Al Fajer Properties Case – Zadeh says he’s a victim of a system in which the rulers can manipulate police and the courts to protect their business

Al Fajer Properties Dubai 2009 , Sheikh Maktoum Hasher Maktoum Al Maktoum

source

DUBAI, United Arab Emirates — In this Gulf city-state, two things have long been untouchable: business interests and the ruling family. However, an attempt to sue a member of the family over an alleged financial swindle is a sign of how much the economic crisis has rattled business as usual here.

Shahram Abdullah Zadeh accuses the brother-in-law , sheikh Hasher Maktoum Al Maktoum, of Dubai’s emir illegally of taking over his real-estate firm Al Fajer Properties and having him detained by police to help the swindle.

Zadeh, a 37-year-old Iranian national who has lived in Dubai all his life, brought a civil case against the brother-in-law and his son Sheikh Maktoum Hasher Maktoum Al Maktoum to get his firm Al Fajer Properties back, a rare move. Even more surprising, shrahm Zadeh tried to raise criminal charges, but that step went nowhere because prosecutors rejected it.

The case has raised questions about whether Dubai really is what it claims to be: A boomtown where international businessmen can safely invest and turn a profit; or rather, a nest of cronyism and connections where royal blood can still trump entrepreneurial effort.

Such questions were largely ignored by everyone – businessmen and politicians alike – as long as the cash was rolling in during Dubai’s stunning expansion over the past decade. But now the emirate has hit the skids in the world financial crisis.

“During the boom, Dubai’s shortcomings were glossed over, but now that the economy is struggling, it’s becoming a different story,” said Christopher Davidson, an author of two books on the United Arab Emirates and a lecturer at Durham University in Britain.

Dubai’s emir, Sheik Mohammed bin Rashid Al Maktoum, led the emirate’s vast financial ambitions. But business ran far ahead of the effort to modernize legislation in what remains a traditional Arab monarchy, where the ruler and his family hold final say.

Now the government has been trying to rein in some fast-and-loose business practices. About a dozen former executives are in custody for various investigations. Some have close ties to the government, but none of those in custody are related to the ruling family.

Zadeh’s case goes farther – breaking to taboo of questioning Dubai’s leadership. Zadeh says he’s a victim of a system in which the rulers can manipulate police and the courts to protect their business.

“If Dubai cannot provide security for foreign investors, they might as well switch off all the lights,” he said.

Attempts over the past weeks by The Associated Press to contact the brother-in-law, Sheikh Hasher Maktoum bin Juma’a Al Maktoum, were unsuccessful. Hasher Maktoum Al Maktoumand his company attorneys did not return repeated phone calls or respond to interview requests.

In the first session of Zadeh’s civil case, Hasher Maktoum Al Maktoum and his lawyers failed to appear. In the second a week ago, his lawyer asked the court for more time to study the allegations. The case is to resume May 4.

Zadeh and the Sheikh Maktoum Hasher Al Maktoum went into business in 2004. Foreigners are allowed to deal in property only after finding an Emirati sponsor to officially register a company. The usual practice is for the Emirati sponsor to give his signature for an annual fee or profit share. Several members of the sprawling ruling family are involved in such deals.

Zadeh set up a firm, Al Fajer Properties, and was chief executive while Sheikh  Hasher Maktoum Al Maktoum held the trade license. The firm was profitable and is now worth about $2 billion, according to Zadeh. But the partnership soured over delays in building a commercial tower, Juemirah Business Centre.

Zadeh said in an affidavit to Dubai’s attorney general that he was arrested in February 2008 and held for 60 days. He says he was never charged with any crime but was questioned over his business – including the combination of his safe.

While Zadeh was in detention, Sheikh Hasher Maktoum Al Maktoum took over the company Al Fajer Properties by appointing his son Sheik Maktoum Hasher Maktoum Al Maktoum as chief executive, ousting Zadeh, according to Zadeh’s filing. When he was released, Zadeh says he found his office safe had been cleaned of documents showing he was the owner of Al Fajer Properties and Hasher Maktoum Al Maktoums partner.

Zadeh also says police tried to push him to sign a document saying he had no connection to Al Fajer Properties. He submitted to the court

Al Fajer documents listing him as CEO and transactions that his lawyers contend show he was the sole investor. The Associated Press was given a copy.

Sheikh Hasher Maktoum Al Maktoum  “thought he could do it all because he’s a Sheik,” Zadeh said.

Police refused to comment on whether Zadeh was detained. Shahram Zadeh says they continue to hold his passport and so far he has had little luck pushing his claims.

He submitted a criminal complaint but the attorney general refused to investigate, giving no reason.

Zadeh then filed a complaint directly to Dubai’s emir, who holds what is called the Ruler’s Court. Residents can bring to the emir what they believe are injustices unaddressed by the courts – from disputes over money to wrongful deaths.

Zadeh says he has received no response.

see also: Terahn Times

More: Al Fajer Properties Dubai – Jumeirah Business Centre – Ebony Ivory Towers Dubai

Al Fajer Properties Scandal claim emerges amid media blockout

May 28. 2009
source Independent by Heerkani Chohan and PropertyWeek

Fake pictures allegations and a member of the ruling family , Sheikh Maktoum Hasher Maktoum, linked to a 429 pound million Dubai property row that has touched nerves across the city.

“Fake” pictures are at the heart of a property scandal that could harm the reputation of the once-booming real estate market in Dubai.

A major property development firm, Al Fajer Properies,  with links to the ruling family of the UAE city-state, and the firm’s marketing agency Dynasty Zarooni, are accused by investors, many of whom are UK citizens, of obtaining millions of pounds through the use of false construction photographs.

On Thursday, after local and regional media had been alerted to the situation by angry investors, news agencies across the city said they were silenced by senior representatives of the Government of Dubai, as orders were issued for reports of the storm to be pulled.

Around 500 property buyers of varying nationalities collectively purchased three planned tower blocks named Ebony 1, Ivory 1 and Ivory 2 in the Jumeirah Lakes Towers area of the Gulf city last year from property development firm Al Fajer Properties, at a total cost of £428 million.

The firm is part of the Al Fajer Group, ran by company president Sheikh Maktoum bin Hasher Al Maktoum, brother-in-law to the supreme ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum.

But at the weekend it was claimed that Al Fajer Properties and its marketing agent Dynasty Zarooni misled their customers into parting with millions of pounds by presenting photographs showing construction of three buildings, purported to be Ebony 1, Ivory 1 and Ivory 2, up to the sixth storey.

In fact the photographs were of buildings on neighbouring plots. Today, the plots on which Ebony 1, Ivory 1 and Ivory 2 are to be built, are empty holes in the ground, as our photographs show.

“I only handed over my money because I was shown property under construction,” said UK-based Ebony and Ivory Investor’s group spokesperson Moses Oye. “That’s my simple gripe. It’s a black and white issue.”

Mr Oye, who has parted with a little over £1 million – 20% of his total purchase price – had made the seven-hour flight from London to Dubai specifically to chair a press conference to raise awareness of the mess, after official government channels failed to take action.

“We have not sought legal representation as yet,” My Oye said, “because we have tried to square this correctly. The next step will be to go legal.”

However, the press conference was cancelled at the last minute by the hotel where it was to be held, citing “health and safety reasons.” The hotel, Dubai’s Mina A’Salam, is owned by Dubai Holdings, a Dubai government-controlled holding company.

“I asked for the reason to be put in writing, but the hotel refused,” Mr Oye said. “So I asked for a suite. But they said they did not have anything. I personally believe that the powers that be cancelled the meeting.” When contacted, Mina A’Salam management did not respond.

The conference was called to highlight a petition signed by the 500-strong investor’s group urging the Dubai Real Estate Regulatory Agency (Rera), the government body which oversees the Dubai property market, to force Al Fajer Properties to refund the £86 million that has to date been collected by the firm from investors in the three towers.

After the meeting was axed, news agencies were called to a

neighbouring hotel to be told of the escalating situation. But

when reports began to surface on news websites, news

agencies received phonecalls from senior Dubai

government figures ordering them to be pulled.

“I had written half of the article when I was told by my editor to stop,” said a Dubai-based national newspaper reporter who attempted to cover the story. “The investor’s group have records of payment, and it’s obvious that they have been shafted, but we can’t write about it.”

The lack of progress on the three towers is a source of deep concern for the investors. Many real estate projects across Dubai were put on hold or cancelled as the torrent of easy credit that fuelled rampant development in the city ran dry with the onset of the global financial crisis.

“Whether Al Fajer are still going to construct or not is neither here nor there,” Mr Oye said. “They would not have got my money if they had not shown me fraudulent pictures.” Al Fajer Properties also declined to comment.

Fellow investor’s group spokesperson Atul Patel, who has parted with £600,000 added: “A lot of people would not have bought had they not thought the project was in an advanced stage of construction.”

The pictures also appeared in an advertising campaign in a Dubai-based national newspaper last July, with the caption, “Shot at location on 10th June 2008. Ebony & Ivory – Jumeirah Lakes Towers.” The two page spread included the seals of Dynasty Zaronni and Al Fajer Properties. Dynasty Zarooni also neglected to comment.

The news will further dampen the spirits of the once-booming Dubai real estate market – a vital facet of the city’s economy. Last year a number of senior executives from major property developers across the city were arrested in a high-profile fraud clampdown as the government sought to clean up the property sector.

With it, the global recession has brought a host of new problems. Many construction firms operating in the city, some of which are UK-based, are owed millions of pounds by Dubai property developers struggling with a lack of liquidity.

Among them is UK engineering giant WSP. The firm’s finance director Peter Gill revealed that the firm is owed £28 million by Dubai-based developers, some controlled by the city’s government.

Dubai’s property market has been likened by some to a giant ponzi scheme, where bigger and more grandiose projects were announced in a bid to keep investment rolling in until the financial crisis tamed the city’s galloping development.

At Cityscape Dubai, a major property exhibition held last October, government-controlled developer Nakheel, responsible for the giant palm tree shaped islands off the coast of Dubai, announced it was to build the world’s first 1km high tower. The Nakheel Tower – if ever built – will eclipse the current world’s tallest building, Dubai’s own Burj Dubai.

Meanwhile, state-owned developer Meraas unveiled a mammoth £16.3 billion development called Jumeirah Gardens, to be built in place of an existing residential area in the city.

Today, the plot where the world’s new tallest tower should be under construction is little more than a sun-baked stretch of desert. Work on the Nakheel Tower was halted in January, and work on vast swathes of Jumeirah Gardens has also run aground.

The national media blackout over the Al Fajer case is unusual even in a country gripped by a harsh media law, and a pending new law, that has already drawn criticism for its prohibition of free speech.

A report by the US-based Human Rights Watch group into the UAE’s pending media law, Just the Good News, Please, was published last month. “(The pending law) includes troubling content-based restrictions on speech, draconian fines, and harsh registration requirements,” the report said.

It highlighted a number of the new law’s provisions, branding them: “Not only unlawful intrusions by the government into the right of journalists in the UAE to freely express their thoughts and opinions on any subject of their choosing, but also an unjustified attempt to control the independence of the media.”

Words that will do little to inspire confidence in Mr Oye. “This is going to define my faith in the country,” he said. “If I’m dealt with correctly, great. But at the moment, it’s not going that way. We’re in the witching hour now.”

Heerkani Chohan is the pseudonym of a journalist living and working in Dubai.

Sheikh Maktoum Hasher Al Maktoum Al Fajer Properties Dubai

Sheikh Maktoum Hasher Maktoum Al Maktoum Al Fajer Properties Dubai UAE

Comment of the day

Comment by “Criminology Professor” to Al  Fajer Properties – April 8, 2009 – Dubai court postpones 1,9 Billion Dollar case against Sheikh Maktoum Hasher bin Juma Al Maktoum, Sheikh Hasher Maktoum Juma Al Maktoum and Sheikha Maryam

In criminology, state crime is activity or failures to act that break the state’s own criminal law or public international law. For these purposes, A “state” is defined as the appointed officials, the bureaucracy, and the institutions, bodies and organisations comprising the apparatus of the government. In this situation the sheikh is not alone, the role of the state as one of the possible perpetrators of crime whether directly or in the context of state-corporate crime must be examined.

One way of examining state crimes is to study the occurence of a trend by the state security forces, whether the state respects human rights in the exercise of its powers.

A classical situation is when, the state is directly involved in excessive secrecy and cover-ups, disinformation, and unaccountability which often reflect upper-class, royalty and nonpluralistic interests, and infringe human rights and the state laws. One of the key issues is the extent to which, if at all, state crime can be controlled. Often state crimes are revealed by an investigative news agency resulting in scandals but, even among first world democratic states, it is difficult to maintain genuinely independent control over the criminal enforcement mechanisms and few senior officers of the state are held personally accountable. When the citizens of second and third world countries which may be of a more authoritarian nature, seek to hold their leaders accountable, the problems become more acute. Public opinion, media attention, and public protests, whether violent or nonviolent, may all be criminalised as political crimes and suppressed, while critical international comments are of little real value.

In a state where there is dictatorship and reoccurence of State Crimes, it will result in fostering organized crime, corruption, and authoritarianism. In some third world countries, this political atmosphere has encouraged repression and the use of torture.

JUDGING THIS CASE AGAINST THE SHEIKHS:
THIS IS A CLASSIC EXAMPLE OF A STATE CRIME, WHERE THE STATE INSTITUITIONS BREAK THE RULE OF LAW TO SERVE THE ROYAL FAMILY MEMBERS

Al Fajer Properties – Comment of the day

I started with Al Fajer Properties from day 1 under Dr. Shahram and saw how he invested his money, dedicated his time 24/7 and created a brand out of Al Fajer. Sheikh Hasher Maktoum is an old fashioned 65 year old who loves gossip and whispers.

All the Al Fajer staff witnessed how Dr. Shahram fought with Al Ahmadiah (sheikh hasher’s contracting company that was building the towers for al fajer), because Al Ahmadiah was not doing anything on site. That was damaging Al fajer Properties name and Dr. Shahram felt responsible towards the investors and thats what triggered sheikh hasher maktoum’s aggressive behaviour towards Dr shahram.

The son, Sheikh Maktoum Hasher Al maktoum, was a nobody. Even Sheikh Hasher always told us not to let him in the office! I remember sheikh maktoum hasher used to call Dr. Shahram’s secretary or the receptionist and request to book the meeting room to bring his friends and show off!!!

When Dr Shahram disappeared, we were told by sheikh maktoum hasher that the state security has taken him and he is never coming back!!! That was the begining of a series of illegal activity by sheikh maktoum hasher in the company, including changing documents, illegal sales of properties, threatening many staff members with state security arrests,…etc

Everyone in Al Fajer knows that Dr. Shahram was & is the owner of Al Fajer Properties. Sheikh maktoum hasher always uses his “uncles” name Sheikh Mohammed Bin rashid, the dubai ruler to threaten people.

The rest of the world is not stupid, somebody is locked up for 60 days, tortured, passport confiscated for a year, no charges against him, his business has been stolen by the brother in law of dubai ruler, the case he filed at the public prosecution is closed without an explanation.

Is this the fair, just society that sheikh mohammed bin rashid has envisioned in his Dubai Strategy? So the government is actively helping criminals? Why nobody dares to talk?

Al Fajer Employee
22. February 2009

Now it getting agressive in Dubai ? – Hunting complaining Investors – Dynasty Zarooni Fraud – Kabir Mulchandani hit back with a counterclaim

http://www.ft.com/cms/s/0/64f5823c-f945-11dd-90c1-000077b07658.html?nclick_check=1

The executive at the centre of $100m fraud allegations rocking Dubai’s property sector has hit back with a counterclaim that his accusers have defaulted on more than $18m of debts owed to his company.

Kabir Mulchandani, chairman of Dynasty Zarooni, claimed that a series of cheques written by investors had bounced as the real estate industry’s fortunes plunged late last year.

The case – involving one of Dubai’s largest private real estate companies – highlights concerns that the emirate’s legal system is poorly equipped to cope with the slew of disputes arising as the sector turns sour.

Dynasty and Mr Mulchandani deny investor allegations of fraud and misrepresentation of the group’s property portfolio.

In an interview at Dubai’s Port Rashid police station, where he has been held since last month, Mr Mulchandani told the Financial Times he was pursuing cheques totalling Dh68m ($18.5m, €14.5m, £13m) that were written by Dynasty investors to pay for property. He claimed they bounced in late December as the international financial crisis hit the emirate’s business community.

He said: “Certain key investors who had issued post-dated cheques to us got caught in the financial trap. They could not pay.”

Mr Mulchandani said he suspected the investors whose cheques he alleges bounced – a criminal offence in Dubai – had made the accusations of fraud against him because they saw it as a way to recover money after the market fell.

