Dynasty Zarooni Dubai back in the Headlines – Another crimninal complaint ?

original source dailymail uk

For successful London jeweller Nadeem Osman, Dubai had all the bling in the world. Like thousands of others, he loved the city’s fast life, with its sports cars, glitzy shopping malls and super-luxury hotels. And, of course, its sun and fabulous beaches.

The 37-year-old businessman from Balham, South London, holidayed there at least twice a year with his wife and even thought of moving there eventually, away from the rain and cold of England.

So 14 months ago, as an investment on the side, Mr Osman decided to buy four apartments in the city, which he planned to rent and also use as his holiday homes.

Losing its sparkle: Jeweller Nadeem Osman bought four flats in Dubai last year, just before the property market there crashed

He paid £580,000 for two off-plan apartments in Villa Caria, a residential block in Jumeirah South, and two more in a proposed hotel on the Dubai Waterfront, known as Hotel K. But his timing could not have been worse, with the Dubai property market then going into free fall: down 32 per cent in the first quarter of this year and 47 per cent in the second, according to Knight Frank.

Assetz, a property investment company, estimates that the fall may reach 70 per cent this year. Mr Osman bought the apartments through Dynasty Zarooni (DZ) – one of the city’s biggest real estate companies, with a portfolio of properties worth £219million.

He paid the full sum upfront, assured that the money would be put into an escrow account which protects a buyer’s money until the work is complete.

In January, one of the directors of DZ was arrested on a £60million fraud allegation – and since released without charge – but work on Hotel K has not even started. It is scheduled to finish by 2011. The company does not even own the land on which it was to be built.

Villa Caria was supposed to be completed by the end of this year, but DZ has told him it may take a further two years. Mr Osman has also been told that his money was not put into an escrow account, and he is unable to get any back.

‘I don’t know what to do,’ he said. ‘If it was in this country I could do something about it, but in Dubai it’s so difficult as there is a huge backlog in the courts.’

Dynasty Zarooni has declined to comment after repeated attempts to contact it.

Mr Osman has now formed a group with ten other investors to decide whether to take legal action or file a criminal case.

Dubai’s courts are struggling with a mountain of property cases totalling £3billion – as much as £500million may involve British investors.

Stuart Law, of Assetz, says Britons, who were the largest Western investors, were partly responsible for the crash as they inflated prices through their highly geared buy-to-let schemes.

‘We’ve known of properties that were sold again and again about ten times one after another – it was good as each person made a profit, but the person who was left with the contract at the last was in trouble,’ said Mr Law.

Read more: http://www.dailymail.co.uk/property/article-1228306/Why-Dubai-lost-sparkle-UK-jeweller.html#ixzz0X3PuoMQ0

Dubai developers Cirrus and Kaizen disappear – Investors worried

original source Construction Week Online Dubai, 14 November 2009

Confusion has broken out over the whereabouts of international real estate firms Cirrus Developments and Kaizen Developments.

Both developers are responsible for hundreds of millions of dollars worth of developments in Dubai and across the region, including Cirrus’ Aquarius Gate in the Waterfront area, and Kaizen’s Equinox Residences at Palm Jebel Ali.

Websites for the companies are no longer active, while phone numbers listed on their brochures have not connected.

Cirrus Developments had been developing Celestial Heights – a mixed-use project of three towers, in the Downtown Jebel Ali master development, but the project is now being looked after by a firm called Catalyst Project Consultants, Construction Week has learned.

“Cirrus was part of phase one of Celestial Heights, then the owners appointed Catalyst,” Catalyst Project Consultants’ director Israr Ahmed told CW.

“Cirrus have downsized and moved offices, but they handed over all work related to the project over a two month period.”

Ahmed also said that Catalyst was “not at all” related to Cirrus Developments but it did have links to Kaizen Developments whose logo featured on early Celestial Heights marketing materials.

The last number he had for Cirrus could not be connected.

Dubai’s Real Estate Regulatory Agency (Rera) confirmed to CW that a developer by the name of Kaizen One Investment Limited was an approved developer, but the phone number it had registered for Kaizen now belongs to a general trading company.

