x Abu Dhabi, UAETuesday 25 July 2017

Palm owners will not get full control

Owners of property on The Palm Jumeirah will not be in charge of the island's maintenance as many of them had expected.

The Palm Jumeirah's infrastructure will be the responsibility of the developer, Nakheel.
The Palm Jumeirah's infrastructure will be the responsibility of the developer, Nakheel.

Owners of property on The Palm Jumeirah will not be in charge of the island's maintenance as many of them had expected, its developer said yesterday. Based on new Dubai property regulations aimed at empowering homeowners, many of those who bought properties on the iconic development had expected their homeowners' associations to be given responsibility for maintaining the buildings and the transportation network, including roads, bridges, tunnels and a monorail system.

But Nakheel, Palm Jumeirah's developer, has decided to retain ownership of the island's vast infrastructure because it believes it would be too expensive and complex for residents to manage, said David Nicholson, the company's general counsel. The mixed-use nature of the development - with shops, hotels, villas and apartments side by side - would make it "exceedingly difficult" for the owners to agree on how to divide such expenses, he said.

Nevertheless, Nakheel's decision has raised the concern among some residents that overseeing the transparency of the contracting and funding of the maintenance work - one of the key objectives of the homeowners' associations - would now be impossible. Mr Nicholson said it was essential for developers to retain at least partial ownership of large mixed-use projects, and Dubai's property-market regulator, the Real Estate Regulatory Authority, said developers can do so despite the new home-ownership rules.

"Major mixed-use developments such as The Palm Jumeirah do not lend themselves to having jointly owned property of all the infrastructure," Mr Nicholson said. "It is just too expensive for residents to own and the interests are too divergent." Mr Nicholson added that only in developments that are purely residential, such as The Springs or The Meadows - where residents share small roads, landscaped gardens and simple communal facilities - would it be practical for associations elected by property owners to be responsible for fully maintaining their common areas.

According to Nakheel, flat owners on The Palm will pay two sets of charges. The first will be for general maintenance and insurance of common areas of their buildings, such as lifts, corridors, lights and stairwells, as well as swimming pools or other communal areas. These fees are still to be calculated and collected for each building or cluster of buildings by the homeowners' associations. The second charge - the so-called master community charge - will fund the maintenance of the island's overall transport and infrastructure network. It will now be set by Nakheel and be divided among the various owners, including hotels, shops, offices and residents.

Hotels will pay the highest proportion of the master community service charge, about four times the rate payable by residents, because the thousands of guests they will house will have a higher impact on the road and transport network. Shops will pay the next highest amount, followed by businesses and last of all residential users, who will pay an estimated Dh4 per square foot of their property's floor area per month.

"The residential users in a mixed development are always in effect subsidised by the commercial users," Mr Nicholson said. "Otherwise it just wouldn't be fair. It's another good reason why you don't hand it all over and say, 'right, you guys take care of it'." rditcham@thenational.ae