Nakheel start charging for late Service Charges

Service charges are always a contentious issue and in these tough times it is a cost that hurts even more.

Most of the Service charges we deal with are for Nakheel Asset Management with Tiara being a recent addition.

Nakheel have been particularly laid back at collecting the service charges which i presume is due to the fact that many residents have firstly challenged the amount charged and then knocked the service provided. It is no surprise to me that the services provided are sub standard on the Shorelines when you consider the delinquincy rate of collections. I would guess that over 30% of residents are in the very late payer category and some are owing in excess of 100,000 dirhams. I also think that some of these late payers are the more vociferous ones when attacking the quality of services.

Service charges need paying or quite simply the investment will fall into disrepair and impact on sales values.

We have been told this week that Nakheel will start charging a late payment fee which will go down like a lead balloon but I think necessary.

As a guide here are some latest Service charges for you to compare:

Nakheel Shoreline

Service Charge 14 dhs /sq.ft
Community charge 5.10 dhs/sq.ft
Club house 2.6 dhs / sq.ft

Tiara
Service charge 19 dhs/ sq ft
Community charge 6 dhs/sq/ft

Marina Residence

Service charge total 19 dhs / sq.ft

We can challenge these all we like but service charges are a cost that has to be paid and if we want a decent environment to live where you can charge decent rental rates the charge is unavoidable.

Costa v Starbucks

Two cups of coffee in the space of an hour and two totally different views of Dubai.

So, Monday 10 am and I have arranged to meet an investor who I have been chatting on and off with for the past 5 years. I generally prefer Starbucks to Costa so we met at JBR for a change from my usual surroundings.

As we stood in line, waiting to order, I politely asked about the kids with every intent of doing a bit of 'oohing' and 'aahing' about the snowfall in the UK. Not necessary as we were straight into the property game quicker than it takes Emaar to change a name on a Tower.

Its like this Mark . I have sat it out for years and Dubai has been good to me but I just don't feel comfortable anymore with any investment outside of the Palm Jumeirah. Jebel Ali in my opinion is a long long way off ,if ever, and I want out. Quite frankly if it was my development company that owned it, he said, I would dump it.

Slurping away at my piping hot skinny latte I bought a bit of time and feigned burnt lips and wiped away the froth from the side of my mouth whilst I thought of an answer

With his eyes bearing down on me he was only expecting one answer . 'You're right the place is never going to get built and you should run for the hills with 50% of the original price in your back pocket.'

It was early and I really didn't feel like the challenge so I shrugged and said 'we don't call it Wobbly Jelly for nothing'.
I honestly haven't got a clue what will happen but one thing for sure is that there is a very large piece of reclaimed land in Jebel Ali waiting to be developed.

After dodging the bullets my latte had cooled down to a temperature where I could gulp rather than slurp so I made my pleasantries and left. I was now Costa bound on the Palm for another potential lecture in how the world is doomed.

Skinny Cappucino please - who am I kidding? the belt is a full stretch since Xmas. We settled down with our respective drinks and I couldn't beleive my ears. 'Mark, I want to buy in Jebel Ali. I know its a risk and information is limited but you know there is a big piece of reclaimed land out there and one day it will get developed. I want in now'. Not exactly deja vu but i thought someone had spiked my drink.

No point in asking this guy about his kids then!!

This is what it is like at the moment. Everybody has a view on the state of the economy and in this emerging market we call Dubai there are a hell of alot of risk takers living here. For sure there are going to be some more tears but at the same time there are going to be some seriously happy people.

I still prefer Starbucks as a venue but for a coffee with a kick I highly recommend a trip to Costa Coffee on the Palm where I think Nakheel are sponsoring the extra shots.

Trainspotter

I am an Anorak!

I have done it and I promise you will only see me sat onthe Monorail again when I am either drunk and planning a getaway from the Atlantis or someone is paying me a fortune.

Although there were hardly any people on it the majority were loud obnoxious brats who need a lesson in how to act in public. It made me remember why I have only been to the Mall of the Emirates 4 times since it opened. I need a bubble to live in and preferably one that does not glide on a few sheets of concrete up and down the Palm.

For those of you (Joanna) who think i only talk about beer, the price of a return ticket from the foot of the Palm to the Atlantis is the price of a pint. 25AED. Too much! I would rather get a taxi for 5AEd and suffer the wrath of an angry driver who is miffed that he got such a short ride.

In its defense the ride does give you a great view of the Palm and lands right outside the Atlantis door. I just can't see who would use it at the moment.

One group who will love it are the Trump Investors who get a cracking view of the construction site. No workers but a good view of the foundations which are capped off with concrete. Stop Mark!

View from the window... can you hear the kids!

Palm Market News

Palm Jumeirah:

This week has seen some reasonable activity on Palm Jumeirah. Both Sales and Lettings have been active and most agents are seeing a pick up.

The Sales department have seen viewings on Shorelines, and the villas. There are requests for Tiara but this is probably just 'laminate floor treading' at this stage. Tiara is lovely but more likely to perform better in the lettings department until Title Deeds are available.
Specifically, we have had offers on Signature Villas form our Russian friends. Smart Russians at that. They sold their Signature villa last year for $6m and are looking to buy back in at $3m. They are going to have to pay closer to $4m for what they want but still shows that 2008/2009 was a good time for some.
M frond low number Garden Home has sold this week for 6.5m AED and Canal Cove 4 bed for 4.5m AED ( take that fork out of your Thigh SC )
The prices aren't making the sellers jump for joy but there is activity and please remember that there is still not a mortgage in sight. When there is finance expect a nice little bounce.

