Nakheel hits back over Palm Jumeirah fees row

Developer says banning residents with unpaid service fees at the Shoreline Residences on the Palm Jumeirah was 'the soft approach'.

Nakheel chairman Ali Lootah says service fees for the Shoreline Residences on the Palm Jumeirah will be reduced this year, as they will across Dubai.

DUBAI //The chairman of Nakheel says service fees at the Shoreline Residences on the Palm Jumeirah will be reduced again this year, even as unhappy owners hunt for a new company to manage the premises.

Ali Rashid Lootah discussed the months-long row over service fees and access to the beach, pool and gym in an exclusive interview with The National last week.

"Our service is the cheapest … if they think they can get a better service, it's their privilege," Mr Lootah said.

The dispute flared last December when Nakheel began to bar residents with unpaid service fees from using the communal facilities. The ban also hit tenants who had paid their rent but whose owners were in arrears.

Mr Lootah said Nakheel was acting within its rights and could have imposed tougher bans, such as a lockout of the buildings.

"We're using the soft approach," he said. "We didn't stop people from accessing their apartment. This is the minimum, I think. They are smart people, they should read their contracts."

Owners argue they should only have to pay the 2010 and 2011 fees approved by the Dubai Real Estate Regulatory Authority (Rera), a stance the government body backed in a stamped document from last December.

Mr Lootah said Rera had not notified the developer of such a restriction, and that Nakheel had the right to charge all fees. Exempting some owners would be unfair to those who had paid in full, he said.

In any case, two thirds of the outstanding fees came from the past two years, meaning people were not even paying the Rera-approved charges, Mr Lootah said. "What's the justification?"

Nakheel has collected 45 per cent of the Dh72million in unpaid fees since they were imposed, he said.

Owners are now moving to replace the Nakheel-owned property manager with an independent company, which they believe will cut costs.

Rera gave them an apparent green light to do so this month. It began registering the 13 associations set up to represent owners, and said in writing to one group that it could appoint a manager and review the budget, among other responsibilities.

The owners hope to issue a tender for a new company this week, said Nader Alizadeh, a member of the board of one association.

But it is unclear if the association will have the legal status to sign new contracts and open the bank account needed to pay them. If not, it will have to rely on the developer to handle such transactions on its behalf, as do other associations across Dubai.

Nakheel would not take up new contracts on behalf of owners, as that would make the company liable to outside companies, Mr Lootah said.

He advised owners to open their own bank account or entrust their money to one person.

"If I sign with a contractor, I'm taking the risk of paying that contractor," he said. "Who's going to guarantee that I am going to collect the money from them?"

Mr Lootah said Nakheel's rates were among the most competitive and were likely to drop this year across all of its communities.

Residents in Jumeirah Islands, for example, would have a quarter of last year's fees refunded due to cost savings.

Service charges at Shoreline had dropped by a third since 2009, he said. According to a chart published in Al Bayan by Rera, Nakheel's rates there were Dh14 a square foot in 2009 and about Dh10 in 2010 and last year.

Rates for two Shoreline buildings managed by another company, Ifa, were about Dh20 a square foot in 2009 and 2010, with no data available for last year. The figures excluded air-conditioning fees.

It was unclear if they included master community fees or separate fees for "clubhouses" - buildings adjacent to the residences that held a gym and other amenities.

"Our intention is to bring our charges for 2012 down," Mr Lootah said. "We are doing it every year. It's an ongoing exercise.

"We want to make our tenants and landlords happy as much as possible - providing they pay."