What does an owner’s association in Dubai do?

 

An owner’s association (OA), in basic terms, looks after the common areas of a development, building or site on behalf of the owners. This includes dealing with security, maintenance, liaising with statutory authorities and enforcing rules.

As it’s such a varied role, an OA management company needs to have lots of different skill bases. These range from property management, facility management, general communication and financial management.

Collecting funds

Depending on the age and use of the building, substantial funds can be needed to maintain it. Improving buildings for residents and owners also costs money and takes time. Owners, therefore, must invest in a substantial reserve fund for these purposes.

A building needs enough financial resources for its lifetime, and this fund must be shared between all owners of the asset. Studies have taken place by the Real Estate Regulatory Agency (RERA) to audit current and future requirements in terms of capital for an asset, and then recommending the appropriate budget.

A typical AGM (Annual General Meeting) for an OA will include a panel of the owners. More than 15 per cent of the owners have to present in order to go ahead, but if the meeting is adjourned and the next time not enough people show up, it will go ahead regardless.

An OA AGM will make various decisions, including selecting the board of directors, passing general motions and working out the annual budget.

Challenges faced by OAs

As buildings age and lose value, the challenges increase for the OA. It’s vital to keep the building management system (BMS) in good repair. This controls lighting, power, plumbing, security systems and fire safety. It’s absolutely crucial to operate a building efficiently and safely.

Preventative maintenance must take place using reserves, otherwise higher costs will be faced later on. Service charges also have to be collected by OAs, something that can present a challenge if the investor lives outside of the UAE and perhaps doesn’t know of these obligations. At present, there are no undisputed enforceable laws to help OAs recover debts and work out disputes, which can present extra challenges.

If charges aren’t paid on time, then there may not be enough in reserve to sort out any problems with the building. Inevitably, the quality of services will decrease. There have been occasions where developers have been known to set service charges far too low in order to entice buyers, which in turn has damaged the finances for the asset as a whole.

OAs are a significant part of supplying high quality services to foreign investors and the buildings they have bought or occupy. They are part of the growth of Dubai’s progression and ability to adapt into being the Middle East’s regional investment hub.

Samir Salya

Samir Salya is the Chairman of Reign Holdings and is involved in real estate and construction within the UAE and UK. Samir holds over 20 years of experience in executive management, business expansion, performance improvement, sales and marketing.