The Lettings Department is very busy with increased viewings. I don't think there are many new tenants floating around as most people are looking to upgrade or get a better rate than they are currently paying. Landlords who already have a tenant should be careful not to push the rates on renewal as the tenants have much more choice and will simply leave.
Tiaras are renting for 130k per annum for a 1 bed with 3 beds touching 240/250k pa. Gardens homes are not much more than 300k p.a with Signatures now less than 500k p.a
Shorelines are doing quite well as tenants enjoy the restaurants and amenities these apartments offer with less than i thought hopping over to Tiara. Shorelines are still flavour of the month with 1 bed sea views reaching 130k p.a .

Over in Palm Jebel Ali it looks like Nakheel are about to announce another delay. They told me last week to expect a very very long delay. Not sure if this means 2 years or 5 but for sure some of you are going to be very upset.

Finally, I am going to be an anorak this week and try out the Palm Monorail. There are only 2 stops at the base of the Palm and Atlantis right now. They are probably thinking of a new name fot the Trump station when it opens. It is 25 dhs round trip, and i will get a 30 dhs coffee at Atlantis to make it worth while. In these times of financial stress I hope you all appreciate this investment I am making for you.

Rental allowances loose their fizz

For the past 5 years I have ben very jealous of all my fellow expats who receive a rent allowance from their companies.Working for yourself has many benefits but it would be great to be self employed and have a rent allowance from some benevolent local.

The playing field seems to be levelling this year with many of our existing tenants and propsective tenants all keen to let us know that their companies have reduced their allowances. Those of you who have not experienced expat living will no doubt be thinking that we should be paying our rent from our salaries and should stop whinging and get on with it. Well, a pint over here is 6 quid and any help you can get is gratefully received. Although I dont get an allowance from my miserly business partner I do sympathise, even if it is through gritted teeth, as this is impacting on the market.

A good rent allowance would be in the region of 200 - 300 k AED . Fallen off your chair yet? If you are a landlord I suggest you keep quiet as this is paying off your mortgage and generous expat packages have kept the property market bouyant for many years.
Unfortunately many tenants are claiming that reductions in their allowance is in the region of 25% and this is going to have a negative impact on the rent received over the coming months.This will be compounded by the fact that Tiara is about to be handed over and Marina Residence is not far behind.

Companies are definitely hurting at the moment and the champagne expat lifestyle is currently under threat. With reduced rental allowancea comes reduced bonuses and I see the next twelve months being one of attrition.



My advice is pay your rent as you need a roof over your head, stick to beer ( at 6 quid ) as opposed to the bubbly, and suck up to the human resources manager. People are seeing better rental prices on the Palm and many tenants are starting to consider the Palm as an option. The Palm will attract enough tenants to fill the spaces but there will be a lag and in this period where we will see lower pricing. Rents will come back but don't expect too much in the next 12 months.

My 'green eyed monster' has been tamed for a while but I am sure a year on and expats will be smiling once again as allowances are increased and corks start popping.

Will the Dubai Rent Index mean anything?

RERA launched their Rent Index last year just in an attempt to help stabilise the rental market. With rentals rising rapidly landlords were simply picking a figure and tenants had little choice, so had to accept.
The market started to change in October with the credit crunch biting and landlords expectations were not matching that of the tenant. The Index was immediately out dated and had little relevance in its first 6 months of publication.
On the 15th April 2009 RERA will update the index and in theory there should be an alignment of landlord and tenant expectations.

Yesterday Landmark launched their own unofficial index which is actually a fair reflection on the present situation. Although Landmark have a brokerage department they have always set themselves out to be an advisory company and it will be interesting to note the differences in these two opinions. There is a good a chance that the RERA index will be still be out of date as rents have declined dramatically in the past 3 months and RERA tend to live in bubble.

I think the RERA index will have some relevance but my advice to Landlords and Tenants is to pick an agent who really knows the area in question and so long as you choose to talk to someone who can count to 500 then you should be able to gain a true idea of rental values in Dubai.

I thought of doing our own index for The Palm but I was too scared to offend the Landlords in Tiara who will be less than impressed with present rentals on the Shoreline apartments. However, I have been in Tiara this week and have to say that this development is going to be fantastic . The finish is excellent, the view is amazing and the gardens give you the feel of being in a hotel environment. The shoreline apartment rents will undoubtedly suffer with over 500 Tiara apartments hitting the market in the next 3 months and the rent index will need updating again.

Just missed the last train!

April is here and I was getting all excited about being able to go up and down the Palm on the monorail. Glide across the ocean to the Atlantis and then put my car up for sale!

Unfortunately the project has been delayed for a few more months whilst more 'testing' is done. My guess is that the monorail is fine, the trains are fine but there is absolutely no chance of any of us boarding one because the stations are no where near close to being ready. You will need a full set of clampons to scale the station walls or a very good trampolene.

These trains are not manned and are run by computers and have been in action most of this year. No matter what time you go on to the Palm the trains are operational so it will not be long before we are all mobile.

I will hold off before selling the car but this piece of infrastructure is going to make a huge difference to the Palm Jumeira giving it another layer of credibility and help make The Palm a special place to visit.