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The plot thickens: drama in Dubai’s property sector

The plot thickens: drama in Dubai’s property sector

Kipp’s exclusive with Nakheel’s Ali Lootah has inspired a rich debate around the role of developer, tenants, home owner, regulatory authority. Which side do you stand?

January 31, 2012 4:09 by

It is hard to deny that property-related articles from Kippreport tend to carry an implicit investor/home owner point-of-view. Which is why, it was interesting to read the backlash from our readers when we posted a few snippets from our exclusive interview with Nakheel chief Ali Lootah concerning the service fee debacle at the Shoreline Apartments on the Palm Jumeirah.

For his part, Ali Lootah was candid and unabashed with the company’s standpoint on the issue: “[Nakheel is] going to chase [its] money right and left. Nakheel cannot afford (not) to… What should I do? Just keep quiet on my money and not collect my money because of the negative (attention)? It is a serious issue, how can we continue servicing them if they don’t pay?” Lootah named Discovery Gardens and International City to be among the next communities Nakheel will be targeting to collect its dues.

Understandably, Lootah’s comments garnered a wide gamut of responses from home owners, tenants and observers of Dubai’s real estate market alike. Kipp has really enjoyed the rich discussion our readers have been engaging in and we want to take it one step further.

The question of service fees at the Shoreline Apartments is multi-faceted. Though their comments may vary, every member of the equation has a bitter complaint to air. And for every comment, another layer to the already murky issue is added.

For instance, some tenants do not think it is fair for landlords to put them in a fix with the developer. Kipp reader Ronman told Kipp:

Homeowners cannot go on a keep putting unsuspecting tenants in a bad fix just because they do not agree what the developer is doing… However the criminality of tenants being left without services and facility access lies in the Landlord’s hands… I’m a tenant who’s landlord has paid his fees to the T, yet the developer is failing to pay DEWA, and the latter is threatening to cut the power, all because a lot of other Landlords are not paying…. Tenants should do their due diligence I admit, but they can do it for one apartment, not the entire tower!”

Ronman brings up an interesting point concerning the responsibility of home owners to pay up—the counter argument to which, is best articulated by Kipp reader Nancy Smith who says:

“Homeowners are withholding their service fees because Nakheel has failed – for years! – to maintain the properties. They are paying for nothing! (…) This means homeowners paid service fees for nothing. People are withholding their money for good reason!”

Another argument being made in favour of the homeowner comes from Kipp reader Ben, who argues a lack of transparency and disempowerment of Home Owners Association has led to the developer usurping fees he claims do not belong to Nakheel:

“Nakheel is collecting on behalf of owners the money because they refused so far to register the HOA. They have appointed them self as the Manager and service providers for the place. Nakheel has an obvious conflict of interest shown by the poor services while over charging for SC’s. The money collected belongs to the HOA for the upkeep of the building and not for Nakheel to use as they wish.”

Phew! The more Kipp dwells into the Shoreline issue, the more acutely aware we become of just how complicated it really is. In this complex tug-of-war, it’s amazing this squabble has been allowed to escalate to this level. Where is the unbiased third party that should have been helping put down some regulations and protocols when it comes to these issues? Where is the referee?

We’re hoping to bring some clarity to this issue. And as such, we continue to stay interested in what our readers have to say. Are you property owner or a tenant? What role do you think RERA has to play? What is the best way forward? Tell us your story and perspectives in the comments section below or send them to [email protected].

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  1. Benny Hill on January 31, 2012 5:49 pm

    RERA? what is RERA? ah you mean the guys who make many PR speeches in the media and give valuable advices like: take them to court! or maybe you refer to the statement made lately: ” we have no authority to implement the Law? My guess, you are refering to a ghost or a science fiction character that only exist in investors dreams and becomes a nightmare by the time they wake up. Yours kippitsimple

  2. Chris on January 31, 2012 9:45 pm

    Rera has not achieved anything positive since there creation. Delayed basic laws for 3 years. Has not solved any dispute with developers, has not reimburesed any investor for stalled projects, no HOA is registered, Developers are still in control and charging owners without having boooks audited, they gave licences to developers owned companies to manage properties, etc. Investors lost faith in their capacity to run the show or be fair. Beside that RERA is a teeth less tiger.

  3. Al Attar Investors on February 1, 2012 1:58 am

    A good example of RERA not doing its obligation is the situation with Al Attar Properties so called developments. SInce 2004 they supposed to complete the construction of seven towers and one thousand townhouses. But guess what? They delivered none and kept the investors fund for what ever purposes they wanted. This is called “Al Attar Free Financing” or Al “Attar Day time Rubbery”. Just google “al attar investors” to see the tip of dark iceberg.

  4. Ben on February 1, 2012 6:06 am

    If RERA was of no help so far, why the should be able to do anything different now? For me, as an investor, the biggest issue is that RERA has allowed developers to escape all their liabilities with no consequences. Take the deviation between what was sold and what was delivered, the sinking funds obligations ignored, The developer conflict of interest tolerated and confirmed by licences, many deadlines ignored and never sanctioned, thousand of investors in limbo for undelivered projects. RERA seems to be more an expensive marketing tool than a real regulatory authority.

  5. Ben on February 1, 2012 6:08 am

    All this is bad for Dubai RE credibility.

  6. just say on February 1, 2012 9:05 am

    When investor is default in the payment rera will send u warning then termination letter , but when developer is defaulter then rera will ask investor to go to court & open a case against developer they can’t do anything , why rera don’t ask the developer to go & open case against investor , that’s mean the right of developer should be implement on the sport but investor right caught me if u can .

  7. MK on February 1, 2012 11:34 am

    What credibility are you taking about Ben? This makes my doubts even stronger about an article published earlier about how with all the sanction on UAE’s neighbour, all the Iranians are now investing in Dubai Real Estate….yeah right!!! Unless they were pretty stupid, and believe me, these rich folks aren’t.

  8. Sal on February 1, 2012 8:06 pm

    Iranians purchasing properties is not an excuse to keep a lawless mess and allow developers to over charge owners and tenants. I doubt Iranians will be able to purchase all the empty buildings or the solution for the investors who never got neither their property or their money back. Finally the rich Iranians have already homes in countries like UK, Canada or other Eu countries, where they get a permanent resident visa after 3 to 5 years or even before if they bought a home with a value higher than USD400K.


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