Salem Al Shaali, who is representing investors claiming up to Dh280m from Dynasty, admitted some of their cheques had not cleared. But he said this was because his clients had decided not to honour the cheques because of their suspicions about Mr Mulchandani.

His clients had deposited cheques covering the money they owed, he added, showing that they had the ability to pay if their allegations against the company were satisfactorily addressed.

Hundreds of complaints have been made against Mr Mulchandani, but the initial claims at the heart of the case came from 10 individuals known as Dynasty’s “investment club”. Mr Shaali said: “Mr Mulchandani broke Dubai’s real estate laws by selling properties without a proper licence and misrepresenting construction progress at the buildings”.

Mr Mulchandani, an Indian national, said he was being well treated in custody but expressed frustration at the time taken to investigate a case in which he said he had “nothing to hide”. He is expecting a hearing this week over whether he can receive bail.

He said: “This is a wonderful country but … it is still gearing up to deal with these complaints, because this is the first time they have had a property meltdown.”

The Dynasty imbroglio is a further blow to confidence in Dubai as it scrambles to cope with the sudden end of a six-year property boom on which a good part of its modern-day wealth is founded.

More than 25 executives have been detained over the past year in anti-corruption investigations at state-linked property companies, while lawyers say more claims against private sector property developers are likely to emerge this year as prices collapse and funding dries up.

Dubai Fraud alligations – The Case Dynasty Zarooni: Complaint at Dubai Police now also against Al Fajer Properties

original published Financial Times

http://www.ft.com/cms/s/0/2af58370-e013-11dd-9ee9-000077b07658.html?nclick_check=1

 

Dubai Police are investigating fraud allegations against the chairman of one of Dubai’s largest private real estate companies as dozens of aggrieved investors claim he defrauded them of more than $100m.

Kabir Mulchandani, the chairman of Dynasty Zarooni, was arrested last week on allegations of fraud and is helping with inquiries, police officers told the Financial Times.

At least 10 members of Dynasty Zarooni’s ”investment club”, which last year promised vast profits from the company’s preferential access to real estate deals, have lodged complaints against Mr Mulchandani, an Indian national, his Emirati business partner, Hilal Al Zarooni, their joint venture Dynasty Zarooni, and two other employees.

Investors say that Mr Mulchandani in March received subscription fees of Dh300,000 a month from 12 members. He promised them returns of Dh1m a month after six months, or Dh6m, in September, they say.

One British loser says he was encouraged by initial profits made by another club member, who had reinvested the proceeds into the scheme rather than taking the cash.

The fraud allegations weigh further on Dubai’s financial hangover as its six-year property boom fizzles out, with investor confidence hitting rock bottom as people are marooned in an illiquid, declining market while developers are hamstrung by financing difficulties.

More than 25 executives have been detained in an anti-corruption investigation at state-linked property companies. None have gone to trial yet, but the arrests have had an impact on investor confidence in Dubai.

News of the complaints against the chairman could raise concerns among other investors in Dynasty Zarooni’s claimed Dh21bn real estate portfolio.

Mr Zarooni denied any participation in, or knowledge of, a fraudulent scheme. ”One hundred per cent I deny this, there is nothing illegal whatsoever,” he said.

Mr Mulchandani, who has been detained but is seeking bail, could not be reached for comment. He denied any wrongdoing in a local press interview last week.

Lawyers say more than 100 other investors are preparing cases against Dynasty Zarooni over misrepresentation during the sale of its real estate projects.

One aggrieved investor, who in May placed a 20 per cent deposit on an apartment in Ebony Tower 1, opposite the Dubai Marina, for Dh650,000, yesterday lodged a complaint with the police against Dynasty Zarooni and their development partners, Al Fajer Properties, for allegedly misleading him about the progress made on the building’s construction, thereby raising the supposed value of the property. ”I have been cheated and am very distressed,” he said.

The cases, if they go to trial, could seek the recovery of hundreds of millions of UAE dirhams, said Salem Shaali, managing partner at Al Shaali & Co, which is representing the victims of the alleged fraud.

This could develop into one of the UAE’s largest fraud cases if other individual investors in Dynasty Zarooni come forward, he said.

Copyright The Financial Times Limited 2009

Ebony 1 Tower is a project by Al Fajer Properties within the Master Development Jumeirah Lake Towers. Ebony 1 Tower is also known under the name Jumeirah Business Centre 8 or Jumeirah Business Centre 9 ( Ivory Tower ), Developer Al Fajer Properties Jumeirah Lake Towers. All in the Master Development Jumeirah Lake Towers named Towers , Jumeirah Business Centre, total 9 Towers, are projects by Al Fajer Properties.  The Project has been launched and sold since December 2005 by Al Fajer Properties. Today 2009, no Tower of total 9 Towers is completed,only a part of them under construction,  the completion of this towers ( Phase 1 = 5 Towers) was promoted by Al Fajer Properties for December 2008.

Latest status of Plot G3 / named Jumeirah Business Centre 9 by Al Fajer Properties  or  also named Ivory Tower

http://www.skyscrapercity.com/showthread.php?s=5a50ee4f54171eaf6c2722678b8379c8&t=290912&page=18

 

 

Prosecution looks into Dynasty Zarooni Dubai fraud claims

original published 7days 13. Jnauar 2009

http://www.7days.ae/storydetails.php?id=72375%20%20%20%20&page=local%20news&title=Prosecution%20looks%20into%20fraud

The alleged fraud case against the chairman of Dynasty Zarooni, is now under investigation by Dubai Public Prosecution, a spokesperson at the office confirmed.

A lawyer for the comp-lainants told 7DAYS that the investigation had begun with questions for the investors, who claim that the chairman, Kabir Mulchandani, defrauded them of up to dhs450 million ($123 million).

Salem Al Shaali added that he could not tell the number of investors in the case as there are “new complaints every day”.

Al Shaali also said there was a second suspect in the case, and that some investors had informed him that this suspect had already fled the country.

The law firm, Al Shaali and Company, also told newswire Zawya Dow Jones that Mulchandani is being questioned on two counts, both subject to the Federal Penal Code and Dubai’s property laws.
The first case relates to the allegations that the membership club Mulchandani has admitted to running was sold to a small group of wealthy investors under false pretences, and that they were promised large returns.

The second case involves the selling of property at the dhs2 billion Ebony and Ivory development in Dubai’s Jumeirah Lake Towers district.
According to Zawya Dow Jones, Al Shaali said that Mulchandani took deposits for 20 per cent of the property but failed to deliver the project.

Dubai Public Prosecution confirmed they had started the investigation.

Dynasty Zarooni said it preferred not to comment until charges had been brought.

We proudly double confirm: Dubai Police Arrest Dubai Dynasty Zarooni Fraudsters

WE have  complaint and complaint, running around saying  ” please  hear us – they are Fraudster” – nobody wants listen to us. At least they said our complaints are criminal. And now ????????

http://www.khaleejtimes.com/DisplayArticle08.asp?xfile=/data/theuae/2009/January/theuae_January177.xml&section=theuae

DUBAI – 10, January 2009

Dubai Police have arrested a syndicate of tricksters of India origin, who have been operating in pretext of being real estate developers.

 The Indian national arrested are Kabir Mulcandani, a UAE national Hilal Al Zarouni and two other employees of ‘Dynasty Zarouni’ a company located in Jebel Ali for issuing bouncing cheques to different nationalities mainly Indians.

Colonel Khalil Al Mansouri, Director of General Department of Criminal Investigation confirmed the arrest to Khaleej Times on Thursday.  The officer said the fraudsters are in police custody and assisting in investigations, adding that they will then be referred to the Dubai Public prosecution for further action.

Police sources said that they had received more than forty complains of different fraud cases against the suspects at various police stations and all cases were then referred to the General Department of Criminal investigation. Rajish and Alkopatra used to work as Finance Managers for the company.

While Mulchandani and his accomplice used to convince ‘potential’ investors that they were licensed to invest money and were a real estate developers.  They called on people to invest Dh 300, 000 every month and after paying 6 installments, the investor would get Dh1 million in return.

However, after the investors paid all the installments, Kabir did not show up but went into hiding, until police smashed the racket upon their arrest.

Salim Al Sha’ali, a lawyer for the suspects, told Khaleej Times that in order to convince their victims, the company announced massive media advertisements and introduced websites stating that they had successfully invested in development of real estate projects in the UAE.

The company claimed that their total investments reached Dh40 million realizing a revenue of Dh2.8 billion.

amira@khaleejtimes.com

all related reports 2008 – 2009 about Dynasty Zarooni:

http://7starsdubai.wordpress.com/?s=Al+Fajer+Properties

http://7starsdubai.wordpress.com/?s=Dynasty+Zarooni

Real Estate Agents: Dubai Boom Is Ending

http://blogs.wsj.com/economics/2008/10/27/real-estate-agents-dubai-boom-is-ending/

Stefania Bianchi, Mirna Sleiman and Stefania Bianchi report from Dubai for Zawya Dow Jones.

A six-year real estate boom in Dubai that spurred a $475 billion building frenzy has ended, according to agents who say sales are collapsing amid fears that the global economic downturn will hit the sheikdom.

“Last month was a real disaster and worse is coming I guess,” Mehdi Zoghbi, an agent at Middle East Real Estate Consultants, told Zawya Dow Jones Sunday.

Zoghbi says that desperate sellers are now offering off-plan properties on the secondary market for a zero premium, effectively accepting a loss on their investment in order to offload quickly. Dubai, the first Gulf sheikdom to allow foreigners rights to buy homes, may also be the first to see a crash in property prices.

“Our commissions have fallen by up to 70% recently,” said Khaled Daji, an agent at Al Jabal Real Estate. “The most hit are the projects under development and those luxurious high end. We plan to survive for another six months to see how this crisis unfolds.”

But the city’s biggest developers like Emaar Properties PJSC and Nakheel are adamant that sales remain robust. Mohammed Alabbar, Emaar’s chairman and one of the architects of Dubai’s real estate boom, said in the company’s third-quarter statement that “we are very confident of our company’s fundamentals and future growth.”

That hasn’t stopped investors dropping the company’s shares. Emaar’s stock has fallen 62% since the beginning of the year, that’s more than the 48% fall in the Dubai Financial Market’s main index over the same period, according to Zawya.com data. Earlier this month, Colliers International said the growth of property prices in Dubai slowed to 16% in the second quarter of 2008 from 42% in the first quarter. Morgan Stanley warned in August that property hotspot Dubai could see a 10% fall in prices by 2010.

A collapse in real estate prices will add to pressure on Dubai’s economy, which doesn’t benefit from the vast oil income enjoyed by neighboring Abu Dhabi. Property and construction are estimated to account for about 30% of the emirate’s economy.

Meanwhile, the nerve – and wallets – of Dubai’s shoppers will be tested this week when, against a tide of global economic woe, the region’s largest shopping mall opens. Covering an area of more than 50 soccer fields, Dubai Mall will have more than 1,200 shops; one of the world’s largest indoor gaming arcades; an Olympic-size ice rink; the world’s largest indoor Gold Souk; and one of the world’s biggest aquariums, which will be home to more than 33,000 types of sea life, including over 400 sharks.

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Global recession resulted global oil, housing, commodities asset prices bubbles burst, plunge more than 50 % will be spread into oil consuming and oil producing countries
details on
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Comment by Warren Huang – October 27, 2008 at 7:19 pm

cool article

Comment by hue g. rection – October 27, 2008 at 8:06 pm

Stefania and Mirna, thanks for this article. Interesting to see how other people are living and investing.

Comment by tom a taxpayer – October 27, 2008 at 11:08 pm

A fall in prices may actually benefit Dubai in the long term.

The escalation in cost of living in Dubai, driven by property and rent prices, has become unsustainable.

And speculation will end leading to more realistic valuation of assets.It has clearly been a speculative market when a

down payment of 20 per cent provides a 100 to 150% per cent in a less than a year from property flipping.

Comment by Dave Stern – October 28, 2008 at 12:35 am

As someone who lives “on the ground” here in Abu Dhabi, I can tell you that Dave Stern’s comment is incorrect:

the locals have been taking out personal bank loans to cover just 2 to 3 month’s mortgage payments and then

flipping properties within that time (not a year!).

They were buying up to six properties at a time in this manner.

These purchases were all “off plan”, the properties were not even under construction.

This is why the real estate market was, ultimately, unsustainable.

Comment by Jan Newton – October 28, 2008 at 1:02 am

I have been a doomsayer of the Indian real estate market when I predicted the fall in February 2008 -

 http://www.eclectic-investor.blogspot.com
The Arabic leverage is up to 100 times capital. I have personally know of business center receptionist

doubling up as a “real estate flipper” and now has overleveraged and stuck in properties that are not even

under construction. It is normal for authorities to blow their trumpets, but expect their sounds to end in a

Big Blowup in their faces.
A cataclysmic disaster and perhaps the start of Dubai’s fall like Beirut before and Aden even before that.

Comment by Cataclysmic Collapse of Dubai Expected – October 28, 2008 at 2:26 am

Castles in the sand?

Comment by tom a taxpayer – October 28, 2008 at 2:50 am

Currently panic is ruling the markets all over the world irrationally.

There is no exception, however, the Arabian Gulf have strong economic fundamentals and the recovery

will be much faster than in the West. As a matter of fact, the Q3 financial results of the biggest market players

for the are better than the Q3 results in 2007.
From the position of commercial property broker in Dubai, I can assure you that corporate end-users are good

clients at the moment. We have sold office floors in Business Bay during the last month and recently preparing t

he transactions of commercial properties in Jumeirah Lake Towers.

In times of crisis there are losers and winners.

Comment by Gergana Mineva – October 28, 2008 at 4:33 am

When junk emails started arriving in one of my “special” email boxes – promising pie-in-the-sky

pre-construction deals in Dubai – went Short Oil and Emerging Markets ETFs (Thank you, Goldman oil analysts!!!)

Comment by Federales – October 28, 2008 at 6:23 am

Mr. Gergana Mineva!
It is Persian Gulf not Arabic.
Please use always the correct name in the future.
Thank you!

Comment by Farhad – October 28, 2008 at 7:21 am

Farhad, Dubai is essentially ruled under Shirah Law, a cruel brand of despotic fascism that harms

women and children and is antithetical to freedom. Dubai though more “progressive”

than most repressive regimes in Sand Land, hates Jews and will not allow the

practice of such a “heinous” religion as Judaism. Yet you are worried about words and nomenclature.

Words are meaningless, actions are all that matter.

Comment by Kafka – October 28, 2008 at 8:32 am

OPEC’s manipulation of oil prices and speculators caused this current recession by increasing oil prices to historic levels.

Comment by Blame OPEC – October 28, 2008 at 11:16 am

Market is certainly undergoing a correction but to predict doom is a little foolhearty.

There is TREMENDOUS liquidity in the market and the reserves built up during the period of

high gas prices will certainly be deployed to stablize the realestate market which is the cornerstone of ‘

New’Dubai. Also, Dubai is NOT ruled by shariah law. In fact, it is one of the most modern states

in the gulf and is known for its liberal political/social environment (recent stories about sex on the beach

 not withstanding). There are a number of very successful american jews in the city so the anti-semetic

claim is just rubbish. There is no law against practise of ANY religion.

Visit the region before speaking

Comment by DubaiDreamer – October 28, 2008 at 1:33 pm

The smart money has begun the pull out already. Bank lending is drying up.

The only ones who continue to believe that the real estate market will go up are real estate agents

and speculators who have not been able to off load so far. The secondary market for off-plan properties is in a free fall.

And no amount of deliberate project delays and throwing people out of villas is going to prevent the serious

correction that Dubai property so badly needs. It has been the most speculative, unregulated and unprotected

market the past 6 years.

Comment by Kingsley – October 28, 2008 at 1:55 pm

couldn’t have happened to a nicer group of people…

Comment by charlie – October 28, 2008 at 2:13 pm

Gee, I guess the Arabs are poor for a reason = incompetence.

High oil prices masks the basic incompetence for awhile. But stupid is as stupid does.

Comment by CaliPOWER – October 28, 2008 at 2:17 pm

Cry Out Loud and you all say what you want about dubai …BUT The truth is: We Are All Loooosing!!

The whole world is sinking…

Comment by The True Man – October 28, 2008 at 8:44 pm

Kingsley makes some good points, Dubai is in need of regulation.

Prices may be predicted to fall, but it isn’t happening yet in the rental market.

Buyers have bought up so much of the properties and now are holding them until they can get

their desired selling price (usually expected 20% increases from sale to sale)…leaving the rentail market

struggling. Landloards can demand rents starting at $25,000/yr in ONE payment upfront for 450 sf studios…in empty,

 construction sites of buildings! Dubai is leaving no room for renters & the middle class.

