Green Community leaseholders in dispute with the developer

Gulf News

More than 300 concerned Green Community residents met last week to discuss the fee hike, which will rise as much as 300 per cent for the owners of these [long-term] leasehold units within Dubai Investments Park. Fees for an owner of a three-bedroom apartment, for example, will rise from Dh10,800 to Dh30,000 this year. "People are angry and upset and wanting answers," one resident said over what has turned into a four-month ordeal. "If we get answers and the truth, we will pay it. We want our community to be number one, but we want to be paying for something that is justified."

A statement by Property Investments to Gulf News said the management fees have in the past been subsidised. "In 2005 and 2006, Properties Investment collected back from its tenants only 38 per cent and 39 per cent, respectively, of the actual costs that it incurred in maintaining and managing Green Community. For 2007, the Company is seeking to collect 76 per cent of anticipated cost, still not the 100 per cent recovery that it is contractually entitled to demand."
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The latest skirmish follows an effort by residents to have Properties Investments provide audited annual expenses at the end of each year and also a detailed budget of the next year's expenses. Both are guaranteed in the lease contract and were not shown in the last three years, residents say. Property Investments, meanwhile, said they have "disclosed to tenants through various means full management accounts for the three years in question."

I was going provide an analysis, but this comment attached to the online version of the article says it all:

Management fees are a common concept in planned unit developments (PUDs). It also very common for the owners or tenants to select a management committe who appoints the maintenance company. The residents have the right to ask why and decide for themselves the choice of management company and the services. Normally the selection of maintenance company is done by management through a bidding process. If these rules are not set right from day one, the success of the real estate ownership and assets can be put at stake. It is the owners and tenants that should be primarily protected for the real estate ownership model to be successful.
A. Ghaffar
Robbinsville,USA

In other words, if other leaseholds selling in Dubai suffer the same flaw, buyers should beware. Ultimately it is Dubai's interest to make sure leaseholders are protected in order to maintain confidence in the real estate market. Heard the expression "die Katze im Sack kaufen"? Don't buy it. It applies a fortiori to label owners meetings "illegal gatherings" and accuse organizers of engaging in "criminal activity." Is it defamation to say "I don't trust your books"?

UPDATE. Found at 10:15 pm: Properties Investment responds to questions by Gulf News on Green Community service charge increase. Choice quote:

the self-styled “Democratically Elected Green Community Residents Committee” that has put itself forward for the role seems intent on conducting itself with disregard to the law and culture of the country in which we live.

UPDATE (see CORRECTION below): Property Investments is a UK-based company. See, Who Needs Civil Society when Profits are to be Made?:

One might argue superficially that the clash between residents trying to organize and protest and the profit interests of the company can be seen as a cultural clash between mostly “western” residents with a sense of civil society (that does not exist in the UAE) and Arabian authoritarian corporate culture. The only problem with that scenario is that the company at hand, Property Investments, Ltd., is a UK based corporation!

So there you have it. The company is accusing the leaseholders of not conforming to the culture of the country where they have chosen to live. But the company itself is UK based. It sounds as if it is the company that is abusing the culture of the country for its own profit.

CORRECTION: I'll let my words stand above as an object lesson, but the Green Community website has this to say about the developers,

Green Community is a quality development by Properties Investment LLC, a joint venture company between Union Properties PJSC and Dubai Investments PJSC. Dubai Investments PJSC was founded in 1995 with the aim of promoting business opportunities, principally in the UAE. ... Established in 1987, Union Properties was floated as a public company in 1993.

Here's what Union Properties has to say about itself. It in turn is part of Emirates Bank Group; that group includes Emirates Bank which is celebrating its 30th Annniversary:

Thirty years ago the late HH Sheikh Rashed bin Saeed Al Maktoum issued a decree establishing the Union Bank of the Middle East. And when later the Government of Dubai decided to consolidate its banking sector by merging Union Bank of the Middle East, then Dubai Bank LTD and Emirates National Bank which later become known as Emirates Bank. Since then it has been a non stop drive from one success story to the next. In 1991 the take over of Middle East Bank helped propel Emirates Bank to widen its scope by becoming a leader in the retail banking sector.