Property developers are to blame for disputes over the cost of air conditioning that led to some services being cut last year, the UAE's largest district cooling company said.
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Sujit Parhar, the chief executive of Tabreed in Abu Dhabi, said the cost of district cooling compared with traditional chillers in buildings was substantially less over the life cycle of a building and reduced energy consumption by as much as half.
A district cooling company traditionally charges developers a fee for the amount of cooling used in buildings, but also a set "capacity charge" that pays for the construction of the cooling plant.
"That's our arrangement," Mr Parhar said. "How the developers deal with their consumers is a totally different arrangement. Therein comes the big controversy you are seeing."
In an ideal situation, the developer should have disclosed to buyers of properties the cost of district cooling provided to their homes. Mr Parhar said a developer should have either factored the cost of district cooling into the price of the units and charged buyers just a usage fee or disclosed from the start that they would be charged a capacity fee as well and lower the price of the homes. Homeowners in towers across Dubai were hit last year with new fees for air conditioning that were nearly double in some cases. Notices were posted in buildings on Nakheel's Jumeirah Islands, Palm Jumeirah and Jumeirah Lakes Towers saying air conditioning would be cut off unless fees were paid. Nakheel declined to comment.
Michael Ryall, a director at Place Strata Management, a property management company, said "a complete lack of disclosure" to buyers of properties about district cooling costs was at the heart of the disputes at properties in Dubai.
"There is very little you can do," Mr Ryall said. "In most cases, they are stuck with the costs. Some of the owners are talking to district cooling companies to try and find a way to reduce the fees." He was speaking just weeks after Tabreed underwent a debt restructuring and recapitalisation. The company was hit hard by the property downturn caused by the global financial crisis. It had started building plants in areas where projects were cancelled, reducing its revenue and greatly expanding its debt.
Tabreed's net profit fell by 21 per cent in the first three months of this year to Dh32.8 million (US$8.9m), compared with the same quarter last year.
While revenue rose, finance costs related to the restructuring and recapitalisation reduced profit. Waleed al Muhairi, the chief operating officer of Mubadala Development, took over as chairman, replacing Khadem al Qubaisi.
Mubadala, a strategic investment company owned by the Abu Dhabi Government, injected funds into Tabreed as part of the restructuring and is its largest shareholder.
"Discipline" was the most important trait of the company after the changes, said Mr Parhar. Tabreed was now becoming more flexible with construction by building its facilities in line with progress on the properties it would supply with district cooling. The company also aimed to increase the use of its existing plants, he said.
Ninety-two per cent of the capacity of Tabreed's 49 plants in the UAE was contracted out to customers and a team was working to sell the remaining 8 per cent.
Existing buildings were also being targeted by the company as owners weighed the cost of replacing chillers every eight or nine years with connections to district cooling. Tabreed is working with about five existing buildings to connect them to nearby plants.
"It hasn't been done yet, but we are working very closely to do that," Mr Parhar said. "It immediately reduces their power bills and removes for them the cost and hassle of having to maintain the systems."
bhope@thenational.ae
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GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
The Great Derangement: Climate Change and the Unthinkable
Amitav Ghosh, University of Chicago Press
White hydrogen: Naturally occurring hydrogen
Chromite: Hard, metallic mineral containing iron oxide and chromium oxide
Ultramafic rocks: Dark-coloured rocks rich in magnesium or iron with very low silica content
Ophiolite: A section of the earth’s crust, which is oceanic in nature that has since been uplifted and exposed on land
Olivine: A commonly occurring magnesium iron silicate mineral that derives its name for its olive-green yellow-green colour
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Manikarnika: The Queen of Jhansi
Director: Kangana Ranaut, Krish Jagarlamudi
Producer: Zee Studios, Kamal Jain
Cast: Kangana Ranaut, Ankita Lokhande, Danny Denzongpa, Atul Kulkarni
Rating: 2.5/5
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2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, Leon.
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Europe wide
Some of French groups are threatening Friday to continue their journey to Brussels, the capital of Belgium and the European Union, and to meet up with drivers from other countries on Monday.
Belgian authorities joined French police in banning the threatened blockade. A similar lorry cavalcade was planned for Friday in Vienna but cancelled after authorities prohibited it.
Three trading apps to try
Sharad Nair recommends three investment apps for UAE residents:
- For beginners or people who want to start investing with limited capital, Mr Nair suggests eToro. “The low fees and low minimum balance requirements make the platform more accessible,” he says. “The user interface is straightforward to understand and operate, while its social element may help ease beginners into the idea of investing money by looking to a virtual community.”
- If you’re an experienced investor, and have $10,000 or more to invest, consider Saxo Bank. “Saxo Bank offers a more comprehensive trading platform with advanced features and insight for more experienced users. It offers a more personalised approach to opening and operating an account on their platform,” he says.
- Finally, StashAway could work for those who want a hands-off approach to their investing. “It removes one of the biggest challenges for novice traders: picking the securities in their portfolio,” Mr Nair says. “A goal-based approach or view towards investing can help motivate residents who may usually shy away from investment platforms.”
Defence review at a glance
• Increase defence spending to 2.5% of GDP by 2027 but given “turbulent times it may be necessary to go faster”
• Prioritise a shift towards working with AI and autonomous systems
• Invest in the resilience of military space systems.
• Number of active reserves should be increased by 20%
• More F-35 fighter jets required in the next decade
• New “hybrid Navy” with AUKUS submarines and autonomous vessels
A Dog's Journey
Directed by: Gail Mancuso
Starring: Dennis Quaid, Josh Gad, Marg Helgenberger, Betty Gilpin, Kathryn Prescott
3 out of 5 stars
Citadel: Honey Bunny first episode
Directors: Raj & DK
Stars: Varun Dhawan, Samantha Ruth Prabhu, Kashvi Majmundar, Kay Kay Menon
Rating: 4/5
