Image Credit: © XPRESS / Ahmed Ramzan

DUBAI: Homeowners who bought apartments in certain New Dubai communities in the hope of getting good rental returns have been stumped by high service fees and rising utility costs.

Take Discovery Gardens for instance. The annual rent from a one bedroom apartment here is around Dh38,000, but its service fee hovers around Dh19,000. In International City too, the picture is no less dismal. For a 740 square foot one-bedroom apartment that fetches only Dh24,000 in annual rents, the annual service fee is around Dh12,000.

Curiously, the service charge for a one-bedroom apartment in the upscale Sky Courts in Dubai Land Residences is only Dh6,500.

If the gross disparity were not cause enough for concern, residents now have to also put up with sharp hikes in their utility bills. Of late, there has been an almost 50 per cent increase in utility bills of communities that run on district cooling. As a result, the service fee charges in these communities have gone up too.

In order to keep the charges down, many communities have been forced to cut down on other services.

Roger Ghandour, Director of Association Management at Mace Macro, admitted he was forced to do away with some cleaners and security personnel in a building to keep costs down.

"You will not be able to decrease costs without reducing the scope of service providers on site. For example, we reduced the number of cleaners and security personnel in a building to meet our targets," Ghandour told XPRESS.

Mohammad Metwally, Chairman, Interim Owners Association (IOA), Al Seef Tower 2, Jumeirah Lakes Tower (JLT), said the hike in utility costs will have a direct bearing on service fees.

"We have seen a 50 per cent increase in utility costs this year. This is bound to increase our service fees. For everything other than utilities, our budget was reduced by re-negotiating contracts and obtaining competitive bids. However, with utility bills we have not seen any reduction."

Energy saving schemes

In their bid to reduce electricity consumption, several communities have adopted energy saving methods. But the rise in utility bills has offset any savings they could have made.

Dr Hamid Mirlohi, Chairman, IOA, Al Shera Tower, Jumeirah Lakes Tower (JLT), said, "Although we worked hard to reduce energy consumption by adopting a number of energy saving schemes within the building, there has been a slight increase in our service fee budget this year because of a significant increase in the utility prices of Dubai Electricity and Water Authority (Dewa) and district cooling."

Kent O' Brien, CEO and Managing Director, Strata Global, a strata management firm, also said that the hike in utility bills was a major impediment in their efforts to keep service costs down.

"We re-tendered building service contracts, increased transparency in the tendering process and took several measures to reduce power consumption but increased utility bills put paid to our efforts," he said.

Metwally said the only way to rein in utility charges was to appoint a regulator to oversee district cooling operations. "Dubai needs regulations to be set up for the district cooling sector. If you see in developed countries, a regulator for all utilities provider is a must."

Residents and experts also say there is an urgent need to formalise IOAs into legal entities to sort out issues with service fees and other concerns.

John Stevens, Director, Asteco Property Management for Oceana Residence in Palm Jumeirah, said: "We need to be able to formally register owners associations as a legal entity and be able to open bank accounts to take legal action to recover outstanding service charges.

Rera chief hits out at poor services

Real Estate Regulatory Authority (Rera) Chief Executive Marwan Bin Ghalaita has come down heavily on developers/maintenance companies for poor service, claiming they were flooded with an increasing number of complaints. Speaking at the Middle East Facility Management Association (Mefma) conference in Dubai this month, he said his department has received many complaints about air-conditioning systems, debris around buildings, faulty fire systems and loosely strewn cables.