x Abu Dhabi, UAEThursday 27 July 2017

Property developer's lofty goals eclipse practical planning

Developers and regulators must stop landlords from pocketing the rent while evading the service charges or mortgage payments.

Since the dawn of time (before non-GCC citizens were permitted to own property, for example) the property landscape in Dubai has been towered over by the duopoly of two giants: Emaar and Nakheel. Emaar generally kept busy building on land in varying shapes and forms; Nakheel, on the other hand, focused its considerable resources on building in the sea.

Today, Nakheel is the proud name behind the Jumeirah Palm, the Atlantis Hotel and Dragon Mart.

Emaar has enjoyed success even after the troubles following the demise of Lehman Brothers in 2008, including projects such as Burj Khalifa and Dubai Mall. It developed Dubai's downtown district, and some of the oldest freehold buildings and villas near Al Barsha still enjoy strong demand as reflected in both sale prices and volume. Emaar has even ventured into other countries in the region and generally fared quite well.

Nakheel, in contrast, has been challenged by the changing economic tides. Setting the drop in property prices aside, there have been many a frown cast at the Palm, the fronds of which can be seen from space. Ask prospective buyers today and most would prefer a villa in the distant Arabian Ranches over the more central and glitzy Golden Mile. Why?

Quite simply, attention to detail and a positive attitude are the keys. In the quest for headlines and Guinness World Records, the smaller and finer things have slipped down the agenda. Poor management and communication have resulted in souring relationships between owners and the developer. Rather than using it as a source of trusted information, owners tried to find ways to fight decisions made by Nakheel. A quick Google search or a visit to the property regulator Rera in Dubai gives a good indication of what is really happening.

Let's consider the dreaded service charge. Historically, every city in the UAE functioned on a model where a single, typically Emirati, landlord owned a block of flats or a villa compound and was responsible for management and maintenance. The equation was simple, fair and successful.

However, since the turn of the millennium and with major changes in legislation, the model has changed significantly and we have seen the emergence of the mighty owner-occupier class. This poses a challenge to conventional property management. Now the developer is in charge of not only the design and construction but also the maintenance of buildings, especially in common areas such as the lifts and staircases.

In a regulatory response, the Government has started to register interim owners' associations to take charge, a move that has been welcomed by many. In the meantime, the developers levy their own service charges. In an environment often shrouded by a lack of transparency coupled by tumbling sales of new properties, the costs - and the number of disputes - have risen. It comes as no surprise to learn that many owners have refused to pay service charges, which has a series of knock-on effects.

Certainly, many Emiratis and expatriates are of the opinion that more should be done by the big developers to improve the situation. After all, this year we've seen Shoreline Apartment owners being barred from using the private beach for which they paid, and which is defined in their contract as being for their exclusive use. The row escalated until the police were called.

In Jumeirah Village Triangle, residents have suffered for more than a year because of the closure of the only gate that allows cars to exit towards Dubai. Instead of spending the money and time to fix the issue, money was spent on general landscaping and installing traffic lights in an area with negligible traffic.

There are a few simple steps that could be taken to improve the situation greatly. Developers could be encouraged to adopt corporate governance and corporate social responsibility. They should communicate better with residents and encourage feedback from owners whenever possible. Also, action should be taken within a reasonable timetable and problems not just left hanging around indefinitely.

A large number of properties, particularly apartments, are owned by expatriates who have purchased them with the help of mortgages. These owners tend to reside outside the UAE, and a number of cases have emerged where they fail to pay service charges or even mortgages. Unfortunately, it is the tenant who suffers in this case, even if he has fulfilled all of his obligations.

This issue needs to be tackled jointly by developers and regulators for a speedy outcome to stop the landlord from pocketing the rent while evading the service charges or mortgage payments.

The beautiful thing about the property landscape in Dubai is that most of it is built in fantastic locations and to very high standards. Even mass-produced villas and buildings enjoy terrific views and have ample parking coupled with low density that is the envy of most cities in the industrial world.

We should work together to focus on making the best out of what Dubai has succeeded in building in record time. Better communication, better planning and better management should lead us collectively to a better life in Dubai.

 

Mohamad Al Dah is an engineer and social affairs commentator based in Dubai

Follow on Twitter: @PianoMKD