Significantly, the registered website that Rera had for Kaizen One Investment Limited was www.cirrusdevelopments.com, which is now defunct.

Construction Week eventually managed to reach Cirrus Developments’ brokerage number where a receptionist said: “Due to the [financial] crisis, we have suspended the brokerage”, but insisted that despite not appearing on Rera’s list of approved developers, the development side of the company was still in operation.

Both public relations firms which represented Kaizen and Cirrus in the past confirmed that they were no longer their clients.

Kaizen Developments is unreachable.

Do you work for Kaizen or Cirrus? Have you invested in their projects or have you worked on their projects? Please contact constructionweek online

Absoulte unhappy Nakheel Propery Buyers – Dubai Jebel Ali Palm complaints investigated

original source The National

The Dubai Land Department (DLD) will investigate complaints over the stalled Nakheel Palm Jebel Ali project after about 125 disgruntled property buyers petitioned the authority.

Nakheel has offered investors alternative homes in other projects that are either completed or already under construction, including at International City, Jumeirah Heights and Al Furjan.

“After patiently waiting for seven years and putting all of our hard-earned money into this project, we are being given the option to transfer to inferior properties which are not in the same league as those promised to us,” the investors said in a letter to the DLD. “This is not what was sold to us.” An official said the department would compile a report on the situation.

Palm Jebel Ali, the second part of the Palm island trilogy, was launched by Nakheel in 2003 and was designed to accommodate up to 250,000 people and add 70km of beachfront to Dubai. Work came to a standstill on the vast artificial island development after property prices started to tumble last year.
read the rest of the Report The National

Sheikh Mohammed Ruler of Dubai has told the emirates`s critics to ” Shut Up”

original source 7Days

Dubai Ruler tells critics to ‘do their homework’ as he stresses unity and confidence in the future

The Ruler of Dubai has told the emirate’s critics to ‘shut up’.

HH Sheikh Mohammed bin Rashid Al Maktoum yesterday broke away from a pre-prepared speech in Arabic on the Dubai economy to make his point in English.

His remark was directed at people who have tried to suggest there is a wedge between the emirates of Dubai and Abu Dhabi after Dubai drew a $10 billion emergency loan from the UAE central bank.

But Sheikh Mohammed said these people “should really do their homework” about his country.

“I just want to tell these people who nag about Dubai and Abu Dhabi to shut up,” he told the MENA and Frontiers Conference in Dubai, organised by Bank of America Merrill Lynch.

Sheikh Mohammed, who is also the prime minister and vice president of the UAE, stressed the close ties between Dubai and Abu Dhabi.

“Dubai and Abu Dhabi are one,” he said, adding: “I assure you that we’ll be there for each other when we need it.”

The comments were clearly aimed at dispelling perceptions of a rivalry between the two emirates.

There have been accusations around the globe that Abu Dhabi has become jealous of Dubai’s success in recent years as it tries to diversify its economy away from a dependence on oil.

But yesterday, in rare public comments on the subject, Sheikh Mohammed stressed the tribal bonds and blood relations between the emirates’ rulers.

“We, our fathers, grandfathers have fought for the Arabian Peninsula,” Sheikh Mohammed said. “We are very, very proud of our country, very proud of our people… And our people (are) very proud of us.”

The ruler also confronted critics who say Dubai was slow to react to the global financial crisis.

He said the government “preferred to wait rather than rushing” so it could restructure state-owned companies. And Sheikh Mohammed said he
was confident the worst of the crisis was over.

“As the global economy stabilises, Dubai today is well placed to exploit its inherent strength,” he said.

“The slowdown will never dampen the mettle of children of Dubai to steam forward in the drive toward development,’’ he added.

Dubai faces a debt of about $80 billion. As well as the $10 billion loan, it expects to raise an additional $10 billion in financing before the end of the year.

more Maktoob.com

Fraud in Dubai and the Gulf Region – Just the tip of the iceberg

source The National

It is more than a year since Dubai launched a highly publicised clampdown on corruption, which led to the arrest of several executives from some of the emirate’s top property developers and financial institutions.

But while Dubai grabbed the international headlines, it represented just the tip of the iceberg in a region that has been identified as a hot spot of corruption.