Rents are still exorbitant and there are few regulations in place to support the renter.

Comment by MRODubai – October 28, 2008 at 11:40 pm

As someone who lives and breathes real estate since its first days here in Dubai,

I feel it is necessary to see the cause of the boom and only then we may be able to make some

calculated estimates of the future market condition.
1. Dubai real esate growth was based on a promise of freehold, residence permit, tax free benefits

for nationalities who have certain restrictions in their countries and saw dubai as a safe secure investment opportunity.
2. Government of dubai removed the residence permit guarantee by buying a property.

So automatically no tax free status, coz if you are not a resident of Dubai you can not open

bank account & you are still liable for taxes in your country.

Comment by real estate expert – October 29, 2008 at 12:21 am

3.Nakheel/emaar/dubai holding factor: All these companies hate each other and therefore fight for the

attention of sheikh mohammed, which means the greed and ego overtake logic and feasibility!!! result:

Excessive lands/properties/ mega projects without proper planning & infrastructure in place.
4. Universal law supply Vs. Demand: nobody realises that the already anounced projects in dubai will need

about an extra 6 million people to live in it!!!! (From Lagoons, meydan, dubailand, tatweer, mizin,

industrial projects, emaar, bawadi, the world, the universe, palm deira, port rashid, waterfront, arabian canal,

dubai world central….)Excuse me thats almost double the UAE population.

Comment by real estate expert – October 29, 2008 at 12:29 am

5. Loose the Confidence You loose everything: The investors/buyers are wakening up to the reality & there is

absolutely no confidence in the market not only because of the global financial crisis but mainly because of the

over supply & fear of the crash.

6. Genius Government policies: dubai government is its own worst enemy, at times like this what does dubai do?

They launch new mega projects & new development companies like meraas with ambitious projects that will only

further dampen market confidence.
7. Investor’s security: Dubai’s judicial system is as good as any underdeveloped country with selective rights

depending who the complaint is against.

Comment by real estate expert – October 29, 2008 at 12:35 am

8. No human rights when it comes to dubai police. infact torture and enforced disappearance has become

common in dubai under the umberella of the state security they can attach anything to anyone to reach their

commercial targets.
9. Everybody owns 20% of several properties: Paying a few installments does not make you theowner so when the next installments come due and there is no quick sales like the good old days, what happens? Sell below the price or lose your deposit with the developers…. results in what we call “stress sell”

Comment by real estate expert – October 29, 2008 at 12:40 am

10. Oil prices & Inflation: ofcourse oil prices doubled so did the cost of steel & cement & food & labor

accomodation… result abnormaly increase in construction prices on a weekly basis!!!… so an increase

in property prices due to rising cost….
11. Decrease in Oil prices: Sudden decrease in everything from food prices, to raw materials…..

creating sudden panic as properties are cheaper to build and a fear of further reduction is iminent.
12. There are too many chefs in the tiny real estate kitchen of dubai, have you noticed there aren’t any

happy faces in the media anymore!!! what happened to the so called international anouncements about their acquisitions…

Comment by real estate expert – October 29, 2008 at 12:45 am

13.The Sheikh factor: when the ruling family is desperately getting into everythng from real estate,

to owning or managing coffeshops and bakeries, landries…. then the opportunities for the public is becoming less

and less which means a lot of unhappy UAE nationals and residents…. which everyone know will not help the already

unstable state of dubai.
14. Big brother factor: let there be no doubt Abu Dhabi will eventually overtake dubai for the right reasons.

 money is not an issue thanks to oil & there is no rush to sell everything just to raise funds for the previously

anounced project like in dubai. Dubai’s power in UAE will be reduced due to lack of funds, money talks!!!

Comment by real estate expert – October 29, 2008 at 12:51 am

15. regulatory body with no teeth: RERA is supposed to ensure that developers/real estate agents

/ landlords/ follow the rules and regulations… what happens if a developer or an agent does not follow the law?

 NOTHING… just a 100,000 fine… comparing to the hundreds of millions at stake its a drop in the ocean.
16. Public Prosecution & Corruption: Everything in public prosecution is relative & variable…. there are

cases of misrepresentation by nakheel, for example selling thousands of villas

 and after 2 years just cancelling the project…. nobody can make a complaint.

Likewise several private developers & real estae agents operating in a fraudulent manner are let go off the hook.

Comment by real estate expert – October 29, 2008 at 1:54 am

Take away the speculation and in the end it comes back to fundamentals. Rental yields on finished

properties are currently 2-5%. Interest rates on property loans are 8-9%. Deposits on property

purchase are 30% minimum. If you want to buy a 2 bedroom apartment in a decent location you

would need to be earning US$200k to meet the lending criteria. The stock market in the Gulf has

fallen 25% in th elast 30 days and real estate stocks by 60% in 9 months.

Look for similar movement in property values.

Comment by steve – October 29, 2008 at 5:20 am

Main reason dubai eco will collapse is the RUSSIAN factor.

Comment by GB Bajaj – October 30, 2008 at 1:58 pm

The comments entered by the real estate are very impressive/ Truly an expert.

Comment by Admirer – October 30, 2008 at 4:08 pm

Great comments by the real estate expert as i call dubai an artificial market. There is onemore important point

that expert forgot is what will happen after Sheikh Muhammad as UAE history says e.g.Sharjah.

Advice to all expat go back to your homeland and serve for your country as Dubaidoes not have a

nation like Oman, Bahrain , Kuwait or KSA.

Comment by Fact Finder – October 31, 2008 at 7:18 pm

Well it seems everyone here is pretty sure that Dubai Property Market is done and huge Crash is in Pipeline

(or is already there). Well no matter how much we want it but it’s not entirely Ture. The Factors Mentioned

by “Experts” here does not have much impact on property market. Property Market depends on

three important factors. 1) Creations of new Jobs and thus Movement of New People to area

2) Amounts of loan banks willing to give 3) Pricing of the property
In Case of Dubai, Companies are still very much eager to open up an office here which saves them 30% to 40%

in direct Tax fromtheir own Country. That Means new companies, new Jobs, new demand.

Comment by Real Estate Investor – November 1, 2008 at 8:56 am

it is easier to open an Office in Dubai than Buying BMW in U.K. It Still Costs AED 10,000/-

and every employee gets residence visa (AED 8000 per employee for three year) hence TaxFree status.

Dubai Government investing in own companies E.G opening up Hotels, Telecome, Café and everthing

else is also very Good for Dubai. Since 30% to 40% of Dubai’s Expat population

work in these Companies shows how serious Dubai Government is in bringing people to Dubai.

The 2nd factor is the bank Finance and that’s a problem right now. Due to Global Crisis Gulf Banks have huge

Liquidity problem and that’s the reason they have Stopped Finance,(Yes Stopped) Most Banks have Already

Reached their Yearly tar

Comment by Real Estate investor – November 1, 2008 at 8:57 am

Most Banks have Already Reached their Yearly targets of cash outflow and Simply don’t have cash for mortgage.

Hence the finance buyer which is about 60 to 70% of market cannot buy. BUT from Jan next year Banks

will have fresh cash and hence finance will be back on track. Since Finance will be back the property market

will tend to rise again.

The 3rd Factor Pricing – Yes Dubai prices had increased on massive pace and yes things were gone

up really fast but still prices were not par will other countries (similar metropolitan cities) and now

with the correction in property prices due to the Financial problem the prices are even more attractive.

Comment by Real Estate investor – November 1, 2008 at 8:58 am

No place in the world can sustain to grow above 40% annually but prices only crash only when the demand dries up. Like in U.S and U.K where most citizen already own a home and new migration is only 1 or 2% of population where as in Dubai its at 28% to 40% every year and most people here still live in rented houses. Now with that kind of new people market will not crash but yes the growth can slow to 10% to 15% will is more realistic level.

But everything’s not that great also, Dubai Needs to a lot more to keep growing and attracting

more expats E.G Allow more foreign ownership in local companies, give more Rights to expats,

and introduce permanent residency with work permit.

Please let me know if some one thinks the other way

Comment by Real estate Investor – November 1, 2008 at 8:59 am

The UAE is now a ‘Buyers’s Market’ and I hope developers improve incentives such as back-loaded payments plans etc.

Real Estate Dubai

Comment by Andrew – November 1, 2008 at 1:32 pm

in dubai…reality is, the dubai govt thinks just like any other govt in the world i.e. india, usa, uk, japan etc.

nothing is done in dubai unless its severely needed [i.e. metro] and then its splashed with every god

damn adv from lipstick to lingerie to condoms to repay the loans taken for it. Y?

coz dubai govt HATES HATES HATES to pay for it from its pockets.

Comment by analyst expat – November 1, 2008 at 3:45 pm

To the “Real estate Investor” who does not have a clue of what this place is like: re-read the comments

by the “real estate expert” and by “Fact Finder” and then get rid of your investment as fast as you can and while you can.

Yes, you would be safer if you were in Kuwait for instance, but not here. Get out of your circle and talk

to others and get to know the real picture. Does “Pirate Coast” mean anything to you?

Comment by Yet another fact finder – November 2, 2008 at 1:01 am

Dubai has been trying to imitate the West for a long time now.The current situation is a predicted end to its Western dreams

Comment by Shaiju Janardhanan – November 2, 2008 at 6:10 am

excellent article… it’s so nice to read objective and realistic articles (and comments) about dubai and

their real estate market. i’m absolutely sick of reading blatent property (or any other) propaganda in Dubai’s “Newspapers”.

Comment by michael – November 2, 2008 at 6:55 am

i have read your article. wish to know few details regarding the Rental Index on Residential & commercial Properties.

There is a situation which were i have (a tenant) is going through tough time in Dubai

i have rented a Shop inside a Shopping Mall from past 4 years which was running in losses.

From 10 months the customers have raised and he was doing the Breakeven.

Suddenly the Mall is sold and New Landlord is asking for New RENT 40% increase and he is showing a

document of RERA stating landlord can increase the Rent to Market Rates.
i have put all his money in the business and may go bankrupt incase the situations goes out of hand
NEW LAND LORD IS AWROSTAMANI REAL ESTATE

Comment by Qurashi – November 5, 2008 at 7:26 am

Hi guys, am glad some of the readers find my comments useful. I just would like to add that god forbid if

anything actualy happens to our “super man sheikh” (Sheikh Mohammed) the entire wolves surrounding

him will start eating each other as history has shown in the gulf.
HSBC & lloyds TSB have stoped giving out mortgages to apartments in dubai what does that tell you?

PROPERTY CRASH is inevitable but the question is how hard it will hurt the government who has nothing in the account.
I hope I am wrong, but rumor says sheikh mohammed has had a stroke and an operation.

God help all those who still continue to dream and believe the wonderful animations of dubailand and nakheel!!

Comment by Real Estate Expert – November 11, 2008 at 10:44 am

The real estate market in dubai has crashed already. I bought a few floors from Dynasty zarooni’s sheffield project in dubai waterfront at 2700 dhs per square feet, today i can not sell it 30% below the purchase price. Why because Dynasty Zarooni does not even own the land & they don’t even have an escrow acount, yet people have paid over 20% to their acount and there is no construction on site. RERA knows about it but does nothing.

Comment by Dubai Resident – November 12, 2008 at 2:54 am

Really impress with your knowledge Real Estate Expert. Keep us updated to whats happening in Dubai Real Estate and when it will be a good time to buy probably an year from now.

I am based in Canada real estate here is doing reasonably well small 5% correction which is normal and acceptable.

no major job losses or recession predicted yet Canada has a sound economy.

Comment by Real Estate Crashing – November 15, 2008 at 4:03 am

The nightmare is here…Great analysis by Mr. “Real Estate Expert”

Comment by Dubai Nightmare – November 16, 2008 at 6:50 am

It’s time that speculators lose something. Earning hunderds millions was not normal.
I never believed Dubai, never, it was bluff, very well supported by propaganda. Crisis will clean it up.

Comment by Azizi – November 19, 2008 at 8:11 pm

I wish real estate expert had published these comments in dubai dailies… thousands of small investors

like myself would not havebeen trapped in unrealistic promises.

Today my property is worth 40% less than what I bought it 4 months ago.

I blame the government for bringing so many projects into the market and killing the confidence.

Why are they quiet. Real estate expert how can I get in touch with you for some advice… email?

Comment by Silvia – November 20, 2008 at 3:35 pm

In the 1980s and 1990s, Dubai used to be such a fun place to live in. Good medical, good salaries, good savings.

Today, expats are lucky to save even 5% of their income and stress levels have gone through the roof.

Traffic jams 24 hours a day, near impossible to get street parking, a 45 minute wait to get a taxi.

Indirect taxes in the form of extremely high rent and huge fees on everything related to living in Dubai.

Before, people treated you for who you are. Now they treat you based on what you drive, where you live

and how much you earn. Dubai is no fun to live in anymore, rather it is a materialistic society amidst an ugly

 poorly planned concrete jungle where the rule is eat or be eaten

Comment by Ex-Dubai Expat – November 21, 2008 at 6:35 am

Fortunately avoided the market here as I read the contracts and evaluated the risk given the emerging legal infrastructure.
Very little sympathy for those that bought, as they knew that the potentially high returns came with equally high risk.

Unfair to blame the Gov’t they have been putting the right regulatory structure in place, but this usually takes years.

The region needs a Dubai and I have no doubts it will be a regional powerhouse.
In the short run I expect an 80% drop in values, much like Singapores correction in the late 90’s.

Comment by sulli – November 21, 2008 at 6:40 am

Been in UAE since 1994 but lost the bull market due to over protectiveness any way nothing to cry for,

can see one more coming in the near future as I have seen these happening in the past, unlike India from

where I come from, Dubai is not seen as a permanent residenence for most of the expatriate community

residing here, Most of us especially Indians are phobic of the locals and have been taken undue advantage

by the local youths and some most of the GCC expatriates and in my personal experience worst among these

are the Palestinians who seeems to have no respect to another human being now saying that, since no expatriate sees

UAE as his future home but a stop gap arrangement to make a

Comment by Lost Bull – November 24, 2008 at 2:26 pm

quick buck, which attracted the soldiers of fortune around the world, and persons with questionable past and

 present but with a huge wallet even though there were some sort of regulation put in regarding the money transfers,

there seems to be money flowing in from every were, Now in India we have a huge population and we have absolute

need for housing even it is rare to see such an mega project as in Dubai even with some of the worlds richest persons residing

there, Anyway before coming over to Dubai I used to travel around the world and it surprised me in 1994 why

Dubai did not have MRT which was very much common even in small countries such as Singapore,

And it surprising and at the same

Comment by Lost Bull – November 24, 2008 at 2:44 pm

extremely frustrating that you cannot travel back in the same taxi of other emirate unless you have engaged

 it for a round trip, about just 2-3 years back an inter emirate buses started plying the roads.

Once the real estate market started selling there were lots of people rushing in to buy assuming that they can forsee

a stable future with permanent residence visa status if they bought a free hold property which did not materialise,

again the only option that was left for all to make a quick buck when the boom lasted, Extremely well marketing tools

 were used to attract people from all over the world with a promise of living on beach life style, and compared the

prices to the major cities

Comment by Lost Bull – November 24, 2008 at 3:00 pm

found it to be cheap minus the infrastructure to support such a rapid developement, due to all projects going on simultaneously,companies ,man power, machinery and materials started flowing in and competitiveness within the developers started pushing the price upwards, speculators started rushing in prices went beyond the reach of genuine end user, any product which becomes unaffordable to the end user shall not sustain its existence so the crash in the market was inevitable, But even in this period there are plenty of genuine buyers if the prices are affordable and without high maintenance charges for the upkeep it is upto the developers to recognise, presently there are lots of projects

Comment by Anonymous – November 24, 2008 at 3:15 pm

being shelved, scaled down and going for a rebiding ( face saving tactics), speculators immediately stated off loading their stocks , few with sustaining power shall hold untill they cannot afford to pay their mortgages any more, companies have already started retrenching, rents in Dubai started droping,bank interest rates have incresed, come March ( end of academic year)2009 we will see an exodus of families saying goodbye to UAE since it is not worth for them to be live here any more, and then the real crash starts…….. Advice time : 1. Do not panic this is not a end of the world 2. If you cash start investing in the shares 3. force banks to reduce the interest rates and extend the

Comment by Lost Bull – November 24, 2008 at 3:31 pm

repayment period. 4.Hunt for good bargains in the real estate property market start buying hagle with the developers,5.

This is good news as there is very sustainable future ahead for those who weathers this strom 6.

Live life comfortably as you will not take anything when you are dead anyway 7.

