Realty firms to increase maintenance charges

Real estate companies in Dubai are set to increase maintenance charges at their properties owing to an increase in the costs they incur, Emirates Business has learnt.

Some companies, such as Emaar, have already increased the maintenance charges in several of their properties.

"Community service fees have already increased in some communities that Emaar is developing. This is primarily because of a general increase in labour and material costs all over Dubai and also due to the increase of utility charges due to a new slab-system implemented by the utility services providers," said an Emaar spokesperson.

"Other factors that influence service range revisions include wear and tear, occupancy levels in the buildings, supplier costs and life span of equipment and replacements. In older communities and buildings, capital equipment (such as elevators, chillers, swimming pool pumps) are ageing, which typically require more maintenance," the spokesperson said.

"Additionally, most of the equipment in buildings and communities which were previously under the manufacturer's warranty are no longer covered, and so all costs associated with repairs are rendered as part of community service fees," said Emaar.

Rayomand Dastur, Chief Operating Officer, ETA Star Properties, said: "We have not increased the service charges so far, but we will be forced to increase them due to inflationary pressures."

ETA Star Properties currently charges a maintenance fee of Dh10 a square foot.

Saeed Bushalat, Chief Executive of Salwan Property Management, a subsidiary of Dubai Properties Group, said: "Ever since JBR residents moved into their apartments, the charges have not been increased."

Chris O'Donnell, Nakheel's Chief Executive, said: "For Nakheel's communities every year the service charges are budgeted based on projected costs with the accounts independently audited by an accountancy firm to ensure accuracy and transparency. How the service charge is calculated is set out in each sales contract for the benefit of the buyer prior to purchase."

"Our service charges are competitive, in JBR we charge Dh9.5 per sq ft, the lowest in the market. On an average, this works out to Dh12.5 per sq ft, and very often the range of service offering that Salwan provides its clients far exceeds this rate," said Bushalat.

"The maintenance cost at Dh9.5 per sq ft covers three main categories in the total maintenance of a building, namely maintenance, security and utility bills for common areas. Maintenance includes the recreational facility maintenance, general cleaning and maintenance of central air-conditioning in the common areas such as parking lots and business areas. The second category includes security while the third includes payment of utility bills in the common areas," he said.

According to Nakheel, the major cost that a developer levies on its buyer is the cost levied on registration fee, in order to register one's property with the Dubai Land Department, and ultimately receive one's title deed.

"For contracts issued prior to December 17, 2006, this amounts to two per cent of the property price with 1.5 per cent payable by the buyer and 0.5 per cent payable by the seller. For contracts issued after this date, the fee payable is one per cent of the property value from each of the party – the buyer and seller," said O'Donnell. "This is the only major additional cost, although there may be smaller additional administration costs for certain extra services, such as the production of an affection plan or amendment of the title deed to joint ownership," he said.

There are different set criteria for maintenance of villas and apartments. "For apartments, the charge is based only on the square footage of the suite or apartment area, while for villas it is based on the villa size or type," said Emaar.

"Currently, Salwan focuses primarily on residential and commercial properties. When we do extend our portfolio into the villa segment, there will be a difference between what we charge for managing villa properties and for apartments. Our team is working out the differential cost details," said Bushalat.

Developers in Dubai say their maintenance fees are in sync with the quality of their developments.

"An itemised budget for community service fees is drawn up every year. The budget is then presented by the Emaar Community Management and reviewed by home-owner representative groups of the residential communities," said the Emaar spokesperson.

"Following such meetings, service fees are determined and invoiced subsequently. If a community does not have a homeowner representative group, Emaar determines the service fees on behalf of the owners. At the end of the year, if the actual cost incurred is more or less than the budgeted cost, then a debit or credit – as the case may be – is made to the service fee account. To ensure transparency, an independent auditor, appointed by the community, carries out a review of the services fees, and the audited results are made available to the homeowners," the spokesperson said.

Dastur of ETA Star Properties said: "We have one of the best industry maintenance services in all our properties. This can be validated at the two properties we have delivered – Belvedere in Dubai Marina and The Palladium at Jumeirah Lakes Tower."

Bushalat said: "Salwan offers an assortment of services to clients at a competitive cost. In addition to general cleaning and maintenance of common areas and recreational facilities, we also offer a full spectrum of security services, district cooling by Empower, and other complementary services. Our bouquet of services fully justifies our maintenance charges."

Developers interviewed by this newspaper said they would be open to raising the level of services and its quality if there was a need expressed by buyers. However, according to Emaar: "We already have a service level arrangement with service providers that outlines the standards to be met. If homeowners demand additional services, it will have an impact on the service fees."

Salwan Property Management, too, said in line with the company's strategy to offer clients innovative services, it has implemented benchmarking and continuous improvement systems across their routine operations.

"The quality of our service is our topmost priority and we are determined to sustain our service levels. We are hiring 40 more personnel for the effective upkeep of these services," said Bushalat.

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