints was dealt with almost overnight after the homeowner association was set up: the aircraft warning lights located on the shorter of the two buildings across from his window were turned off.

"I fought for 18 months," he said. "My flat was like a discotheque. I showed them the regulations that said they weren't needed. When we set up the association, they were off within 10 minutes. We are taking control."