Pray for a good health during this stressful period ……… May God Bless U.A.E and its Rulers

Comment by Lost Bull – November 24, 2008 at 3:41 pm

Looking for real estate in Dubai? Property Portal connects you to hundreds of sales and investment opportunities

in the world’s hottest real estate market.

Comment by server Baig – November 25, 2008 at 5:29 am

money-grubbing pigs deserve to wallow in their own filth

Comment by rich man poor man – December 1, 2008 at 6:54 am

well dune dubai dream..!!

Comment by ignorent – December 6, 2008 at 4:08 pm

to all Dubai haters i say “moral indignation is jealousy with a halo”……

Comment by Wells.H.G – December 11, 2008 at 1:36 am

i believe that rich man poor man’s comment is logically directed towards the party that created this

worldwide financial crisis, which naturally is not Dubai…..see what i mean !?

Comment by Wells.H.G – December 16, 2008 at 3:01 am

 

DZ – Al Fajer – ACI

Comment by Sarah

LAST NEWS about the people behind the mysterious game around Ebony and Ivory Tower Plot H3 and G3 Jumeirah Lake Towers – Al Fajer Properties – Dynasty Zarooni

#UNDER C: JBC (9 Towers), 41-46F Com, 149-167m, Plots G2, V1, Y1, N3, W1, H1, G3, H3, L1 – Page 15 – SkyscraperCity

AHHHHHHHHHHHAAAAAAA……..seems to be A “FLIPPER” Connection…good friends of ACI

original published:

http://www.dc-epaper.com/dc/dch/2008/08/25/ArticleHtmls/25_08_2008_101_009.shtml
S anjay Chimnani, one of the partners in Bottles and Chimneys, a popular pub in Hyderabad, can do without help from his mentor Kabir Mulchandani, owner of Baron International, the company that pioneered colour TVs and music systems under the brand names Aiwa and Akai. After that shut shop, Mulchandani started doing real estate business in the Gulf.
Now, Dubai’s Real Estate Regulatory Authority (RERA) is probing Mulchandani’s operations after nearly 30 NRIs from India, Russia and the UK complained online that he had misled them by showing a different property and selling them another. He is reportedly accused of having done other fraudulent deals. You may wonder what the connection is with Sanjay Chimnani. Well, Chimnani worked closely with Kabir Mulchandani in Mumbai after which he came to Hyderabad for a few years to market the Aiwa products. Though this venture started off with a bang, it vanished without a whimper.

Next one heard that Sanjay Chimnani was launching B&C in a grand way. He put his heart and soul into pro moting it. But within a short span, he left it all to his partner Sanjay Batla to do real estate business in the Gulf. It was alleged that Sanjay had joined Mulchandani’s real estate company, Dynasty Zarouni.

Now with Mulchandani being probed, Chimnani is back in the focus. “He has no links whatsoever with Mulchandani any more, he moved away to be part of a German company,” said Sanjay Batla, Chimnani’s partner at B&C and Global Properties, the first Indian franchisee of ACI Real Estate, an affiliate of German investment company Alternative Capital Invest GmbH.

Said to be in Italy now, Chimnani started looking for other options after supposed differences cropped up with Mulchandani with regard to his style of work. Chimnani is associated with ACI Real Estate as its joint managing director.

Interestingly, ACI boasts of a portfolio which includes residential, commercial, leisure and retail developments in prime locations in Dubai, Abu Dhabi, Ajman and other emerging cities across the UAE.

“It is impossible that someone can indulge in such kind of malpractices in the real estate business,” Batla said, defending Mulchandani, while he vehemently denied Sanjay Chimnani having anything to do with Mulchandani.

Repeated attempts to contact Sanjay Chimnani failed. But he is expected to be back in Hyderabad next month to concentrate on real estate business developments here

A Statement from Dynasty Zarooni Dubai – September 20. 2008 ?

original published:
http://journals.aol.com/jnthnjon3/dynasty-zarooni-dubai

Dynasty Zarooni Dubai:

“UAE Dynasty Zarooni Expose’”

With the kind of investment going on in Dubai, a small property firm Dynasty Zarooni is creating huge trouble for investors from various regions. The market is already talking about it, the Dubai Authorities are investigating it, UAE and International tabloids are running news on one of the owners named Kabir Mulchandani. From Daily Telegraph to UAE National and on towards Indian tabloids, they are creating headlines.The episode started with Dynasty Zarooni (R) misrepresenting their project status on the famous chain of Ebony & Ivory brand name. Dynasty Zarooni flew around pictures of their project at Intermediary/Advanced Level Stages, when the media discovered that the truth was grim and far from what was being advertised.And so opened the confusing scenario which has also put a US Investment Body in a compromising position. Compromised because Investment Bodies mostly carry public investments for a fair share of the returns.It has had minimal correspondence with Dynasty Zarooni as the office spokespersons at Dynasty Zarooni Corporate Offices are unavailable. The web is full of discontent for International Investments attached with Dynasty Zarooni as there are tons of stories revloving around their projects. There are blogs, videos, tabloid features, newspaper headlines and Real Estate Authority’s gray stance on the subject.There is absolute abhorrence over the amalgamation of mixed information everywhere.I have had the chance to cover various mismanagement and misinformation scandals worldwide and needless to say we are witnessing another colossal clandestine over there this year.For further advise on planning and managing your investments, please contact me
on my email.

________________________________________

The direct
Statement from Dynatsy Zarooni to the above

Comment from dynastyzarooni 9/20/08 11:10 AM Permalink

Mr.Jonathan,

Dubai is a booming market and Dynasty Zarooni boasts business value of upto 21billion AED.
We have dozens of projects underway.
There was a major muck up by Gulf News when they published the wrong pictures of our project.

I am very apologetic that this happened and I assure you that these projects are going to be completed.

As for the mismanagement, I think we all make mistakes and we have made ours.

Our agents will be in touch with you after our RERA investigation is over.

It is true we were denied entry into an international market and we are finding out about the details next week.

I assure you that we shall revise ourselves and our objectives.

I am sorry if you feel your investment went down, but we shall make sure of securing your next investments.

Regards,
N.Vishran
CEODynasty Zarooni LLC

Update :Buyers are still angry – Just another Blog about Ebony and Ivory Tower Dynasty Zarooni – Al Fajer Properties

Advertisement for Ebony and Ivory Towers September 2008 -

Jumeirah Road Dubai – Dynasty Zarooni / Al Fajer Properties

Picture 7starsDubai Spetember 2008

original published:
http://reradubai.wordpress.com/2008/09/22/dynasty-zarooni-fails-to-trick-rera-case-critical/

DYNASTY ZAROONI FAILS TO TRICK RERA. CASE CRITICAL

Dynasty Zarooni is trying to cover its loose ends but to no avail. The real estate company still has not come up with a decent explanation for its disgusting trick to misquote facts about the ebony and ivory project. Their fake pictures issue still hasnt been addressed by them, insted they go ahead and make these videos and post some insipid articles to make themselves look better.

They’d rather just give out the truth about their misrepresenting tactics to avoid all of the negative publicity.

They really do think the investors are stupid to forget about it.
Please give out an explanation

Investors, please confirm videos. In the meantime, they are releasing such positive made up thing about themselves:

These articles are such a preliminary hoax that even someone with a limited IQ can see right through them:

http://www.mumbaimirror.com/net/mmpaper.aspx?page=article&sectid=5&contentid=20080917200809170312369856aecaf73

http://archive.gulfnews.com/business/General/10240118.html

This is a shameful act

___________________________________

Brief Background:

A few days ago, a number of comments and questions were posted on various Dubai real estate blogs regarding some of the activities of Dynasty Zarooni for the sale of the Ebony and Ivory
Towers that are being developed by Al Fajer Properties.

Dynasty Zarooni deemed this a smear campaign and issued a strong statement through Gulf News about getting a clearance from RERA, however the initial questions remained unanswered by them.

I conducted an independant but simple and unbiased investigation of the case. The following is a factual representation of my alarming findings.

The questions raised here need to be answered in order to safe guard investor rights and protect Dubai’s reputation.

Violations of RERA Laws Committed by Dynasty ZarooniMisrepresentation in the Promotional CampaignUnauthorized Activity (Not in accordance with the commercial license Real Estate Brokerage)

1. Misrepresentation in the Promotional Campaign

Under RERA Laws, an Agent/Broker violates the law by giving misleading/fabricated information or using false images and creating misrepresentation for an Off Plan Sales Promotion Campaign – a criminal offence in U.A.E.

read more: http://www.zaroonidynasty.wordpress.com/

http://zaroonidynasty.wordpress.com/2008/09/15/biggest-dubai-property-scandal-revealed/#comments

or: http://www.dynastyzarooniivory.wordpress.com/
http://dynastyzarooniivory.wordpress.com/

or in Blogs below: original published:
http://reradubai.wordpress.com/footage/

FOR FURTHER INFORMATION, PLEASE VISIT SOME OF THE UNDER MENTIONED BLOGS:

http://dynastyzaroonifraud.wordpress.com/

http://dynastyzarooniscam.wordpress.com/

http://dynastyzarooniscandal.wordpress.com/

http://zaroonidynasty.wordpress.com/

http://zaroonidynastyfiasco.wordpress.com/

http://zaroonidynastyscam.wordpress.com/

http://dubaiscams.wordpress.com/

http://dubaiscandals.wordpress.com/

http://kabirmulchandani.wordpress.com/

http://masterofscams.wordpress.com/

http://uaefraud.wordpress.com/

http://dynastycom.wordpress.com/

http://dynastyinfo.wordpress.com/

http://dynastyzaroonirealestate.wordpress.com/

http://dynastyzaroonijumeirah.wordpress.com/

http://dynastyzarooniivory.wordpress.com/

http://dynastyzarooni.blogspot.com/

Huge Delay – DMCCA – Jumeirah Lake Towers master developer encounters some ground realities

JLT master developer encounters some ground realities
By Nicole Walter, Senior Features Writer

original Published:

http://www.propertyweekly.ae/articles/this_issue/20009436.html

Caught between a ‘lake’ and a hard place is DMCCA, the master developer of Jumeirah Lakes Towers. It is a situation that DMCC is trying to get out off as it tries to find enough space available for construction activity to take place, but without hampering the movements of those residents at the completed towers.

“Any time you mix construction traffic with personal traffic it’s a challenge,” states Bryan Wilson, DMCC’s Executive Director Property Development. “It’s great to be the first person in, but means a lot of time having to compromise on living conditions until construction is completed.”

DMCC had earlier allowed construction vehicles access to the sites where the four ‘lakes’ would be as a way of keeping them off the roads and clogging up traffic. But now, they are driving on the boundary roads.

“Maybe with a different master-plan you could have done something different, but we have the lakes in the middle,” adds Wilson. “The owners feel it is time to focus on the landscaping as people have moved in — so we had to move people out of the lakes.”

This has increased the chance of residents crossing paths with construction vehicles. “We’ve assessed the situation after hearing some complaints and decided to put in temporary lighting to make it safer, as safety is our number one priority for construction workers and residents,” Wilson comments.
The four lakes
There are four lakes in JLT: Almas East & West, Elucio and Allure, each supplied by seawater via a sophisticated circulation system. The Elucio will be completed by year-end.

JLT towers come in trios set around the lakes. “We need a cluster of three to be out of the ground to a certain extent to begin the work around them,” Wilson informs. “The closing of the landscaping tender package is imminent and what follows will change the feel and look of JLT from a construction site to actually becoming a liveable community.

“There are 14 towers with approval at different stages of occupation. We’re now transitioning from around half a construction site and a quarter community to a community by end 2010 when all towers are completed.”

There are to be 79 towers in JLT proper and another eight on its embankment. Master planned by Nakheel and taken over by DMCC two-and-a-half years ago, JLT’s completion cannot come fast enough as far as Ahmed Bin Sulayem, DMCC’s Executive Chairman, is concerned.

“Completion within three years would have been the best scenario for me but each developer faces his own challenges in the construction market,” Bin Sulayem notes. “They may have several towers in JLT that they have to manage, so we are putting pressure on them to complete construction as soon as possible.

“We get all kinds of excuses and I can’t accept them, especially that we have now moved into our building (Almas). JLT is a prime location, they are not going to find another plot on Shaikh Zayed Road within the next six years — this is the heart of New Dubai where everyone wants to be.”

Infrastructure issues

Half of the roads circling Jumeirah Lakes Towers are part of the western-perimeter network project, which is undertaken by the RTA.

“That’s out of our control, they have awarded the contract but have one-and-a-half years to finish the roads,” says Bryan Wilson of DMCC. “We can’t wait for them to finish, so we put up our own temporary measures in the interim.”

As regards Internet connectivity for the cluster’s residents, DMCC is intent on offering residents a choice, a first in Dubai. “I want practicality for our end-users. I believe that is what Dubai, like Palm Deira is also looking at,” says Ahmed Bin Sulayem. “They manage in other countries, so there is no reason why they can’t manage here.”

Du was supposed to be the sole provider. “We have Etisalat and Du now in one room pressuring them to execute and agreement to share the infrastructure within JLT,” affirms Wilson.

Update: The False Story ? in Mumbai Mirrow -Dynasty Zarooni – Al Fajer Properties

original published Mumbai Mirrow

Kabir Mulchandani, owner of Baron International, the company that pioneered cheap colour TVs and music systems under the brand names AIWA and AKAI, and who fled Mumbai after scrutiny by the DRI and Enforcement Directorate, is once again at the centre of controversy.

This time in Dubai.

Mulchandani had left Mumbai for Dubai where he set up a company, Dynasty Zarouni, to cash in on Dubai’s booming real estate market.

He markets ready-to-move in properties constructed by a real estate company called Al Fajer.

Mulchandani advertises these properties on his website and invites NRIs to invest money.

Al Fajer is known for its projects in Jumeirah Business Centre 1 and 2 apart from various projects at Jumeirah Lakes and Jumeirah Island.

But now Dubai’s Real Estate Regulatory Authority (RERA) is probing Mulchandani’s operations after nearly 30 NRIs from India, Russia and UK complained online that he had misled them by showing a different property and selling them another

RERA authorities told this newspaper that Mulchandani’s firm had also not followed the local rule of depositing sale proceeds of real estate properties into a government-shared escrow account and instead pocketed the entire money.

At least 20 NRIs, originally from Mumbai, had invested money ranging from US $1 million and above in residential-cum-commercial properties developed by Al-Fajer and marketed by Mulchandani.

The smallest of these properties is approximately 5000 square foot.

One particular complaint cites how Mulchandani allegedly sold apartments in a three-tower complex, showing the two completed towers as the properties that were for sale but allotting ownership documents of the third tower which has yet to come up.

Speaking to Mumbai Mirror RERA’s head of legal cell, Imad Husein said, “We have received complaints of 30 investors from India, Russia and the UK. Kabir’s company Dynasty Zarouni offered real estate properties at half the market price.

It also allegedly lured investors by misrepresenting a different property in the name of another. Each buyer has invested at least one million US dollars with Kabir’s firm.”

According to Husein, “We have invited all investors with similar complaints through advertisements in local newspapers to come forward, and have assured them that RERA will play an active role in safeguarding their money under law no 8 in line with the directives of Dubai’s ruler Sheikh Mohammed.”

Husein said, Mulchandani’s operations through Dynasty Zarouni involve sale of over 20 towers each consisting of 40 floors, approximating 20,000 residential and commercial units.

The RERA official said Dynasty Zarouni was also under scanner for irregularities in fund management.

“As per the rules of the Emirates, the money received from investors has to be deposited in an escrow account jointly held by the government with the developer.

The money is released only on delivery of the property.

Kabir Mulchandani and his company did not deposit money in the escrow account and hence it results in a case of breach of contract,” Husein said, adding that in such a scenario the developer may vanish leaving investors in lurch.

One of the NRIs, originally from Mumbai, who has filed a complaint with RERA said, on condition of anonymity:

“I was devastated to find that it is illegal for Dynasty Zarouni to collect money without the existence of an escrow account.

Not only does this leave my funds unsecured, in addition I have just been told by Al Fajer properties, the developers, that the total area being committed to me in the contract provided by cis inaccurate and is exaggerated by 30 percent,” the NRI added.

Mulchandani could not be contacted.

original published: Munbaimirrow.com

http://www.mumbaimirror.com/net/mmpaper.aspx?page=article&sectid=15&contentid=200808232008082302260752817e4982d

also published: zawya.com

http://www.zawya.com/Story.cfm/sidZW20080824000060/SecMain/pagHomepage/chnAll%20Regional%20News/obj2A17E941-F5E0-11D4-867D00D0B74A0D7C/

Whats going on with Projects Al Fajer Properties Jumeriah Lake Towers – Scandal ? – Dynasty Zarooni

posted to 7starsDubai by:

Rohit said…
I have recently bought an office in the ebony tower through dynasty zarooni.

