'We will go by the book,' says Nakheel

Master developer adamant it will recoup $35m in unpaid service charges

Shoreline Residences at Palm Jumeirah has been at the heart of a service-charge dispute with master developer Nakheel.
Shoreline Residences at Palm Jumeirah has been at the heart of a service-charge dispute with master developer Nakheel.

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Master developer Nakheel recently hosted a media round table to present its case in its ongoing dispute with residents at the Shoreline Residences on Palm Jumeirah with regard to unpaid service charges.

Nakheel has been embroiled in a months-long row over service fees and access to the beach, pool and gym facilities at Shoreline Residences. It threatened to ban residents with unpaid service fees from using the communal facilities.

RERA has also stepped into the fray and commented that Nakheel cannot prevent residents from accessing the beaches and facilities.

An added bone of contention has been tenants who have paid their rent, but owners who, in turn, have not paid over the service charges to Nakheel.

Nakheel acting CEO Sanjay Manchanda admitted that a billing backlog on the part of the master developer, due in part to its financial restructuring.

This had resulted in a service-charge backlog of $9.5m at Shoreline Residences, with 60% to 70% of residents having not paid to date.

However, Manchanda was adamant that Nakheel would recoup these costs. Despite the billing backlog resulting in huge bills for residents, it was unlikely that Nakheel would negotiate payment arrangements for the outstanding charges.

“I would want the owners to come over and present their proposition to us, because as far as I am concerned, the services were rendered and paid for. So you have already consumed the benefit of those services.

“Now if you had not paid, and you feel there is one very large amount you have to pay in one go, we would want to see what people are offering us, because it is a disadvantage to someone who has paid and someone who has not paid and is seeking certain permissions.

"We have to treat people on an even footing, equitably. It is very important to us,” said Manchanda.

Commenting on the billing backlog, Manchanda said this was due to “the requirement that these billings have to be approved by the regulatory authority.

“As a business, our focus was to make sure we could keep this company in a shape and form and financial health in which it can contribute to the community development and objectives of Dubai, so our priorities shifted.” This effectively meant no service-charge billings for the period 2008 to 2010.

“We did the catch-up and started billing. We knew people would pay us the day we started billing. As far as the backlog is concerned, yes, it is a function of what we went through, but that does not mean we want to turn our backs on this.”

Manchanda stressed that “there has been no cut-back in services. On the contrary, we have funded those services. Our commitment to continue providing services at economic prices, and the various steps and measures we have taken, will continue, because at the end of the day it is for the good of Dubai.”

Manchanda acknowledged that Nakheel’s entreaties had elicited a response from some residents at Shoreline Residences.

“Some people have realised that there is an obligation, and they have paid that, and they are enjoying the services. The rest are being a little stubborn, I would say.”

While reluctant to suggest that Nakheel would pursue legal action, Manchanda said: “We will seek counsel and guidance from the regulatory authorities for what next steps are feasible, maybe with their concurrence, but we do not want to put a lot of pressure on everyone. We have communicated with them about the facts. We have tried to use very persuasive steps.”

Asked about a timeframe for resolution of the dispute, Manchanda said: “As far as I am concerned, it should have been yesterday, because please do remember, every nickel and dime that is outstanding, I have an initial cost which I cannot pass on.

"So if people are really conscious of what they are doing, then they should keep their emotions aside, come talk to us, and I am sure we can find a solution.”

Asked as to when Nakheel would begin handing its communities over to owners’ associations, Manchanda said: “I can assure you we are taking all necessary steps towards that action.

"We will be handing over to the owners, but I cannot commit to a timeline, because I am not the only one who is a party to this. We have the regulatory authority, owners and the developer.”

Commenting on the issue of sub-letting, Manchanda called for tenants to be become more aware of the law, and also to study their contracts carefully. “We will start following the law, by the book,” he stressed.

“If you are living in a rented house, you go to DEWA and make sure you have connections. I think people now have to be a little bit more educated about the leasing, and communities like ours, or anybody’s, which are managed by owners’ associations, they must seek out the owner to present to them whether he has paid the service charges or not. Why should they be put through inconvenience?”

Manchanda summarised Nakheel’s position: “I am not making any money. Pay my money. Here is the situation: I have a building … Owners are not paying. Services have stopped. Can I have this happen in all my locations? I cannot. We as master developers have a duty to keep these in the same shipshape conditions as we handed over the apartments.”

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