Kroll, an international risk consultancy, said last week the Middle East was the world’s only region to see a rise in fraud in the past year. It singled out corruption and bribery as the single largest threats.
“For seven out of 10 cases of fraud, it had the highest incidence of any region, including bribery and corruption,” Kroll said. Average financial losses from corruption doubled to US$11.5 million (Dh42.2m) this year from $5.6m last year, it said.

read more of this article….

Emirates Press Law and the Media Blackout

source arbabMediasociety October 2009

On May 29, the London-based daily The Independent published an article entitled Dubai property scandal claim emerges amid media blackout. According to the report, a group of investors who had bought properties in buildings by Al Fajer Group, a company run by Sheikh Maktoum bin Hasher Al Maktoum, held a press conference to accuse the developer of fraud, according to The Independent.

The investors allege that the developer Al Fajer Properties showed them photographs of buildings it claimed were Ebony 1, Ivory 1 and Ivory 2, but were in fact buildings belonging to another developer.
 
The investors were demanding a refund totaling GBP86 million.

Unfortunately, the investors didn’t get the sort of press they had hoped for.

Incidentally, Sheikh Maktoum bin Hasher Al Maktoum is the brother-in-law to the ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, and soon after the press conference finished, Dubai government officials warned news agencies against publishing articles on the press conference.

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

Why?

Because a member of the royal family is directly involved.

To date, we have not received updates from Al Fajer Group regarding the allegations made against the company.

 
Rather than view Sheikh Maktoum bin Hasher Al Maktoum as a businessman who may have been involved in conning investors out of GBP86 million, the government views him as a royal first, a businessman second.
 
And herein lies one of the media law’s biggest problems: most UAE royals hold government offices and executive positions in companies throughout the Emirates. In fact, most UAE-based companies have some connection, either directly or remotely, to members of the royal family.
 
 How, then, can the media ever hold these individuals accountable for their actions, if stories (albeit negative ones) cannot be published if they involve a royal?
 
Sadly, the draft media law won’t help with this conundrum, and it certainly won’t help with future torture tape cases either. Article 32, which makes criticizing government officials and royals illegal, is artfully ambiguous. According to HWR’s report, “[such] a vague law invites self-serving interpretation by the government, and with courts that have proven compliant in harshly regulating speech, the result will be continued anxiety, self- censorship, and arbitrary enforcement of the law in the UAE. It appears designed to insulate the government from public accountability and criticism and would deter investigative journalism and undermine the media’s role as public watchdog.”
 
According to Samer Muscati, the HWR is putting together a new report, because “the situation is more dire than we anticipated.”
 
It is dire, especially given that in spite of local restrictions on content, the world press can write and say what they want about the UAE, without ever succumbing to the country’s media laws. And the stories the government doesn’t want the local media to publicize, are being publicized anyway by journalists around the world.
 
Due to the Internet, the only way to prevent the press from airing your dirty laundry in public is by not having any dirty laundry in the first place.
 
Interestingly, the draft law is still pending approval. One has to wonder why a country that passes laws so quickly compared to other nations has taken its time with this one.
 
“I’m hoping that the reason why they haven’t signed the law is because they’re going to amend it,” said Muscati. “They need to reevaluate the law and take the recommendations that we’ve given them.”
 It is unclear why the draft law hasn’t been passed. Repeated efforts to contact the NMC for an explanation yielded little more than assurances that the government is working on finalizing the law.
 However, transparency was never one of the UAE’s strong points, which is ironic given its desire to maintain its status as a regional business hub. Without transparency, and without press freedom to report on political, business-related and social issues, the UAE is unlikely to repair its mired reputation.
 
Since the financial crisis hit the region in September 2008, bringing the nation’s billion dollar real estate industry to its wobbly knees, the UAE’s credibility as a stable and profitable developing nation was compromised. Dubai, more so than Abu Dhabi, had over stretched its budget. To date, no one knows how much debt the emirate raked up, but occasional disclosures hint at a distressed economy. Earlier this year, Dubai admitted to owing $80 billion, although analysts suspect the number is higher. Clearly, without the government providing accurate numbers, speculators will assume the worst.
 