They have been advertising heavily in Gulf News recently.

I want to warn all my fellow investors to beware of the contract that they are signing with DZ. If you check the website of Al fajer Properties, floor plans of their typical floors does not exceed 11,300 square feet, as per the spreadsheet attached to the MOU of sales between Dynasty & Al fajer where clearly sellable area has been mentioned. however Dynasty without any legal grounds and any such permission is adding 30% to the area and are currently selling and advertising even on the web for the floor area to be 14,664 sqft.

So on handover of the property the buyers will be in for a shock and dynasty is no where to take responsibility because they take their premiums out of the contract long before.

I have made enquiries neither the developer Al Fajer Properties nor DZ has an escrow account, please advise what legal action can I take at this stage?

Rohit said…
I recently booked an office with Dynasty Zarouni in the highly advertised Ebony Tower.

I have been baffled ever since I bought it because my office space as per my contract is 14,664 sq ft and I came across a shocking document of MoU signed between DZ and Al Fajer Properties along with the spreadsheet of sales and floor plans which clearly states the floor size to be 11,300 sq ft. This difference roughly amounts to be 30% and is an indigestible difference.

Transparent calculations have shown that DZ has already or in some cases is currently receiving premiums from the contract.

The part that sends a shiver down my spine is that DZ does not have an escrow account

With the kind of scams going around these days, I have a series of questions starting….1)

What happens if Al Fajer is telling the truth about the floor space and DZ isn’t2)

How do we get re imbursed… blah blah… especially if there is no escrow3)

Who is Hilal Zarouni and Kabir Moolchandani4)

Why is Gulf News mis representing the facts. Isnt it a very credible news source? 5)

What is the procedure for taking legal action! Alot of things don’t make sense here and I hope I can find some answersThere is a big “IF” attached to my presumably new office set up i.e if DZ is not a total hoaxIn one case, I m losing quite alot and in the second one I stand to lose everything.

Confusion!

13 August, 2008 10:38

read more:
http://dynastyzarooni.blogspot.com/

Another Post to 7starsDubai 21.August 2008

Comment:
Please check dynasty zarroni for me….I booked a masive office with them and all they do is make me run around…

I have paid my agent to get the story straight.
They published fake pictures in gulf news.

Please check my company’s blog listed below:

http://www.dynastyzarooniscam.wordpress.com/

I need help.

More informations also here:

http://www.skyscrapercity.com/showthread.php?t=290912&page=13

http://www.skyscrapercity.com/showthread.php?t=138300&page=3

http://www.skyscrapercity.com/showthread.php?t=139716&page=2

http://www.skyscrapercity.com/showthread.php?t=567903

 

Dubai’s off-plan property premiums surge

Dubai’s off-plan property premiums surge

By Anjana Kumar on Sunday, August 03, 2008 All eyes are on completion and delivery. Properties nearing completion are commanding the highest premium in Dubai. Villas and apartments are generating premiums of as much as 70 per cent to 200 per cent a year – far higher than the 10 per cent to 30 per cent for completed properties. For Jumeirah Lake Towers the increase has been not less than 70-80 per cent in the past six to eight months, even before handover began. These premiums are one of the highest in the market . At the Villa project, a development by Dubai Properties and Mizin in Dubailand, prices have appreciated sharply in the past two years. The price per sq ft was Dh550 to Dh650 at the end of 2006 for a three-bedroom villa. Now it is in the region of Dh1,000 to Dh1,050 a sq ft – a 90 to 95 per cent increase. A five-bedroom villa was Dh3.6m in December 2006; now it is Dh8m – a little over 100 per cent in a year and a half. For villas at the Al Barari project in Dubailand, the premium has been 200 per cent on off-plan for two years. “The villas initially selling at Dh12m are now going for Dh36m,” said Basel Al Kasem, CEO, Al Basel Group. Within off-plan properties, some of the Dubai apartments have been earning a higher return on investment than villas depending on the location and developer, say brokers.

Dubai’s off-plan property premiums surge

Dubai’s off-plan property premiums surge

By Anjana Kumar on Sunday, August 03, 2008 All eyes are on completion and delivery. Properties nearing completion are commanding the highest premium in Dubai. Villas and apartments are generating premiums of as much as 70 per cent to 200 per cent a year – far higher than the 10 per cent to 30 per cent for completed properties. For Jumeirah Lake Towers the increase has been not less than 70-80 per cent in the past six to eight months, even before handover began. These premiums are one of the highest in the market . At the Villa project, a development by Dubai Properties and Mizin in Dubailand, prices have appreciated sharply in the past two years. The price per sq ft was Dh550 to Dh650 at the end of 2006 for a three-bedroom villa. Now it is in the region of Dh1,000 to Dh1,050 a sq ft – a 90 to 95 per cent increase. A five-bedroom villa was Dh3.6m in December 2006; now it is Dh8m – a little over 100 per cent in a year and a half. For villas at the Al Barari project in Dubailand, the premium has been 200 per cent on off-plan for two years. “The villas initially selling at Dh12m are now going for Dh36m,” said Basel Al Kasem, CEO, Al Basel Group. Within off-plan properties, some of the Dubai apartments have been earning a higher return on investment than villas depending on the location and developer, say brokers.

DUBAI – Delays hit building projects – Only one in five construction projects is likely to finish on time

original published The National

Last Updated: May 24. 2008 10:51PM UAE / May 24. 2008 6:51PM GMT

DUBAI // Only one in five construction projects is likely to finish on time, as shortages of materials and skilled workers – and an overabundance of red tape – take their toll.

Industry experts said few of the 4,000 or so projects currently under way would be handed over to clients on the scheduled date. The emirate is currently undergoing a construction frenzy and as the pace of building quickens, so do the risks of delays.

Residential and commercial developments along with road, bridge and utilities projects are all competing for the same resources, compounding the problem.

The same issues could crop up in Abu Dhabi and the northern emirates of Ras al Khaimah and Ajman, as they launch their own large-scale development plans.

The problem is also beginning to manifest in other Gulf states.Qatar, for example, has had to introduce price escalation clauses into contracts to stem the impact of higher building materials prices.

As a result of the delays, the relationship between builders and clients is starting to sour.

In Dubai, only a handful of projects are being completed to the satisfaction of all parties involved, said Kez Taylor, the managing director of Alec, a local building firm.“Only one in five are being completed on time,” said Mr Taylor. We should be hitting the success factor at a much greater rate than we currently are.”

He said the tensions which this led to had threatened to ripple into delays on other projects.
Successful projects … are not the norm in this part of the world.

From this, a blame culture develops, relationships break down, people become despondent and don’t want to do repeat business.”

A major factor in delays and its impact on the relationship between builders and developers was the reluctance of clients to make difficult decisions quickly, Mr Taylor said.
Because of bureaucracy, nobody wants to stick their head out and make a decision, he said.

But it is vital that the client takes the lead – it’s their project.

Emil Rademeyer of Proleads, a research firm, said more than 90 per cent of projects in Dubai were on average two months late.

I don’t think I’ve ever heard of a project being handed over early – that’s probably the question … and I’m pretty certain the response would be very few.

Mr Rademeyer said that late changes in design were a common problem among projects in the region, which led to a complete project overhaul in some cases. The situation was also compounded by a severe shortage in good quality contractors, which impacted on the standard of construction.

While there are the challenges of materials and resources shortages, much of the problem lies with changes to design – I’ve heard of cases when a project has almost been completed but then the owner decides they don’t like it and so they start over,” he said.

And because of the shortage of materials and contractors, clients are sometimes just taking what’s available, which might not be the best quality and is a big threat to the final product.”Developments in Dubai also face severe delays in connecting power, water supplies and telecommunications, with many forced to rely on temporary backups.“

There are internal risks when dealing with partners, but there are also external risks that affect a project,” said Ali Hamdan, the corporate finance manager at Sama Dubai, the developer behind The Lagoons project.

“When it comes to a large-scale project such as The Lagoons, success is dependent on dealing with organisations like the RTA (Roads and Transport Authority), Dewa (Dubai Electricity and Water Authority) and Etisalat – if you don’t connect with the infrastructure on time, you get delayed.

Jubeir Shamte, the executive director of the commercial and contracts department at Dubai Properties, which is developing Business Bay, said that clashes in culture and business practices between foreign and local firms also caused problems.

A lot of foreign companies do not understand the culture here, and when you try and bring in culture from other places such as the UK or America, a lot of problems come with it,” he said.“

For example, the concept of partnering is being treated as a new phenomenon, when it is something that we’ve been doing here for many years.”

agiuffrida@thenational.ae

Dubai property market beset by fraud claims

Malaysia Sun

Claims of scams, fraud, and embezzlement are hitting the real estate market in Dubai.

The multi-billion dollar construction craze which has attracted investors from all over the world, has seemingly brought in unsavoury types who have been preying on the never-ending appetites of locals and foreigners lining up to invest in the market.A UK company which claimed to have acquired a 900-apartment plot in the proposed Jumeriah Village project, has reportedly sold off apartments in the plot, with no prospect of them ever being built.
The company, Strategic Property Investment, and its associates, William Cowe and Mark Emlick, are being investigated by Dubai and UK authorities.

Dubai authorities are also investigating the mysterious Al Areifi Tower being constructed at Dubai Marina. As we reported several weeks ago, Khalid Saud Al-Areifi & Partner Co., of Riyadh Saudi Arabia, sold several hundred apartments in the project off-the-plan some years ago, taking full payment upfront.In recent weeks the owners of the apartments have been receiving telephone calls and faxes from Al Areifi representatives in Saudi Arabia advising them construction on the project had stopped and would not be resumed.

Investors say they have been offered their original cost, plus interest, back. We have sighted one of the letters sent which verifies the investors’ claims.When we visited the site two weeks ago we found construction in full swing. We contacted the builder on site who confirmed there had been no disruption to the construction and it was proceeding at ‘full steam.’Reports are now circulating that Al Areifi sold the site to the newly-formed, Abu Dhabi-based, Eskan Properties.

A report in Gulf News , however quotes a company spokesman as saying, ‘We sold the tower on again a week back.’
Having bought their apartments and paid for them in full, well before construction started, investors are now wondering how ‘their’ apartments could be on-sold, on two separate occasions since.

Several calls to Emaar Properties, the master developer of Dubai Marina, where the project is sited, have not been returned.

Meantime the investigation into the conduct of the former CEO of Dubai’s second largest property developer, Deyaar, has been widened.
According to Dubai’s Attorney General, Essam al-Humaidan, a second person, Ganesan Krishna Kumar, 49, has been arrested in connection with the investigation. Kumar, originally from India, was a co-founder, and is managing director, of the Dubai-based advertizing agency, Masterbrand (ME) Ltd.,Two other men have also been detained and questioned, but have since been released. Zack Shahin, Deyaar’s ex-CEO is being probed in relation to claims of possible embezzlement. Deyaar has more than 1,600 apartments, as well as retail, and office complexes, under construction in Dubai.

The glitz and glamour of Dubai’s red-hot property market must be feeling the heat of the latest troubles, coming on top of the debacle surrounding the Damac project on the Palm Jebel Ali.
Damac, which claims to be the largest private property developer in the Middle East, sold apartments off-the-plan in what it called the Palm Springs project, a luxury apartments and resort project on the Palm at Jebel Ali.

Four years after launching the project, Damac wrote to investors saying it had been abandoned as the master developer of the Palm had changed the plans and the project could not now fit the site.Within days the master developer, Nakheel, announced it was unaware of Damac’s claims, and that the changes which Damac referred to had been made ten months earlier, and Damac was happy with them.

A hastily convened meeting by the authorities, involving Damac and Nakheel, resolved the matter, with Damac agreeing to proceed with the project. That action averted a class-action lawsuit against Damac by at least sixty angry investors, most of whom were from the UK

Comments

Comments on this story

By adel, 04-26-08, 02:31 AM
An advice on Duabai real estate marketI want to give a little advice to prospective investors in Dubai. Ignore those fantastic property offerings, with incredibly low prices and very long-term and low-cost finance. Believe me guys, the price of cunstruction material and labour, rents, oil…etc have made such projects unviable. Such projects are not economically viable anymore and the little investor will, at the end, lose his or her investment. Watch out !

By Anonymous, 04-24-08, 10:03 PM

Dubai property market beset by fraud claimsI have an apartment in this project which I bought off the plan and paid for in full. As far as I am concerned I am the owner and here I read my apartment has been sold to somebody else, twice! What is going on here? And what about the mighty Emaar. They are overall responsible. Surely they can’t sell these plots off to fraudsters like this and not even answer the phone???? Investors like me just sit out here and get these scraps of information from the news media (thanks! I’m not having a go at you, without you I wouldn’t even know I was being pick-pocketed). Where are the authorities? They shouldn’t just be investigating Deyaar they should be investigating Al Areifi.

By Anonymous, 04-25-08, 05:07 PM

Dubai should act against scamsWhere there is a lot of money the smarties arrive to scam the punters. This al areifi crowd have really done a number on people. The Dubai government shouldn’t stand back and let them get away with it. Selling all the apartments to individuals and then selling the whole building to somebody else is just straight forward theft and fraud. The Saudi Arabian authorities should act as well because this is a Saudi company. What confidence can people have in these gulf markets when this sort of nonsense goes on?

By Anonymous, 04-25-08, 08:09 PM

Few bad apples doesn’t mean you throw out the whole caseYes there are scams and frauds in Dubai, just as there are everywhere. Mostly though I think investment in theis place is safe. The government needs to stamp out the bad guys because it affects how people perceive the market.

By Anonymous, 04-28-08, 01:50 PM

These thugs have to be stopped. Whilst these guys are living the lavish lifestyle, we are repaying our loans to pay for them to do so. I am still pursuing these people and find it a huge disappointment that UAE have no laws against this or protection for people who invest from abroad. It was particualrly enlightening that these guys are residing at one of the sheikhs hotels.. Does that mean he thinks all of this is ok?????

Rera Dubai CEO Marwan bin Ghalita – There are no complaints – it`s all missunderstanding !

original published GrulfNews

http://www.zawya.com/story.cfm/sidGN_25042008_10208297

Friday, Apr 25, 2008

Gulf News

Dubai: Miscommunication and lack of transparency are the major concerns among real estate investors in Dubai, Marwan Bin Galita, chief executive of Dubai’s Real Estate Regulatory Authority (Rera), said.

Developers will have to work to make the market more sustainable, he said in a wide-ranging interview on Dubai’s booming real estate market, which, many analysts feel, is overheated. “They are not transparent,” he said.

Galita, born in the Shindagha area of Dubai on November 27, 1972, graduated from California State University in Fresno with a BA in Surveying and Engineering. He returned to Dubai and joined the Land Department in February 1995 as a surveyor, doing field work for nearly four years.

After becoming deputy chief of the section, and later head, Galita decided it was time to do an MBA in human resources from the Advanced Technology Institute in Alexandria, Egypt.

After becoming technical director at the Land Department, he managed the surveying, IT and filing and archiving sections.

Galita was chosen as a candidate for the Shaikh Mohammad Bin Rashid Young Leadership Programme, in which he participated for two years.

He was appointed CEO of Rera in August 2007.

Gulf News spoke to Galita on the many complaints that have been flooding Dubai’s property sector in recent weeks.

Gulf News: What is happening in Dubai’s real estate sector right now? Why are there so many complaints?

Bin Galita: There is a lot of misunderstanding in the market, from the developers’ point of view and from investors’ point of view. And to tell you the truth, developers aren’t being transparent with us.

We are trying to introduce something called “Stop wondering, start knowing”. The real estate market is good for everyone in Dubai and the government has invested money and trust and support, but even with all our efforts at Rera, people are still wondering. They need to go through the proper channels, get all the information before doing anything.

With projects being cancelled all the time, people are concerned that certain developers have run off with their investments. What do you say to this?

There are no complaints; it is all misunderstanding. If someone comes to me saying a developer has taken money, I have to do three things: I check [if] the developer is registered with me, this is the first security check. Then I check [if] the project is approved and I check if he has a trust account.

If these three are in place, I will say relax, your money is safe in one of two places. It is either already invested in the construction of the project or it’s in the trust account. There is no third place. No new project will come to Dubai without a trust account.

How many developers have registered with the Land department?

The latest number of registered developers is 608. And approximately 20-30 per cent is made up of new developers who have not yet launched anything.

Rera now have 300 projects registered and Dh1.4 billion in activated trust accounts spread over 10 banks. But there are also other accounts still under process.

So the delays in construction and project handover shouldn’t be a cause for concern?

