Property owners are furious that the state owned developer has banned
them from using the beach, pool and gyms in their buildings in the first
stage of a plan to charge for access to the facilities.
Analysts warned the move could see landlords struggle to rent out their
beach front properties and would push down the price value of apartments
in the development.
‘If that is the course they’re going to go down then it could have a
negative impact on their signature apartments,’ said Matthew Green, head
of research at property consultancy CBRE.
‘The attractiveness of being on the Palm is a lot to do with location
and the facilities, so if that is taken away, then beyond having a sea
view and a nice apartment people are definitely missing out on things
which are most probably being offered elsewhere. We may start to see a
bit of migration away from the development if Nakheel do start taking a
tough stance on these facilities,’ he explained.
Nakheel has declined to comment on the dispute. But it has been reported
that it wants to charge owners up to AED12,000 a year to access
Shoreline’s pools, gyms and beach. Owners argue they own the facilities
and many have withheld maintenance fees.
Dubai’s Land Department has asked owners to pay outstanding service
charges into an escrow account it had established, and not to Nakheel,
as it moves to determine who holds ownership of Shoreline’s common
property.
A number of tenants in the development told Arabian Business that they
had paid a premium for Shoreline’s beachfront access and planned to
leave as soon as their lease expired.
‘I’m paying a 30% premium to stay here. If I can’t access the beach
clubs I might as well move to Jumeirah Lake Towers or Dubai Marina for
significantly less. Even if I pay to break my contract, I’m still saving
money,’ one person said.
And one home owner said he believes that the row could wipe 20% off the
value of his property. ‘A Palm Jumeirah apartment with no pool, gym, or
playground. It does however back on Nakheel's beach club. Great,’ he
said.
Owners and tenants are waiting on Dubai’s Real Estate Regulatory Authority to rule on who owns the facilities.
Last month, Nakheel’s chairman Ali Lootah said the firm was legally
permitted to privatise the beach clubs for its apartments, and that it
didn’t expect tenants to be happy with its decision. He also said he did
not see the move damaging Nakheel’s reputation internationally.
He is confident that RERA will back the company’s stance. ‘I cannot make
everybody happy. They (owners) should read their contract. We checked
legally, we went to RERA. We abide by the law and we respect the law,’
he explained.