Apartment service charges in JBR increased by 129 percent

Apartment owners on Dubai’s Jumeirah Beach have been hit with a massive increase in service charges.

Salwan Property Management, a subsidiary of the project developer, Dubai Properties, which is linked to the Dubai government wrote to Jumeirah Beach residence owners last week advising the services charges levied against their properties would rise from AED 9.50 dirhams per square foot to AED 21.75 dirhams per square foot. Despite the letters being dated 4th December 2008, the manager advised the charges would be backdated to 28th September 2008.

In the letter, Salwan, said the old charge “was much below the actual costs of maintaining the tower and did not include additional costs such as the sinking fund, utility charges, building insurance premium, communication cost….”.

Salwan said the differences “were met by the master developer; however, with the anticipated co-ownership laws coming into force [the Strata Law] and the need for transparency, these costs need to be budgeted from the service charges.”

The Jumeirah Beach Residence project has been controversial due to its non-completion, poor exterior finishes, and failed promises to deliver recreational facilities, beach parks, and gymnasiums. Occupiers of apartments have consistently complained of the services of the management company saying windows are cleaned only twice a year.

Dubai Properties sold the development as a luxury complex of forty towers comprising  approximately 7,000 residential apartments and hotels. It displayed plans and told buyers they would develop acres of beachfront recreational facilities, clubs and gyms. Two years after the completion of the construction they have failed to materialize. One very large section of beachfront, earmarked for beachfront recreational parks, was converted to a car park earlier this year for commercial, despite calls of condemnation by irate JBR owners and residents.

Investors are not happy. The resale prices of their apartments are lower than expected, and the volume of transactions is lower while the inventory of available property is considerable, giving buyers a lot of choice. The new differential in service charges is having an effect on the resale market.