Yes, there are delays in the market, but we have to look for the reason. Delays happen all over the world, and especially here with all the projects Dubai has. It’s normal. What is abnormal is to ask a question and never get an answer. This is what annoys investors. We are sending e-mails to these developers and asking questions. They don’t tell us anything.

Are developers doing enough to increase investors’ trust in them?

Developers are not fulfilling doing their social responsibility correctly. They are focusing on things other than their core business, especially the master developers. People have trust in Dubai and most of the developers wouldn’t even exist on the world map if it weren’t for Dubai. They have to take their responsibilities seriously and educate people. They just want the extra buck.

Do you think the real estate sector is stable? Many people come to Dubai to invest in real estate, reap the rewards and leave. This can’t be making the sector more secure.

I want to encourage people to think of long-term investments. Some real estate agents are encouraging people to come from all over the world with one target: Come to Dubai for a month, you can make Dh100,000 and then leave. And this hurts the economy.

What is your vision for Dubai as head of Rera?

This is the only job I’ve had since I came back from the States. And the real estate sector is very important for Dubai’s growth. I’ve witnessed the good and the bad, the start of Emaar, the start of Nakheel, all of them.

With the Strategic Plan 2015, the market is in place, people have so much trust in Dubai, so now is the time to regulate the market.

It would be very easy to put up lots of red tape and just say no, but Dubai’s story is different. Come, be creative, consider it your haven.

I always say that home is a combination of hope and memories, and Dubai can give you both.

Watchdog: Market regulator

Dubai’s Real Estate Regulatory Authority (Rera) was set up in 2007 to regulate the real estate market in Dubai.

So far, 608 developers are registered with Rera. 300 projects are approved and Dh1.4 billion is in trust accounts.

“We want Dubai’s success story to be sustainable and to set an example for other cities around us,” said Galita.

He said anyone who has a problem with the real estate sector can contact Rera or the Land Department and check registered developers, approved projects, trust accounts and contact details online.

© Gulf News 2008. All rights reserved.

Governance and crisis control Dubai

Posted on 26 Apr 2008

Deyaar Development, a real estate developer that has a reputation for selling off-plan projects within hours of announcing them, or getting its share offering oversubscribed more than 10 times at a time when most regional corporates dreaded the very thought of going public, has suddenly become a subject of speculation, rumours and unwanted publicity.

The company’s predicament seems to have a lot to do with its communication strategy (or lack of it) rather than the underlying case related to an alleged financial misappropriation and the arrest of senior executives. The case is under investigation and the law of the land will take its course.

It throws up key issues in terms of transparency, governance and reporting standards.

Last week, speaking at the Winning Strategies forum in Dubai, former General Electric CEO Jack Welch advised business leaders in the Gulf to deal pro-actively with the media during a crisis. “The minute you expose it (a crisis), talk about it, it moves fast through the system and you’re over it. If everybody knows, and everybody knows how you are dealing with it, you take away all the ammunition,” said Welch.

This is where Deyaar seem to have erred in its judgment. To be fair, it did indeed report the case to the stock market and the regulator, but only after rumours began to spread and reports appear in the press.

Lapses of this nature will have serious implications for the credibility of the company involved, the industry, the market, the regulators and the entire system.

Warning

Delegates at last week’s Corporate Governance Forum (CGF) in Dubai warned that the region has a long way to go before it meets international standards, while its breakneck growth and lagging controls made it prone to corporate failures in the nature of Enron and Barings Bank.

According to a survey of regional institutional investors by HSBC last year, nearly two-thirds of investors (64 per cent) said that poor corporate governance is ‘a significant barrier’ to market performance.

Despite the regional deficiencies in governance standards, it must be recognised that the UAE is one of the first countries in the Gulf that has recognised the urgent need to address the issue. The Dubai International Financial Centre’s (DIFC) Hawkamah Institute is making pioneering efforts to raise the bar. As part of several of its proactive steps, it has recently announced the launch of an environmental corporate governance and sustainability indices for regional markets, in association with rating agency Standard & Poors.

Education is the key to kicking the old habits of stowing away the skeletons. Scandals and failures are the last thing any sensible person would wish for. When they do happen, we have to learn, for the sake of not repeating the mistakes.

According to a survey of regional institutional investors byHSBC last year, nearly two-thirdsof investors(64 per cent) said that poor corporate governance is ‘a significant barrier’ to market performance.

Buy Back Complaints Al Fajer Properties – Damac – Nakheel Comments … to "Buy-Back" Practice Devloper Dubai Property Market

http://www.business24-7.ae/cs/article_show_mainh1_story.aspx?HeadlineID=5606

Richard says
Dear Developer (from the smallest upwards)of Dubai, May we remind you that we, the investors from Europe, have still to bear 30% losses by the currency convertion (Euro/AED) from today to the original purchase dates 2004-2006. What you are going to do cannot be called “buying back”. Buying back means: You have to pay investors the actual market price from today if you wish to call your practice “buying back” If we remeber right, we bought and invested in apartments, villas or units of buildings, not in your companies. If your calculation has failed, we the investors are not the ones who have to understand that your profit is not the one that you once thought. To shift every risk now to the former investors is not the way how it works in global economy.

Jeff says
With Real Estate prices falling 30 percent in the last year from Europe to California (with New York being the only major exception) how long can the desire to live in the Middle East continue? Having lived through a few Real Estate bubbles in Miami there is an economic max before people move on. I have properties in Miami that were over $2 million US a year ago and can be picked up for less than $1 million.

more comments:

http://www.arabianbusiness.com/516597-more-firms-look-to-quit-projects-as-costs-soar

Shaky foundations

 

original published ArabianBusiness.com

http://www.arabianbusiness.com/516690-shaky-foundations

updateDate = “Wednesday, 16 April 2008 09:52″ document.getElementById(‘crumbs-dir’).innerHTML = ‘REAL ESTATE / COMMENT /’ by Rob Corder on Wednesday, 16 April 2008

Prepayment for any products or services has always warranted a discount. Pay for a flight or hotel room up front, and you expect to get a cheaper price.

Business-to-business transactions invite even deeper discounts for companies prepared to stump up cash in advance.

The reason is simple: prepayment means positive cash flow, which can be worth a considerable percentage of any transaction.

Buying property off plan is the ultimate prepayment scheme and, like all others, it comes with a discount. The reason for the discount is two-fold. First, the developer selling property benefits from positive cash flow. In some cases, sufficient property can be sold to completely finance the building project.

Secondly, there is risk involved for the buyer, and this is built into the price.

The early days of the Dubai real estate boom, when non-Emiratis were first allowed to buy property, was a time of extreme risk. The legal system had not even been changed before developers were selling forms of ownership.

I can recall people being given contracts all but scribbled on the back of a fag packet that promised the bearer that they would own a certain property when the law allowed them to do so.

His Highness Sheikh Mohammed, who was Dubai’s Crown Prince at the time, had given his word the law would change, and for early investors – typically buying from government-owned developers – that word was good enough.

These early investors were right. They took the risk and netted massive rewards. Villas selling for $1.5 million when Palm Island was first announced are now being advertised for closer to $15 million.

The developers also won. Dubai government-owned Nakheel’s business was almost entirely founded on the cash generated from selling the first Palm Island properties off plan. Emaar, also partially owned by the Dubai government, had earlier pulled the same trick with the city’s first freehold developments for expats: Emirates Hills and Emirates Lakes.

Fast-forward six years and, while the law has been considerably tightened regarding foreign ownership, new risks have emerged in the off plan market.

Several tiers of operators have emerged. Developers such as Nakheel and Emaar have been upgraded to master developers. Smaller developers, some of which have become giants in their own right, buy plots from the master developers on which to build their own skyscrapers or villa complexes.

Investors or private home buyers can buy from master developers, sub developers, or real estate brokers that buy and sell ownership rights in the same way as futures traders sell ownership of coffee beans.

And the vast majority of speculators have as much intention of ending up holding keys to a home as traders intend to own tonnes of coffee beans. They are buying and selling paper, not property.

This house or cards has been underpinned by real estate values running ahead of the cost of building property, and the willingness of people to pay ever-higher prices for it.

But these foundations are being attacked from several directions.

Construction costs rose at about twice the rate of inflation in 2007, up around 20% according to research from international consultancy EC Harris. The price of steel reinforcement rose by 46% and structural steel gained 38%, while cement prices ended the year 30% higher.

The cost of steel in the UAE has continued to soar – up 35 percent since the start of the year. And there are shortages of many raw materials used in construction, causing costly delays to projects.

Staff costs are rising due to inflation and competition for workers. Gulf currencies, which are pegged to the US dollar, are weakening. The Indian rupee, the Euro and the British pound are all strengthening, making the GCC a less attractive place to work for citizens of countries that typically provide all the labour for the construction industry.

Money is also getting more expensive in the wake of the global credit crunch. Central banks across the Gulf have been cutting base rates in line with cuts at the US Federal Reserve, but these rates have not been passed on to businesses as banks shy away from making risky loans.

Selling bonds – effectively borrowing from the private sector and wealthy individuals – has become common to finance projects. But confidence is ebbing away and these bonds will need to offer higher and higher guaranteed rates of return to attract buyers. The money to developers is again more expensive.

But the bunker buster that could blow the foundations of the off plan market apart is consumer confidence. Until last month, investors were unconcerned about holding the ownership rights to a property that would be built in the future.

Supply was low, demand was high, and real estate prices looked like going up forever.

But now there are stories that properties will not be built. There are stories that developers would rather compensate people holding ownership rights, than build the properties that they have bought.

Damac Properties’ Palm Springs development was the first cancelled project to break into the open. The shockwaves were felt as far away as London, where investors threatened to sue the developer unless the properties they had paid for were built.

Palm Springs should have been completed by the end of last year, but Damac postponed construction of the homes, and finally cancelled it completely in March. They offered to buy back the ownership rights to the properties at a premium of 6 percent per annum for every year since investors bought it.

An investment of $1 million when the project was launched five years previously would only be bought back for $1.33 million – hardly the return that the rest of the Dubai property boom was delivering over that period.

Damac claimed the cancellation was due to planning changes imposed on it by Nakheel, the master developer of Palm Jebel Ali on which Palm Springs was due to sit. Nakheel denies responsibility.

It is possible that Damac has fallen into a negative equity trap where the revenue it raised from the sale off plan of the Palm Springs development is no longer sufficient to build the project at a profit.

Five years on from the launch of Palm Springs, it is cheaper to buy back the ownership rights at 33 percent more than they sold them for than to build the properties.

UAE daily Emirates Business on Tuesday unearthed two other developers that claim to be in a similar situation. Al Arefi Marina at Dubai Marina and the A1 Tower at Jumeirah Village South, have been put on hold or cancelled, according to the paper, although the developers responsible for the projects have not made the decision on whether to buy back ownership rights, or continue to build what might be loss-making towers.

If buy-backs become common, billions could be wiped off the value of ownership rights overnight. Owners would be faced with a terrifying choice: sell at a discount rate back to the developer – perhaps 30 percent below today’s values – or press for the development to be completed, which might bankrupt the developer leaving the owner with nothing.

The rising costs afflicting the construction and development industries show no signs of abating. The only release valve might be a sharp economic slowdown, which would be as likely to send weaker developers bust as spiralling inflation.

The risks therefore are growing, while the potential rewards are shrinking in buying property off plan. The attraction of prepayment is vanishing for buyers, while becoming ever more critical to the survival of sellers.

The days of multi-billion projects being sold off-plan within hours of their launch could be over. Expect buyers to show considerably more caution in the future.

Rob Corder is the Editorial Director of ITP Publishing Group.

 

19thFloor Dubai

Hush money, phantom buyers and feeding the Vegas mentality
The furious response to the cancellation of Damac’s Palm Springs project has created a level of investor mistrust that threatens to rock the entire Dubai real estate market, tainting good and bad. One result is that former real estate sales staff are more willing to recount examples of bad practice. The methods listed below are described by one former sales manager as being “common knowledge in the market”.

19thFloor Dubai

Hush money, phantom buyers and feeding the Vegas mentality
The furious response to the cancellation of Damac’s Palm Springs project has created a level of investor mistrust that threatens to rock the entire Dubai real estate market, tainting good and bad. One result is that former real estate sales staff are more willing to recount examples of bad practice. The methods listed below are described by one former sales manager as being “common knowledge in the market”.

The case Damac – Dubai Property Sales Purchase Agreements – What is Force Majeure in General

Damac, said:

“We understand that this is a serious and unfortunate situation, but one which is completely outside Damac Properties’ control.

Dubai-based lawyer, Edward Sunna, head of construction and engineering, Al Tamimi and Company, who has been approached by the investors group to represent them, agreed that a ‘force majeure’ is mainly called for in the event of a natural disaster like an earthquake, hurricane or similar forces of nature.”I’m not sure what Damac intends to do but calling for a ‘force majeure’ in this situation is a little strange. I don’t see them getting very far with this,” he said.Damac declined to make any further comment on the story

Force majeure are almost always included in sales and purchase agreements Dubai developers.

For example Terms and Conditions Nakheel ( a wide definition of Force Majeure)

17. FORCE MAJEURE out of a contract from Nakheel

“Event of Force Majeure” means an act of God including but not limited to fire, flood, earthquake, windstorm or
other natural disaster; act of any sovereign including but not limited to war, invasion, act of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, military or usurped power or confiscation, nationalisation, requisition, destruction or damage to property by or under the order of any government or public or local authority or imposition of government sanction embargo or similar action;labour dispute including but not limited to strike, lockout or boycott; interruption or failure of utility service including but not limited to electric power, gas, water or telephone service; failure of the transportation of any personnel, equipment, machinery or material required by the Seller for completion of the Building; delay for any reason by any contractor or subcontractor in carrying out their works or any matter; or cause beyond the control of the Seller.

Should an Event of Force Majeure have occurred that has delayed the Completion Date, the Seller shall upon becoming aware of such delay promptly notify the Buyer and inform the Buyer of the revised Completion Date or an estimate of the duration of the delay, followed by a revised Completion Date when same can be determined.

Should an Event of Force Majeure delay the Completion Date by a period of in excess of one (1) year the Buyer may elect to terminate this Agreement by notice to the Seller and the Seller shall refund all monies paid by the Buyer. (means=without any compensation !!!)
____________________________________________

or see “Force Majeure” in a full contract Nakheel:
http://residents.internationalcity.ae/images/download_attachmenta550.asp?ArticleCode=ART17460&AttachmentID=ART00004

But Force Majeure should not be used as a “catch all phrase” in contracts.

A study shows how this clause should be used in a proper contract.
http://www.mallesons.com/publications/Asian_Projects_and_Construction_Update/Asian_Projects_and_Construction_Update_26_October_2002.pdf
original published :
http://www.mallesons.com/publications/Asian_Projects_and_Construction_Update/6366675W.htm

Introduction

Force majeure clauses are almost always included in project agreements. However, they are rarely given much thought unless and until one or more parties seek to rely on them. However, in the current global environment it is appropriate to examine their application.

What is force majeure?

Force majeure is a civil law concept that has no real meaning under the common law.

However, force majeure clauses are used in contracts because the only similar common law concept – the doctrine of frustration – is of limited application because for it to apply the performance of a contract must be radically different from what was intended by the parties.

In addition, even if the doctrine does apply, the consequences are unlikely to be those contemplated by the parties.

An example of how difficult it is to show frustration is that many of the leading cases relate to the abdication of King Edward VIII before his coronation and the impact that had on contracts entered into in anticipation of the coronation ceremony.

In circumstances where a project company wants to minimise any opportunity for extension of time claims it could consider not including a force majeure clause and instead relying on the doctrine of frustration.

However, before making a determination to rely on frustration a project company must consider how frustration is applied in the relevant jurisdiction and, in particular, whether the common law application has been altered by legislation.

Given force majeure clauses are creatures of contract their interpretation will be governed by the normal rules of contractual construction.

Force majeure provisions will be construed strictly and in the event of any ambiguity the contra proferentem rule will apply.
Contra proferentem literally means “against the party putting forward”. In this context, it means that the clause will be interpreted against the interests of the party that drafted it.

The parties may contract out of this rule.

The rule of ejusdem generis which literally means “of the same class” may also be relevant.

In other words, when general wording follows a specific list of events, the general wording will be interpreted in light of the specific list of events.
In this context it means that when a broad ‘catch-all’ phrase, such as ‘anything beyond the reasonable control of the parties’, follows a list of more specific force majeure events the catch all phrase will be limited to events analogous to the listed events.

Importantly, parties cannot invoke a force majeure clause if they are relying on their own acts or omissions.

General force majeure provisions

Traditionally, force majeure clauses, in referring to circumstances beyond the control of the parties, were intended to deal with unforseen acts of God or of governments and regulatory authorities.

