Trouble at the £1bn Burj Khalifa tower: Spiralling service costs see landlords falling behind on their bills
Despite paying more than £40,000 a year to live in one of Dubai’s most exclusive addresses, residents are being denied access to the gym and tennis courts – and they fear the lifts in the world’s tallest building could be next
From their apartment on the 98th floor of the world’s tallest building, Mahi Golchin-Depala and her family could see far out across the Persian Gulf from one window, and the sands of Dubai inland from the other.
Below them lay the islands built on the sea in the shape of the world, in stark white relief against the aquamarine. The distinctive high rise of the coral pink Atlantis hotel and water park lay before them, its dimensions flattened by their viewpoint, nearly 800 metres up the Burj Khalifa tower.
“The most amazing thing was when it was cloudy. You would be just surrounded by white. You could open the windows and literally touch the clouds,” she says.
The people of Dubai are naturally proud of this tall, elegant sliver of glass, steel and concrete, jabbing the sky above the desert city. It is, famously, the tallest building in the world, in one of the fastest growing cities on the planet.
But for many of the residents in its 1,000 super-chi-chi apartments, the “white-glove” service for which the Burj is famed is falling well below their hopes. Especially after paying a rent which hovers around £40,000 a year for two-bedrooms, or more for a view of the fountains at its base (the world’s biggest, naturally). Because, according to local reports this week, some have been finding their keycards will not gain them access to facilities like the gym, the pool, the tennis courts. Some residents fear even the lifts may soon be out of bounds – no joke for those living on the 98th floor.
At issue is the fact that the building’s owner, Emaar, has been finding some of the apartments’ owners have not been keeping up with the maintenance bills. Having given them “repeated reminders”, Emaar says, some have still not paid their dues, so now, access to communal services is being withdrawn .
Ms Golchin-Depala, who owns several apartments in the building, points out that it isn’t usually the owner of the flats left having to take the stairs: “It’s the tenants who suffer,” she says. “They’r e only renting but if their landlords don’t keep up with the fees, they get their access blocked.”
There has even been talk that Emaar will put up a name-and-shame list in the lobby listing all those who are behind on their bills.
“You’ve seen that at other developments in Dubai,” says Ms Golchin-Depala. “They have a list at the entrance saying who hasn’t paid their maintenance fee. Then, when you pay, they put a sticker up that says ‘paid.’”
Sometimes, it’s just landlords getting greedy, but for others, it’s a matter of cost. For, while you may pay £1.1m for your two-bedroom flat, you could find the service charge crippling you at £155,000 a year on top.
Local reports last year suggested the service charges were being hiked by 27 per cent.
Ms Golchin-Depala says: “Dubai may be tax free but it isn’t fee free. People can’t afford the fees and some haven’t paid for two years or more.”
It’s not just the maintenance charges that are rising – property prices themselves have surged in the past few years since collapsing during the financial crisis. Cluttons estate agents said apartments in the Burj jumped 25 per cent in 2013.
One local property investor says: “It has been a boomtown since the instability of the Arab Spring, with investors from countries like Egypt, Iran and Lebanon buying here because it feels safe and secure.
“Then, of course, nobody likes to mention them, but there are those from all over the world who launder their wealth here by buying property, too.”
Rents are rising fast, too. Sarah El-Said, a married mother of two, just relocated for the fourth time since arriving in Dubai in 2008 due to spiralling rents. She describes the situation as “ insane”, telling the Bloomberg news agency: “It’s like you have to move house every two years. You feel no stability in where you live and you’re always at the mercy of landlords whose sole interest is making more money.” Rents surged 15 per cent on average last year, mainly squeezing the 80 per cent expat community.
Dubai’s victory in winning the Expo 2020 – the modern legacy of the London Great Exhibition of 1851 – will only make living costs even more expensive, residents fear.
One said: “It’s getting to the situation where some people will be moving out of the Marina, Jumeira Beach and The Greens to the less desirable developments like Festival City.”
There is an irony to Emaar’s difficulties extracting cash from its Burj Khalifa clients. Because the tower would have been bankrupt at birth were it not for the Dubai rulers’ skill in negotiating a bailout from its oil-rich neighbouring emirate, Abu Dhabi during Dubai’s debt crisis in 2009. Dubai negotiated direct and indirect bailouts totalling $25bn from its more sensible, and infinitely richer, brother just before the building was inaugurated.
Its saviour’s price? To have the tower’s name changed from the Burj Dubai to that of the Abu Dhabi ruler, Sheik Khalifa.
Leaders of Dubai’s neighbouring emirates were said to be smirking at the flashy profligacy of the country for spending nearly £1bn on one building just as it was plunging into a financial sandstorm. But, just like the sandstorms that hit Dubai periodically are quickly cleaned away, beside the name on its tallest building, now there is little trace of the crisis. As the country’s leader and Godolphin stables owner Sheikh Maktoum had planned from the outset, Dubai has made up for its relative lack of oil by becoming an international trading and financial centre for the region.
The question is, can he keep a lid on the property speculators who are pricing out the very expats he has been trying to attract?
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