Strata Law and extreme high maintenance costs property Dubai – Omniyat floats property management unit
Posted by 7starsdubai on February 3, 2009
http://www.thenational.ae/article/20090202/BUSINESS/664551982/1051/rss
DUBAI
Omniyat Properties, a Dubai-based developer with Dh13.5bn (US$49bn) worth of projects launched, announced on Monday a new property management arm to help the company diversify its income and distinguish itself from its competitors when the global financial turmoil is hitting the UAE economy.
“It’s a new revenue stream for the group and it will extend the experience that we have in property development into the life of the building,” said Mehdi Amjad, executive chairman of Omniyat Holdings.
As sales slow across the UAE, developers are scaling back projects, cutting staff and focusing on the construction of key projects. Analysts say that companies will need to prove themselves capable builders in 2009, as well as find ways of differentiating their projects in the market.
Peter Walichnowski, chief executive of Omniyat Properties, said the company would announce no new projects in 2009 and instead focus on delivering three projects a year for the next three years. The company announced it had laid off 69 employees, or about a third of its workforce, in November.
Rather than expand its development side, the company is “investing even more than before in the existing buildings”, Mr Amjad, the chairman, said.
The company had spent an extra Dh50m on One Business Bay, an office building, to outfit it with an LED wall in the lobby and other technology, he said.
“It’s time to get closer to your clients,” Mr Amjad said. He added that the company had assuaged nervous buyers of two recently launched buildings, the Octavian and Beachfront Living, by changing the payment plans so that they adhered to construction milestones.
Property management is expected to be a growth industry in the UAE in the coming years, as buildings become ready for occupancy. For existing projects, developers are managing property on behalf of buyers, but once the Real Estate Regulatory Authority releases the regulations for the strata law, that responsibility will move to home owner associations.
The strata law, enacted last year, stipulates the creation of homeowner associations and the sets the rules for the maintenance of jointly owned property for places like lobbies and communal parks.
Under Omniyat’s new set up, residents will actually have a choice of whether to use Omniyat Asset Management or another company for the maintenance of the building, officials said.
“The owners will have a choice, but we expect to have that role because the quality of our services will ensure they won’t need to look elsewhere,” Mr Walichnowski said, adding that the company will be transparent about expenses and make decisions in conjunction with home owner associations.
This is a key feature of a developer-owned property management company, said Martin Seward-Case, the chairman of the UAE chapter of the Royal Institution of Chartered Surveyors.
“The most important part of this is that the consumer has choice,” he said. “Residents need to have the ability to choose a company and look inside and find out if their money is being spent in the way they like it being spent.”
Mr Seward-Case said there was a potential conflict if developers were to maintain buildings because they could pass on extra expenses onto buyers, but transparency about the operational budget would prevent that.
Many buyers have started complaining about extraordinary rises in their annual maintenance fees. Residents of Jumeirah Beach Residences, for example, saw their fees rise to Dh21.75 from Dh9.5 per square foot last year.
Several strata and property management companies have opened up in Dubai in the last year in anticipation of the regulations, including a joint venture with National Bonds Corporation called BCS — Strata Management Services and Horizon Property Management.
Sorry, the comment form is closed at this time.
