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40 KV firms protest rent hike

DUBAI — While several international universities located at Knowledge Village (KV) will refrain this year from passing on the 30 per cent rent hike to their students, a cluster of KV partner companies running small businesses and struggling to control operating costs have voiced concern to fund the increase, forcing many to explore alternative office locations.

Around 40 KV business partners offering training and educational services with limited staff and tight budgetary constraints to remain competitive, have put their names to a petition demanding talks with the KV management to reconsider the size of the increase and the negative impact it will have on their businesses.

“The rent increase combined with maintenance charges from Dh85 to Dh110 per square feet from April 2005, will force small businesses to either pass on the raise, against their will, to clients by hiking up their service prices or close down their office,” signatories to the collective petition said.

The group of tenants claimed their petitions and several requests for a meeting with the management have failed to evoke positive response.

“We are surprised and extremely disappointed that the office of the Director General of the Dubai Technology, Electronic Commerce and Media Free Zone (Tecom) has not responded to our letters, particularly given the fact that this is an official request by 40 KV business partners to obtain clarification from Tecom concerning their delivery of our business services,” said a KV partner spokesman.

Although, KV management in its web site claims to provide help to business partners to run their businesses smoothly, the spokesman disclosed, “refraining to meet collectively with KV partners to discuss the rent increase is anything but a hassle-free experience.”

Another signatory to the petition pointed out that rent hike is only one of the issues faced by KV business partners.

“There is lack of accountability and transparency on the part of KV management, inefficient services and maintenance provided to partners, and poor construction quality with cracks in the buildings already visible in just over two years of the KV infrastructure built,” said the tenant who spoke on condition of anonymity.

He said: “When we first agreed to move in to Knowledge Village we were told that rents would be considerably cheaper than in Dubai Media City and Dubai Internet City, because of the types of organisations that operate here. But once maintenance fees had been added to the rent we ended up paying only four dirhams per square foot less than other Free Zone properties.”

Apart from high rents, the tenant explained that operating a business from KV involved a trade licence issued by Tecom. A decision to move out of KV would mean cancellation of the trade licence resulting in a huge financial loss.

“For companies operating on the mainland in Dubai there are rules concerning how much one can put up in rent in a year and there is a rent committee you can turn to if you have a complaint. Here there are no tribunals. They have their own rules,” the tenant complained, stating it was impossible to operate under the circumstances. “At the same time, it’s difficult to move out of KV leaving us with no choice but to either close down business, or absorbing the increase and intensifying our struggle to survive with increased operational costs.”

When contacted, the KV management refused to comment.

However, in a letter to tenants on December 30, 2004, the KV claimed that it needed to increase rent charges in response to inflation.

“In addition to the rent increase for 2005, we will implement another rent increase for 2006,” the letter stated.

Some are miffed, some are not

REPUTED offshore university campuses located in Knowledge Village (KV) have expressed concern over the 30 per cent rent hike which is standard for all KV business partners. However, they aired apprehensions of passing the hike over to their students by raising tuition fees in the new academic year.

A source at BITS Pilani and MAHE, two of the reputed Indian institutions which have campuses in KV, said: “The rent increase will put on hold our proposed salary hike of faculty and staff. Several services to students and faculty will also have to be put on hold temporarily to absorb the rent hike, since we do not want to roll it over to our students.”

The source said the objective of their institution is to cater largely to expat students from middle income groups whose families cannot afford to send their children back home for higher education. “KV is a good address for education institutions, but if the rent hike continues for another year, we will have to consider moving to an independent campus in the Academic City as early as possible,” it said.

Professor Nick van der Walt, CEO of University of Wollongong in Dubai (UOWD), however, did not rule out a proposed increase in tuition fees in the new academic year. “But, a fee hike cannot be attributed to the rent hike in KV. Our academic fee review is usually carried out during this time of year annually and a number of areas will be looked into before a decision to revise fees is taken at UOWD. It is a bit early to tell the decision of the review committee,” he said.

UOWD which occupies two buildings in KV will continue its operations smoothly with no major impact on staff and faculty recruitment or introduction of new programmes and courses, Nick added.

An official of the SP Jain Centre of Management said the rent hike will not have a sweeping effect on his institution because “our long term plans include moving to the Academic City.”

“Ours is a very different model and does not operate in a normal environment since most of the faculty is visiting faculty and involves technology in classrooms for teaching,” he said.