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Nakheel hikes approval fees by up to 233%

Furious luxury villa owners forced to reconsider extension plans

Picture for illustrative purposes only.
Picture for illustrative purposes only.

Dozens of Dubai residents living in luxury villa communities such as Palm Jumeirah, Jumeirah Village and Al Furjan, who were looking to build extensions to their properties, have been forced to scrap their plans after master developer Nakheel last month increased its application fees by up to 233%.

Under the terms and conditions laid out in Nakheel’s ‘Guidelines and Procedures for Villa Extension Applications’, residents are required to pay an application fee as part of the approval process before they can start construction.

Previously, the fees ranged from AED150 ($40) per square foot in Jumeirah Village and Al Furjan, to AED200/ft2 in Jumeirah Park, AED300/ft2 in Jumeirah Island and up to AED600/ft2 in Palm Jumeirah.

However, residents were last month informed that the government-owned developer had increased the fees by more than 150%, effective immediately, and any applicants whose paperwork had expired would be required to reapply under the new terms and conditions and pay the higher fees.

In Jumeirah Village rates increased from AED150 to AED380 per sq ft, an increase of 153%. This means that any residents looking to add an extension of around 1,000 sq ft will be required to pay Nakheel a fee of AED380,000, on top of the construction and utility costs, which averages at around AED400,000. As a result of the surge in fees, many disgruntled residents have been forced to scrap their plans.

“This means that for an extension of 1,000ft2 you will end up paying over $100,000 to Nakheel. For what? We have been told that the decision came from the board and that they took it overnight and it was effective immediately,” a Jumeirah Village resident told Arabian Business.

In Palm Jumeirah, Nakheel’s flagship manmade island project, the increases have been even steeper, increasing from AED600 to AED2,000 per sq ft, an increase of 233%. This puts the fee for a 1,000ft2 extension at over half a million dollars, even before a single brick of construction has been paid for.

By comparison, rival developer Emaar states in the terms and conditions of its ‘Alternations & Home Improvement Fact Sheet’ that, in addition to submitting the standard paperwork, homeowners are required to pay a refundable deposit of AED5,000 to cover any damages to common areas and a flat fee of AED2,000 per application.

The residents Arabian Business spoke to said around 60 to 70 homeowners planning extensions to their properties in Nakheel developments had been impacted and had been forced to downsize or reconsider their plans as a result of the surge in fees.

“Nakheel’s propaganda when we all bought the property was that major extensions up to three additional bedrooms were allowed thanks to the big plot area... All of us are obviously now reconsidering the possibility of extending our villas. We feel our rights completely ignored and trampled on… We feel deprived of our rights of ownership,” one resident said. 

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Construction Week - Issue 747
Aug 03, 2019