Increased district cooling rates irk Dubai tenants

Nakheel will raise district cooling rates to meet government tariffs (Getty Images)

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Residents in The Gardens in Dubai are expecting a huge hike in their district cooling charges this year, after developer Nakheel said it would raise utility costs to meet revised government tariffs.

Tenants said they received a circular from Nakheel informing them of the new rates at the end of November 2011, despite the changes being effective from the beginning of that month.

Many have written to the former Dubai World conglomerate to dispute the high costs, which in some cases reflect an increase of nearly 50% on their previous bills.

“My district cooling charges were AED445 a month; now they are AED686,” said resident Obaid Sadiq, who lives in a two-bedroomed apartment in the development.

“A lot of my friends in The Gardens also say they do not know what to do. People living in three-bedroomed apartments have had to go from AED650 to AED1,262 per month; that is almost a 50% increase.”

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Some tenants may leave the community if Nakheel goes ahead with its plans, he said. “My contract ends in March, so I will probably move out. I am not willing to pay another AED5,000 [a year] and stay in the same apartment, because I can get a better apartment where I do not have to pay this.

“Most of the other residents I have spoken with have also said they will move out to none-Nakheel properties like Silicon Oasis and JLT, especially people in large apartments.”

Nakheel said in a statement it had long been subsidising the cost of increased water and electricity prices for residents in the Jebel Ali development, and could not afford to continue doing so.

The previous cooling rates were set in 2002, it said, and were not applicable following increases in rates by authorities, the state-owned company told Arabian Business.

“In the current economic climate, we are no longer able to continue to subsidise the rates as we have been doing. Moreover, in January 2011 the government of Dubai announced a further increase to the tariff charged to the district cooling companies.”

The dispute is the latest in a series of rows between Nakheel and residents in its Dubai developments. In October it became embroiled in a dispute with homeowners in its luxury Palm Jumeirah Shoreline apartments, after it moved to privatise the beaches, pools and gyms within the development.

In December 2011 Nakheel brought in security guards to ban tenants from accessing the project’s facilities if they, or their landlord, have not paid maintenance fees.

Many homeowners have withheld payment in protest at the plans to charge for access to facilities, arguing that Nakheel does not own the development’s communal areas.

Nakheel is also facing difficulties in its Discovery Garden’s projects, where hundreds of residents have refused to pay service charges in protest at the cost and quality of maintenance.

The company is understood to have told residents it will use security cards to block access to the buildings for homeowners yet to pay their fees.