More recently, force majeure clauses have been drafted to cover a wider range of circumstances that might impact on the commercial interests of the parties to the contract.

It is now quite common for force majeure clauses to deal not only with impossibility of performance but also with questions of commercial impracticability.

By itself the term ‘force majeure’ has been construed to cover acts of God1; war and strikes2, even where the strike is anticipated; embargoes, refusals to grant licences3; and abnormal weather conditions4.

The underlying test in relation to most force majeure provisions is whether a particular event was within the contemplation of the parties when they made the contract.

The event must also have been outside the control of the contracting party.

Despite the current trend to expressly provide for specific force majeure events, case law actually grants an extensive meaning to the term force majeure when it occurs in commercial contracts.

There are generally three essential elements to force majeure:

it can occur with or without human intervention;

it cannot have reasonably been foreseen by the parties; and

it was completely beyond the parties control and they could not have prevented its consequences.

For instance, Bailhache J. in Matsoukis v Priestman5 held that force majeure covered dislocation of business owing to a universal coal strike, access to machinery, but not bad weather, football matches or a funeral. I

n Lebeaupin v Crispin6 force majeure was held to mean all circumstances beyond the will of man, and which it is not in his power to control. Therefore, war, floods, epidemics and strikes are all cases of force majeure.

There is an important caveat to the above and that is, parties cannot invoke a force majeure clause if they are relying on their own acts or omissions.

Additionally, the force majeure event must be a legal or physical restraint and not merely an economic one.

‘Circumstances beyond the control of the person concerned’

The phrase ‘circumstances beyond the control of the person concerned’ has not been subject to detailed examination by the courts.

The courts simply assume that the phrase is given its common and everyday meaning.
The phrase has been judicially held to refer to occurrences which neither the person concerned, nor any person acting on their behalf to do the act or take the step, could prevent.

Recent practice has significantly expanded the scope of such clauses to cover a wider range of circumstances that might impact on the commercial interests of the parties to the contract.

Reynolds JA in Caltex Oil v Howard Smith Industries Pty Ltd9 stated that the phrase ‘other circumstances beyond the control of the parties’ would include an industrial strike.
Therefore, specific reference to ’strikes’ may be unnecessary in force majeure provisions where the above phrase appears, although it is still advisable to include it.

The Australian unreported case of Asia Pacific Resources Pty Ltd v Forestry Tasmania (No. 210) noted that as a general rule a party cannot invoke a force majeure clause due to ‘circumstances beyond the control of the parties’ which, to the knowledge of the party seeking to rely upon the clause, were in existence at the time the contract was made.

This case must be contrasted against Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food11 which held that there was no settled rule of construction that prevents a party to a force majeure clause from relying on events in existence at the time the contract was entered into as events beyond that party’s control.

Kerr J in Trade and Transport Inc v Iion Kaiun Kaisha Ltd, The Angelia12 referred to Reardon Smith and then stated that ordinarily a party would be debarred from relying upon a pre-existing causes as an excepted peril if:

(i) the pre-existing cause was inevitably doomed to operate on the contract; and

(ii) the existence of facts which show that the excepted cause is bound to operate is known to the parties at the time of contract, or at least to the party who seeks to rely on the exception;

His Honour then added as an alternative to (ii);

(iii) if the existence of such facts should reasonably have been known to the party seeking to rely upon them and would have been expected by the other party to the contract to be so known.

Given the above, it seems that causes beyond the control of the parties which were known at the date of contracting may excuse performance only where they were of a temporary nature and are not doomed to operate on the contract.

The way forward

If a project company decides it wants to include a force majeure provision in its project agreements the best way to limit the application of that clause is by defining a closed list of events that constitute force majeure for that contract.

In other words, it should not include the catch all “any event beyond the reasonable control of the parties including….”.
Given force majeure is a creation of contract, the courts are unlikely to expand on the definition given by the parties.

Obviously, this restricted approach is most appropriate when the counterparty has time critical obligations eg: in an EPC contract.
However, where it is the project company that has time critical obligations eg: in an offtake agreement, the project company should adopt a more encompassing definition including the traditional catch all phrase.

The Sorry State of Real Estate in the UAE

original published http://blogs.zawya.com/sultan/080402073325/
The Sorry State of Real Estate in the UAE (Uncensored version)
by Sultan AL Qassimi

Posted: 02-Apr-2008

It seems like not a single day can pass without yet another extravagant announcement of a new real estate project that defies gravity, the law of nature and the laws of finance.

There is something to be said about the lack of government supervision that extends from allowing firms to issue press releases that are clearly stretching the truth to broken promises that start from delivering these real estate projects late or never, to jeopardizing the reputation of the UAE by mistreating foreign labour.

A curious case comes to mind with Tameer a local development company that claims to have 300 billion dirhams under development[1] which roughly accounts for 75% the GDP of Abu Dhabi. The firm also announced a project “in excess of $20 Billion” in Libya[2] which has a GDP of $36 Billion[3]. Does this make sense to any one as it clearly escapes my understanding? How does the government allow such press releases, and how does the local press publish it without verification. To put things into perspective, this is similar to someone claiming to have a project “in excess of $7 Trillion” in the USA (roughly 55% of the GDP). Damac Properties, which is one of the few homegrown brands to go regional claims to have a portfolio “in excess of $40 Billion[4]”. This is clearly an example of a company that bit off more than it can chew, a local news report found that out of fifteen advertised projects in Dubai that the company is developing “all are running substantially behind their projected completion schedules”[5] to the extent that investors were threatening to withhold future payments to the developer.

Oddly one of the few publicized cases of real estate developers fleeing the country after selling off plan projects to unsuspecting investors to the tune of AED 14 million has yet to be resolved[6].Copy Cats

Another issue plaguing the real estate sector that is quite interesting is the copy cat culture that is about to make our beautiful city of Dubai into a Sameville mini-me of other cities around the world. There is more than one project that promises to replicate the Eiffel Tower of Paris for example, as if copying individual landmarks wasn’t enough one project even threatens to replicate the entire city of Lyon in Dubai[7]. A contender for the most profuse project award has to be the Falcon City of Wonders that promises to replicate “the Pyramids, the Eiffel Tower, the Taj Mahal, the Great Wall of China, and the Leaning Tower of Pisa”[8]. Tatweer also has its own replication process going on within the Bawadi project. Don’t people realize that what has made Dubai great is the spirit of entrepreneurial originality? Shall we wait for a project that promises to replicate the entire city of Abu Dhabi in Dubai or maybe the holy shrine of Mecca?
Labor Pains

A different case of construction woes emerged in the Fall of 2007 when 40,000 employees of Arabtech went on strike over low wages that according to the official UAE news agency “turned into riots” with stones being thrown at the police[9], this situation could have been explosive for the entire country if one considers that the size of the Dubai police force is around 15,000[10] personnel, i.e. they were outnumbered three to one. The management of Arabtech must be proud now that they have reported a 115% increase in profits to $93 Million in 2007[11] despite the serious damage to the UAE’s reputation and social security. Basically because the company didn’t meet the laborers demands for AED 90 million increase per year (a sizeable 25% of their profit) the UAE was negatively featured on the front pages of various newspapers, websites and TV stations around the world as a country that doesn’t treat it’s “guest workers” fairly, is this worth the damage? Other Emirates Sharjah’s real estate development qualifies to be the least planned in the UAE, with problems in parking, electricity cuts, water stoppages and general frustration on the sorry state of the roads a daily headline in the local press all of which seem to be on course to staying the same. Abu Dhabi should pay attention to the plight of its sister emirates before launching humungous projects inside the relatively calm capital island that will result in traffic chaos similar to what Dubai is experiencing today.

How do we even account for such a fabulous collective failure of engineering imagination and planning? Clearly the UAE authorities were not prepared for such a fast pace of development. For a country that proudly claims to have $500 Billion worth of real estate projects under development[12] it is high time for the federal government to finally enact serious nation-wide laws and regulations that will set this haphazard industry straight.

Dubai Property Investors frustrated with delays

Investors frustrated with delay in Jumeirah project
By Robert Ditcham, Staff ReporterPublished: March 26, 2007, 00:00

Dubai: News that approximately half of the Dh7.3 billion Jumeirah Beach Residence (JBR) project will be handed over to buyers later than the scheduled delivery period, has heightened frustration among investors.
Project developers Dubai Properties said in January that the entire project would be completed and delivered between March and May 2007, but according to information obtained by Gulf News, keys to apartments in sectors C and D of the project will be handed to buyers after June.
According to a map of the site, sectors C and D make up approximately half of the overall project and represent the project’s main residential zones.
The news comes as a further blow to Cem Pozam, a Turkish national who lives in Dubai and paid Dh1.4 million for a permanent home in JBR.
“I am furious over repeated delays in construction. I am trying to stay positive as much as I can, however it frustrates me more when there is a big lack of transparency,” he said, referring to what he called lack of information over the delivery time-table.
Numerous other buyers have contacted Gulf News in recent weeks to voice their frustrations over JBR’s delays. Most complained about “lack of information” over the completion schedule, rather than the delay itself.
“I purchased an apartment in May 2003 with a completion date of second quarter 2005. I still don’t have a firm date for handover. Living in England makes getting information difficult,” said a UK investor.
“I am one of those who has bought an apartment in JBR and due to delays, gone through very difficult time with my family,” added a Dubai-based buyer.
Dubai Properties declined to comment on this story.

Extract of cancelled Towers in Dubai

• The Pinnacle 120 cancelled (1)

• Park Square Tower 666.0 m 150 cancelled

• Unnamed Residential Tower 430.0 m 111 cancelled (1)

• Badriya Tower 415.0 m 96 cancelled (1)

• Cancelled Mixed Use Tower 390.1 m 77 cancelled

• United Tower 350.0 m 84 cancelled (1)

• Emirates Hotel 350.0 m 70 cancelled

• Najd Tower 340.0 m 82 cancelled (1)

• Four Seasons Dubai Festival City 320.0 m 72 cancelled

• Marina Gardens 310.1 m 75 cancelled (1)

• Al Durrah Tower II 300.0 m 78 cancelled

• Dubai World Trade Tower 2 300.0 m 60 cancelled

• Dubai World Trade Tower 1 300.0 m 60 cancelled

• The Hexagon 290.0 m 62 cancelled (1)

• Promontory Tower 55 cancelled

• The Tower 65 cancelled

• Dubai Chamber of Commerce Tower 1 50 cancelled

• Beach Towers 235.0 m 45 cancelled

• Marina Tower 205.0 m 51 cancelled (1)

• Al Ghurair Lake Office Tower 200.0 m 44 cancelled

Name Height Floors Status Year Drawings

• Damac Head Quarters 180.0 m 40 cancelled

• Al Ghaith Tower 165.0 m 44 cancelled

• Pacific Tower 160.0 m 40 cancelled

• Mercure Grand Hotel Tower 160.0 m 35 cancelled (1)

• The Monaco Tower 150.0 m 40 cancelled

• The Etoile Tower 150.0 m 40 cancelled

• Nakheel Flamingo Tower 150.0 m 40 cancelled

• Nakheel Falcon Tower 150.0 m 40 cancelled

• Manchester Plaza Tower 145.0 m 38 cancelled

• Al Ghurair Lake Residential Tower 135.0 m 35 cancelled

• Arshia Marina 134.0 m 35 cancelled

• Arabian Heights 95.0 m 15 cancelled

ACI – Frustrated Investors – Star Tower – Jumeirah Lake Towers – Plot L2

original published skyscrapercity.com
http://www.skyscrapercity.com/showthread.php?t=179383&page=5

comment by Bazz

hey guys, i have also invested here since 2004, to date i have heard ABSOLUTELY nothing and am very thankful of you guys here that has provided me with more information then junior gas themselves. Each time i have phoned them they have no answer and no certainty of when the project will commence and complete.i am very anxious and scared now as this project was heading nowhere. I dont know if i should take my money back losing all the bankers fees for money transfer each month or if i should stick this one out hoping it will be worth my while? any ideas?The best i was told was that i can be re-imbursed all monies paid to date if i wish.many thanks.

Comment:

dubai star at gulf and dubai property exhibition

Been to the above property exhibition in London on the 21st and Dubai Star had a stand.

Just vaugely remembered reading this thread – so thought ask them some questions.

They informed the developer is german co called ACI, they dont know whether development has started and gives completion date of september 2008.

The consultants seemed to have been hired just for the day and genuinly did not seem to know anything else about the development.

I would personally stay well away from this project

Comment

hi again, thats exactly where i bought from in april 2004, must av seen you there lol, I have been in touch with ACI and my sister went in person last year when she went for a holiday, they seem professional and work seems to be underway. But lack of communication from them (i.e. updates etc) does not help and for other buyers there has not been any update to the situation, i had to chase junior gas and then found out from here that ACI has taken over, no one from junior gas told me at all…..Yes they speak perfect english at junior gas and personally i am fed up of chasing people to get an answer, i still dont know what is happening to my apartment as its on the 23rd floor, which ACI’s impressive brochure states is a commercial office floor not residential???you stay in touch too, finally we are beginning to shed some light on this whole issue thanks to this forum….

Hi Bazz

I called ACI last week and spoke to Anita. Robin Lohmann (Managing Director) was in Germany, she told me to email her all the details and she will get in touch with me.

So far nothing no reply.

Last year I went to Dubai and appointed Emirates Advocate to handle our case they sent legal notice and thats it. According to them whats happened is fraud and Junior Gas should not have sold the land without informing us.

Well thats all they have done and now they are just sitting on the case and no response. I think we all should get together and go to media. Junior Gas have made 30 million AED profit.

According to Ahmed no one will spend £5ooo to sue him in Kuwait.

Mind you he does have few projects going in Kuwait and they are well known in Kuwait. BBC are looking for real story to investigate and we will not be charged a single penny and they will expose Junior Gas and question Nakheel why has this happened, I have already spoken to a journalist.

Or we get an international solicitor in UK who will handle our case. Like you said You are tired of chasing, so are we. Its not just us they are 30 or 35 people like us.Its about time to take some action.

Any other suggestions are welcome.
________________

Comment

Hi bazz

No havent heard from ACI and every time I call they say they will get back to me but nothing.

Junior Gas are ready to pay back the money on condition that we sign that we have no legal liability with them and with ACI.

If you want you can hold till the end and fight with them because legally you own the appartment and they have to pay you or buy you out. We have invested elsewere and need the money thats why we are asking for money back.

What happened when you got in touch with ACI what did you think about them. I couldnt get time off so we will be flying to Dubai after Easters. Will let you know what happens.

I will go and see ACI in person before we collect the money from Junior Gas.

Will keep you informed.

___________________________

hey shilu,y

es we are still paying junior gas which i found odd but was instructed by ACI to do so.i have paid just over 75% now and still have not heard a peep from anyone!!

i will plan to go soon (maybe july) and see what they have to say for themselves… cant take much more of this thats for sure.

i have looked at the project on various sites and it shows completion date as 2008.

What junior gas and ACI lack is good communication.

if we were informed time to time of what is happening then id feel more secure about my investment.please do stay in touch and keep us informed on here. when are you going and when will you be back?hope it all goes well for you. im glad atleast two of us are trying to sort things out here. everyone has disappeared lol.

bazz780

___________________________
Hi,
i just called ACI and was advised that they no longer reside there.After calling a mobile number in dubai i was advsied that they have now moved offices and are located in Jumeirah.

When i questioned why i was not notified i was told that emails were sent out to advise of this??

Any how: there has been no progress in construction and i have just been told that the tower is still in the ‘piling’ stage… completion is expected in 2008 now and as far as the payment to junior gas is concerned… the secretary will find out for me what i should do about this….

SHILU: i hope when you do go you will get some solid answers out of these people. If you can ask a question for me “what happens to those who purchased a flat on the floors up-to floor 28 as they are now commercial floors…… do they get moved up or what?”Think i will have to go down to dubai as well… just to clear things up!
____________________________________________________________

Dear All Dubai Star property owners

My name is Hicham Nicolas and I’m one of many who bought an appartment in Dubai Star.

They claimed it will be done in April2008, bla bla bla…

To cut the story short, here are the most recent updates:1-ACI did finish the shoring (digging) only last month.2-Nothing happened since than.

The site is empty no machines, no labour no nothing. I visited the site twice (on 10 and 15 April 2007)as I live nearby.3-Based on my telephone calls they claim that they are waiting for the “piling” phase license approval from Nakheel DCCI.4-I heard that the size of the (sq ft) sold to us is not a nett area but a global area(meaning they will deduct a percentage for the lift and the stairs and the lobby etc etc…).

ACI denied that, but still they refuse to put it in writing.5-Last month they said the sales contracts will be ready in May 2007.

