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Row over Dubai’s Palm Jumeirah beaches could affect prices and rents

Property owners are furious that the state owned developer has banned them from using the beach, pool and gyms in their buildings in the first stage of a plan to charge for access to the facilities.

Analysts warned the move could see landlords struggle to rent out their beach front properties and would push down the price value of apartments in the development.

‘If that is the course they’re going to go down then it could have a negative impact on their signature apartments,’ said Matthew Green, head of research at property consultancy CBRE.

‘The attractiveness of being on the Palm is a lot to do with location and the facilities, so if that is taken away, then beyond having a sea view and a nice apartment people are definitely missing out on things which are most probably being offered elsewhere. We may start to see a bit of migration away from the development if Nakheel do start taking a tough stance on these facilities,’ he explained.

Nakheel has declined to comment on the dispute. But it has been reported that it wants to charge owners up to AED12,000 a year to access Shoreline’s pools, gyms and beach. Owners argue they own the facilities and many have withheld maintenance fees.

Dubai’s Land Department has asked owners to pay outstanding service charges into an escrow account it had established, and not to Nakheel, as it moves to determine who holds ownership of Shoreline’s common property.
A number of tenants in the development told Arabian Business that they had paid a premium for Shoreline’s beachfront access and planned to leave as soon as their lease expired.

‘I’m paying a 30% premium to stay here. If I can’t access the beach clubs I might as well move to Jumeirah Lake Towers or Dubai Marina for significantly less. Even if I pay to break my contract, I’m still saving money,’ one person said.

And one home owner said he believes that the row could wipe 20% off the value of his property. ‘A Palm Jumeirah apartment with no pool, gym, or playground. It does however back on Nakheel's beach club. Great,’ he said.

Owners and tenants are waiting on Dubai’s Real Estate Regulatory Authority to rule on who owns the facilities.

Last month, Nakheel’s chairman Ali Lootah said the firm was legally permitted to privatise the beach clubs for its apartments, and that it didn’t expect tenants to be happy with its decision. He also said he did not see the move damaging Nakheel’s reputation internationally.

He is confident that RERA will back the company’s stance. ‘I cannot make everybody happy. They (owners) should read their contract. We checked legally, we went to RERA. We abide by the law and we respect the law,’ he explained.