Things to watch out for when moving to Dubai – one of the hottest residential destinations in the world

Image Source:- Debtsettlementlink.com

What happens when you are one of the largest developers in the world and you spend the last few years launching grandiose schemes at breakneck speeds? Clueless, well, if you don’t catch yourself, you tend to rack up multi-billion debts that threaten to sink faster than your latest artificial island development fills up its foundations. Nakheel, the developer best known for iconic developments like palm-shaped islands and their ilk is also a subsidiary of the Government owned Dubai World. With debts skyrocketing towards the $4 Billion mark, it is one of the many firms that have been caught out by one of the fiercest financial crises to rock the Middle-Eastern regions in recent times.

When you have a debt this large, it is somewhat expected that one would try every trick in the book and look for ways to generate some funds. Sometime at the fag end of last year, a number-cruncher or two came up with a brainwave to get back some of the outstanding revenues from flat owners in its luxury Shoreline property. Fair enough, every business is entitled to recover its outstanding dues and when the debts have piled up as high as they were for Nakheel, no one would have grudged them their dues. The spanner-in-the-works with this plan was the way in which they went about implementing it. Ideally speaking, when one purchases a property, it usually includes access to most if not common areas. Areas such as gym facilities, parks, recreation areas and if one resides in a beach-front property, beach access too is included. Mind you, that is the norm. In Dubai, such charges are aggregated and collected under service fees that developers tend to charge home owners on an annual basis. Also included under service fees are the cooling charges (given the climatic conditions in Dubai, cooling counts as one of those bare necessities). So far so good, no complaints this far.

Image Source:- App1.kuhf.org

The problem begins when Nakheel suddenly wakes up to realize that its property owners owe it tons of money, money that is sure to come handy to pay those humungous debts off. However, instead of serving notice to the owners, the developer turns around and serves notice to the tenants that reside there instead! Going a step further, it begins to bar access to the community areas for those tenants residing in flats with outstanding dues. For the tenants, all charges and dues are supposed to be included in the rent that is charged by the flat owners. So this move was a tad too abrasive on the developers’ part. There were even reports about payment notices being served upon tenants and a minor number of them getting locked out of their own apartments.

Seeing that things had gotten way out of hand, the Real Estate Regulatory Agency (RERA) who is the local watchdog for such flare-ups, decided to step in and smoothen things out. Reports were coming in of projects being delayed or put on hold, voices were being raised and tempers began to flare up. Investors who had been flocking to the Emirate for their dream vacation apartments and villas in Dubai began to feel cheated and the demand for getting their monies back has only begun to rise. The Dubai Land Department has started to transfer such cases to the legal department and in genuine instances, even directed developers to refund the investments.

Moving to Dubai still ranks as one of the top ten decisions with most expatriates. However, it is not a move that is fraught without risk. The recent economic crisis and the resultant downturn in the industry have shown that sometimes, even the hottest of investment destinations run into rough weather. Thus, it may be a wise decision to seek the assistance of consultants who have a thorough understanding of the local conditions and then serve you solutions that best meet your needs.