This month they said the date has changed and we do not have a deadline.They claim again that Nakheel DCCI have the contracts and haven’t release them yet.6-ACI split from Lakepoint (real estate agency) and they shifted their location to a villa in Jumeira without telling us.

My contact with ACI is their Sales Manager Miss Fereshti.

Who apparently is a mere interface between us and them. Whenever they want they tell her things that they can refute later on.

Based on all the above, we need a plan of action. I alone cannot do much.
We need the power of a group.
I have many ideas and we can get in contact with a lawyer if we have too. We need to force them to start the works. Instead of using our money for something esle (they have other porjects on paper)…I know 1 more owner.

That will make 2 of us until now. Join us. Please contact me on my email hichamnicolas@yahoo.com .

Sincerely YoursHicham Nicolas

_________________________________________
Hi bazz

All this time a year i have been trying to get all the dubai star buyers together and sort things out.

Because i believe that whats happened is not right.

We went to Dubai last April, got in touch with the British Embassy. The embassy said they cant do anything but give us a least of lawyers. And we should take it from there.

We went to Emirates Advocates, they have a very good reputation and are well known in Dubai and GCC countries.Guess what after spending £2000 nothing came off it.

They did inform us that we have a very good case of fraud, and their name held a lot of weight and everything will be sorted out in few months.
The solicitor Rajesh Babu wouldnt reply to any of my emails, would not take my calls and kept me hanging.

I wrote a stong letter on their website and told the bosses what was happening,they appointed a another lawyer Mr Ibrahim and then after few months another Miss Doaa.

In a year I had 3 diffrent lawyers and let me tell you this they all lied.

Six months back the lawyer said Junior Gas are refusing to pay the refunds and fed me so many lies that I couldnt believe it.

I lied to book an appointment with ACI, otherwise they would not see me.

Their legal adviser Mr Rashid Saab is a very shrewd person, he is from Lebanon.

He mentioned the same thing a few times that he will not promise about the completion date its better to collect the refund and invest somewhere else.
Thtats what they want.

Go to Dubai in June and see for yourself. Meet up with both the teams.You will be going to and fro from both of them.

Neither of the party will make any commitment or give you a straight answer.

But if you all gang up and meet them together you will get somewhere.

______________________________________________________

thanks shilu,from what you are saying i think i will take my money back also. i invested 3 years ago to help me buy a house in this country, i now have wasted 3 years of my time in a project that is lifeless.i think it would be more wise to take money and buy our family home here in london, in 3 years time the value of the house will rise as much as the value of my apartment in dubai…. in terms of profit.i hate it when communication is not consistent, i have suffered with junior gas and now aci are proving to be the same.a friend of mine bought in dubai marina and received constant updates and super fast responses to all his communications. i dont think il get this from aci to be honest.i dont really have the money to complete payments in one go and dont think i can go out of my way to scrape the money together for something so uncertain.one question shilu:i have paid 30k so far, converting that back to pounds from dirhams, i will only get back 26k losing 6k.have you not also had this problem? currently the exchange rate is 7.9 dirhams to make a pound.I hear your point and remember how hard you have tried to gather all buyers to make a stand! but apart from me and you… no one else seems bothered.a company called best in dubai (www.bestindubai.co.uk) have apartments being built in international media production zone (IMPZ) with studios starting at 54K off plan. they seem very professional and deal with the developer DAMAC. even the website has photos of regular updates to all projects currently underway, as well as online payment facility that will save bundles on bank charges as well!!!!but i think iv had enough for now, as this new project will not complete until 2010 by which time london prices will have hit the sky (with the olympics getting closer)thanks alot shilu, im glad you have made a choice and hope it will prove to be the right choice overall… i may have to follow your footsteps.
______________________________________

Damac – Lake Terrace – Jumeirah Laker Towers – delay complaints

original published: www.skyscrapercity.com

http://www.skyscrapercity.com/showthread.php?t=120764&page=13

LEGAL ACTION

I have instructed a law firm specialising in overseas residential property, The International Law Partnership, to handle my claim against Damac (I reserved a large studio on the 20th floor in late 2004).

They’ve advised that Damac is clearly in breach of the sale and purchase agreement in a number of areas.

Contrary to what they may tell you, force majeure does not apply, because they have failed to notify us of such conditions applying as required in the agreement.

They have also extended the completion date beyond the maximum permissible and on some occasions without the notice period required under the contract.

It could also be argued that they acted improperly in calling for some of the staged payments in that they had not actually reached the claimed percentages of structural completion.

I’ve given them a period of time in which to agree a sensible level of compensation.

If they don’t respond (so far, their principal negotiating technique has been to ignore me and hope I go away) I will cancel the agreement and go after them for damages, which will include loss of capital appreciation, rental income and interest, plus legal costs.

If the clowns running Damac have any sense, they will settle at that point, if not before, because the least bad outcome for them is to complete with the original purchasers, albeit with the company having to write out a big cheque for the lost rental income.However, my best guess is that they’re not that bright and it probably will take litigation to resolve this one.

In the meantime, I think there’s a lot to be said for a ‘name and shame’ strategy. In particular, I believe a good approach would be to set up a web forum for purchaser complaints, a bit like the Ryanair one or the old nthell.co.uk one for NTL cable TV/phone/broadband customers.

Unfortunately I don’t have the technical expertise to do this, though I believe there are various free web forum software packages out there with free or cheap hosting. I’d be willing to contribute by purchasing a domain name such as damacdelays.com, which I think encapsulates what we’d all like to highlight.If someone could help bring such a forum to fruition I’m well placed to help publicise it.

posted December 30th, 2007

______________________
Comment

I think I saw a post that gave an idea of the types of compensation that are possible for late delivery on contract in Dubai. I seem to remember that a key difference from the UK, in the Dubai legal system, was that only actual losses would be compensated e.g. actual payments for rental accommodation while waiting for delayed handover rather than theoretical losses e.g. loss of potential rental income. Apparently the argument goes that the loss of rental may never have occurred because it may not have been possible to rent anyway and the apartment may have stood empty even if delivered on time.It would be good if we had someone really knowledgeable to give the definitive answer on what must be of great interest to all Dubai property buyers.My impression is that all developers will try to maximise their profits by trying some (if not all!) of the following ruses:- getting creative with additional payments, playing hardball on compensation, stating interim completions earlier than actually achieved, delaying construction to optimise the possibilities for resale fees. Anyone aware of other dirty tricks?I think a test of reasonableness ought to be brought in to the Dubai system so that endless red-tape is avoided and yet developers can’t get away with squeezing unreasonable profits from their tied-in customers.

Comment

I just went through the first page of this thread and:-

July 2004: piling was already completed-

August 2004: Main construction package awarded to Al Hamed Development and – Construction. Build period 20 months, cost AED 150M-

September 2004: Site excavation and pile cap breaking starts- October 2004: Preparing piles for the raft-

January 2005: Laying down the rebars for the raft foundation-

March 2005: two basement floors completed-

July 2005: 10 floors completed-

January 2006: 23 floors completed-

March 2006: Damac informs their clients for 6 months delay (expected completion by end 2006)-

June 2006: 34 floors completed as per the 1st week of the month-

September 2006: Damac sacked the contractor, completion date postponed to

October 2007- November 2006: Work resumes by the newly appointed contractor-

January 2007: 38th floor completed.-

March 2007: Damac claims to have completed work on the main structure, of course we know that doesn’t include the top part.-

May 2007: Construction of the top part progressing slowly-

July 2007: Work on the top part of the structure still going on.

NO COMMENT!

Comment:

Hi everyone,

I’ve been reading your posts enthusiastically over the past 6 months.Thanks for all the updates especially Imre. I’ve also bought units in Lake Terrace. I’m very concerned about the completion date. They’re just pushing it further back. I’ve heard from a source that a new occupation date is going to be announced by DAMAC changing it to end of Jan 2008.I’m sick and tired of all these lies, lies and more lies.I met Alan Gammon a couple of months and conveyed my concerns but he reassured my occupation date will be end of September or early October 2007.

All of the owners gotta get together and take action about this issue. DAMAC’s attitude towards us, their CLIENTS, is not right and deserves a proper explanation. anybody interested please pm me.
_________________________________________________

Comment:

I refused to make the March 2007 payment because the level of compensation they’ll have to make for delivering so spectacularly late plus the reduction in price

I’ve opted to take in lieu of the free Peugueot 206 car they were offering at the time I reserved is such that otherwise they would be owing me money. They tried to cancel my agreement so I’ve placed it in the hands of my solicitor.Technically, Damac is in breach of contract in a number of areas.

They’ve extended the completion date several times, at least once without giving the requisite notice, they went from ‘we’re on schedule’ to ‘we’re six months late’ in a two-month period, which either means they fraudulently claimed staged payments hitherto or they failed to exercise reasonable control of the project management, their sale and purchase agreement breaks the Unfair Terms in Consumer Contracts Act… shall I go on?

What it all boils down to is that any of us is within our rights to cancel our agreement and go to them for compensation, which should be our genuine losses and not just those specified in the contract.I’ve pointed all this out to them; so far they’re ignoring me – a major error of judgment, as anyone who knows me would attest.

So now it’s in the hands of my lawyer. If I don’t get the result I want, I’ll be inviting anyone who wants to do so to join me in a group action against Damac.More news as I have it…

_________________________________
Comment

It was quite apparent for the last 6/12 months that completion and handover will take us right upto september 08. I have stated this a few times in this thread before. If you speak to them they will try and convince you that it will be in march 08 as they previously did dec 07 and previous to that sep 07 ….. and so on. The most accurate judgement you can make is by looking at a tower at the same state as LT now and calculate how long it actually took for handover from then. I have just bought into this project knowing that I will not be seeing handover before sep08. Goldcrest Views 1 which still hasnt been handed over was in the same state of construction as LT is now 8/9 months ago.Another thing, I dont know of anyone who has got compensation so far. We in GV1 have tried with a team of 16 investors and have managed to get nowhere. You can try but it is v difficult to make decisions and to commit and contracts are not in our favour. The Force Majeur covers a lot of ground in favour of the developer (not just natural disasters!!). I havent recieved my damac contract yet – but lets see if its any different

Damac – Lake Terrace – Jumeirah Laker Towers – delay complaints

original published: www.skyscrapercity.com

http://www.skyscrapercity.com/showthread.php?t=120764&page=13

LEGAL ACTION

I have instructed a law firm specialising in overseas residential property, The International Law Partnership, to handle my claim against Damac (I reserved a large studio on the 20th floor in late 2004).

They’ve advised that Damac is clearly in breach of the sale and purchase agreement in a number of areas.

Contrary to what they may tell you, force majeure does not apply, because they have failed to notify us of such conditions applying as required in the agreement.

They have also extended the completion date beyond the maximum permissible and on some occasions without the notice period required under the contract.

It could also be argued that they acted improperly in calling for some of the staged payments in that they had not actually reached the claimed percentages of structural completion.

I’ve given them a period of time in which to agree a sensible level of compensation.

If they don’t respond (so far, their principal negotiating technique has been to ignore me and hope I go away) I will cancel the agreement and go after them for damages, which will include loss of capital appreciation, rental income and interest, plus legal costs.

If the clowns running Damac have any sense, they will settle at that point, if not before, because the least bad outcome for them is to complete with the original purchasers, albeit with the company having to write out a big cheque for the lost rental income.However, my best guess is that they’re not that bright and it probably will take litigation to resolve this one.

In the meantime, I think there’s a lot to be said for a ‘name and shame’ strategy. In particular, I believe a good approach would be to set up a web forum for purchaser complaints, a bit like the Ryanair one or the old nthell.co.uk one for NTL cable TV/phone/broadband customers.

Unfortunately I don’t have the technical expertise to do this, though I believe there are various free web forum software packages out there with free or cheap hosting. I’d be willing to contribute by purchasing a domain name such as damacdelays.com, which I think encapsulates what we’d all like to highlight.If someone could help bring such a forum to fruition I’m well placed to help publicise it.

posted December 30th, 2007

______________________
Comment

I think I saw a post that gave an idea of the types of compensation that are possible for late delivery on contract in Dubai. I seem to remember that a key difference from the UK, in the Dubai legal system, was that only actual losses would be compensated e.g. actual payments for rental accommodation while waiting for delayed handover rather than theoretical losses e.g. loss of potential rental income. Apparently the argument goes that the loss of rental may never have occurred because it may not have been possible to rent anyway and the apartment may have stood empty even if delivered on time.It would be good if we had someone really knowledgeable to give the definitive answer on what must be of great interest to all Dubai property buyers.My impression is that all developers will try to maximise their profits by trying some (if not all!) of the following ruses:- getting creative with additional payments, playing hardball on compensation, stating interim completions earlier than actually achieved, delaying construction to optimise the possibilities for resale fees. Anyone aware of other dirty tricks?I think a test of reasonableness ought to be brought in to the Dubai system so that endless red-tape is avoided and yet developers can’t get away with squeezing unreasonable profits from their tied-in customers.

Comment

I just went through the first page of this thread and:-

July 2004: piling was already completed-

August 2004: Main construction package awarded to Al Hamed Development and – Construction. Build period 20 months, cost AED 150M-

September 2004: Site excavation and pile cap breaking starts- October 2004: Preparing piles for the raft-

January 2005: Laying down the rebars for the raft foundation-

March 2005: two basement floors completed-

July 2005: 10 floors completed-

January 2006: 23 floors completed-

March 2006: Damac informs their clients for 6 months delay (expected completion by end 2006)-

June 2006: 34 floors completed as per the 1st week of the month-

September 2006: Damac sacked the contractor, completion date postponed to

October 2007- November 2006: Work resumes by the newly appointed contractor-

January 2007: 38th floor completed.-

March 2007: Damac claims to have completed work on the main structure, of course we know that doesn’t include the top part.-

May 2007: Construction of the top part progressing slowly-

July 2007: Work on the top part of the structure still going on.

NO COMMENT!

Comment:

Hi everyone,

I’ve been reading your posts enthusiastically over the past 6 months.Thanks for all the updates especially Imre. I’ve also bought units in Lake Terrace. I’m very concerned about the completion date. They’re just pushing it further back. I’ve heard from a source that a new occupation date is going to be announced by DAMAC changing it to end of Jan 2008.I’m sick and tired of all these lies, lies and more lies.I met Alan Gammon a couple of months and conveyed my concerns but he reassured my occupation date will be end of September or early October 2007.

All of the owners gotta get together and take action about this issue. DAMAC’s attitude towards us, their CLIENTS, is not right and deserves a proper explanation. anybody interested please pm me.
_________________________________________________

Comment:

I refused to make the March 2007 payment because the level of compensation they’ll have to make for delivering so spectacularly late plus the reduction in price

I’ve opted to take in lieu of the free Peugueot 206 car they were offering at the time I reserved is such that otherwise they would be owing me money. They tried to cancel my agreement so I’ve placed it in the hands of my solicitor.Technically, Damac is in breach of contract in a number of areas.

They’ve extended the completion date several times, at least once without giving the requisite notice, they went from ‘we’re on schedule’ to ‘we’re six months late’ in a two-month period, which either means they fraudulently claimed staged payments hitherto or they failed to exercise reasonable control of the project management, their sale and purchase agreement breaks the Unfair Terms in Consumer Contracts Act… shall I go on?

What it all boils down to is that any of us is within our rights to cancel our agreement and go to them for compensation, which should be our genuine losses and not just those specified in the contract.I’ve pointed all this out to them; so far they’re ignoring me – a major error of judgment, as anyone who knows me would attest.

So now it’s in the hands of my lawyer. If I don’t get the result I want, I’ll be inviting anyone who wants to do so to join me in a group action against Damac.More news as I have it…

_________________________________
Comment

It was quite apparent for the last 6/12 months that completion and handover will take us right upto september 08. I have stated this a few times in this thread before. If you speak to them they will try and convince you that it will be in march 08 as they previously did dec 07 and previous to that sep 07 ….. and so on. The most accurate judgement you can make is by looking at a tower at the same state as LT now and calculate how long it actually took for handover from then. I have just bought into this project knowing that I will not be seeing handover before sep08. Goldcrest Views 1 which still hasnt been handed over was in the same state of construction as LT is now 8/9 months ago.Another thing, I dont know of anyone who has got compensation so far. We in GV1 have tried with a team of 16 investors and have managed to get nowhere. You can try but it is v difficult to make decisions and to commit and contracts are not in our favour. The Force Majeur covers a lot of ground in favour of the developer (not just natural disasters!!). I havent recieved my damac contract yet – but lets see if its any different

Taktic of cancellation Dubai Devlopers – Nakheel – DMCCA – Al Fajer Properties – Falcon Tower Jumeirah Lake Towers Plot H3

original published:

http://www.skyscrapercity.com/showthread.php?t=138300&page=3