http://www.xpress4me.com/news/uae/dubai/20011040.html
Amid declining property values and delayed developments, investors fear they are being left in the dark regarding small fortunes they have sunk into some of the 664 new developments that are now under construction or at the planning stage in Dubai.
However, real estate authorities in Dubai said they are working to “clear up property misunderstandings” with a new free consultancy service starting next year. Experts will provide advice to help avoid any ownership pitfalls in the property market, said Marwan Bin Galita, CEO of the Real Estate Regulatory Authority.
“This is a new thing that is coming. We are putting in place a legal consultancy free of charge. There is no need to go to a lawyer,” said Bin Galita. “This will guide you through the process. You can listen to them. They can help you free of charge. Then you can decide what you want to do.”
Delays and property disputes have led to over 70 cases filed before the new Dubai Property Court seeking settlements.
Promises and delays
And while Bin Galita emphasised that his agency is a regulatory body and not a mediating one, he said investors are still coming to RERA offices to seek assistance as new laws are brought into force to ensure that developers deliver on promises.
MiNC developers, for example, have informed about 100 off-plan buyers that the plan to build its Prodigy 1 tower in Jumeirah Village South has been delayed due to a financing crisis connected with the global credit crunch.
Launched in October 2006, the development has still not started and MiNC has asked investors to pay an extra Dh313,000 over and above the original Dh375,000 that investors have already shelled out for the flats.
Under the plan, the total money paid by investors will amount to Dh688,000 per unit.
MiNC CEO Haroon Mahmoud declined to return phone calls but in a memo to investors, obtained by XPRESS, said asking for the extra cash “is the only viable option available” to combat construction prices that have doubled. Mahmoud wrote: “Failing this, we fear that the project will be suspended, possibly permanently.”
Fear factor
A MiNC senior executive, who declined to be identified, said the idea isn’t sitting well with Prodigy 1 investors and the company is now looking at alternative ways to raise the capital needed to start construction.
“Obviously, people are scared and panicked. Basically, the next thing is to raise some funds through other channels,” said the executive.
Despite financial troubles, companies such as MiNC cannot simply cancel their developments without approval from the Land Department and money invested in the project must be returned to investors with an order made by the courts, Bin Galita said.
“By law, developers should start construction six months after opening the [trust] account.” If it’s clear that a development will not go forward, investors’ “property rights remain secure”, Bin Galita said.
Legally speaking
Investors “have to go to court to cancel their contracts, and then we will get an order to get their money back. Or, you can reach an agreement with the developer that they will deduct some amount – 10 per cent – and will give you back the remaining”.
Islamic values dictate that business partners must have “both a win-win, or both a lose-lose” situation, Bin Galita said.
News facts
To beat back investor uncertainty, some developers in Dubai have issued public assurances that they will deliver, as promised to investors, on their projects.
Omniyat Properties CEO Peter Walichnowski confirmed that the firm will complete three projects every year for the next three years on time. “Construction is on track for all of Omniyat’s launched projects and Omniyat is firmly committed to the delivery timelines. This reflects our faith in the Dubai market and in Omniyat’s position,” he said