Given Dubai’s drive to raise itself from the economic bog it created running up to the financial crisis, honesty and transparency are tantamount. And without the media’s involvement in reporting information about Dubai and the UAE’s news, any effort to regain investor confidence is slim.
 
In fact, keeping close tabs on the media, like it does with its companies, will only prove that in spite of the lessons the financial crisis has taught the business world, the UAE hasn’t grasped them yet.

read the full article here

Dubai`s off-plan buyers cash at high risk – Delayed Projects axed

source  MaktoobBusiness

DUBAI – Many real estate projects claimed to be on hold due to the collapse of the UAE’s property market have actually been cancelled, but developers do not want to admit this because then they will have to return investors’ money, industry observers say.

Observers also question some developers’ ability to repay investors when projects are finally cancelled, with the prospect of buyers losing millions of dollars.

“In the 18 months before the downturn a number of projects were announced that were not financially viable and therefore unlikely to see completion,” said Tahir Akhtar, chairman of Dubai Business Advisors, who has invested in projects across the UAE.

“Developers do not want to admit this because then they will have to return the funds.”

Billions of dollars worth of developments were launched during the UAE’s real estate boom, which had seen property prices close to double by mid-2008 from the start of 2007.

The boom was driven by speculation and easy credit, with developers funding the construction of projects through off-plan sales.

When the global financial crisis gripped the country’s real estate market prices plummeted as financing and demand dried up, leaving developers unable to fund construction.

UNDER REVIEW

Many developers have put projects on hold or have said they are reviewing projects, but few have come out and outright cancelled projects.

“If they (developers) say it’s cancelled they will have to repay the money to clients. Probably for that reason they are saying it is still on hold,” said Charles Neil, CEO of property consulting firm Landmark Advisory.

Michael Shvo, a well-known luxury real estate marketer from New York, said a developer told him privately a project that is “officially” delayed is actually cancelled, declining to name the developer.
 
“A developer told me that officially the project is on hold, but it is actually cancelled,” Shvo told a conference at Cityscape Dubai earlier this month, prompting him to call for greater transparency.

The number of real estate projects cancelled or on hold stood at around $408 billion in September, up 18 percent from $346 billion in April, according to the Kuwait Financial Centre.

The Centre, also known as Markaz, said it expects cancellations to rise further in Dubai due to the continued lack of financing and uncertain economic outlook.

UAE real estate regulations vary from emirate to emirate, but currently there are no laws governing how long a project can be on hold before a developer must refund investors’ money.

In Dubai, the UAE’s most developed real estate market, authorities are in the process assessing which projects are unviable and should be cancelled, with the findings due out before the end of the year, according to the Real Estate Regulatory Agency (RERA)

Developers are not allowed to cancel projects in Dubai without the approval of RERA and the Dubai Land Department, RERA said, adding that if a developer does get approval to cancel a project it would have to reimburse investors. 

“It will vary from project to project as which ones will go ahead. Some will end up with half-completed buildings and some may not start (at all),” Landmark’s Neil said.

INVESTOR CONCERN

Investors have become increasingly vocal in voicing their concerns about delayed projects, calling on developers to transfer their investment to another project or refund their money.

Larger companies such as Emaar Properties and Nakheel have set up schemes that allow buyers to swap their investments between projects, but smaller developers lack the project portfolio to offer an alternative, analysts say, leaving investors at risk of losing their money.

Dubai Business Advisors’ Akhtar said a group of investors he belonged to stood to lose around 150 million dirhams ($40.8 million) from projects in the UAE emirate of Ajman that now look like they may not go ahead.

“Not a lot has been done to protect investors,” he said.

Dubai brought an escrow account law into force in mid-2007 in an effort to better protect investors – requiring developers to hold buyers’ money in a special bank account until the completion of a project – but many projects had been launched prior to the law, and other emirates were even later in introducing similar regulations.

“Most projects that fall under the escrow provisions of RERA have an established level of comfort and protection. Those projects that are not covered by escrow are a different situation,” said Blair Hagkull, regional managing director of Jones Lang LaSalle.

Test Case for RERA Dubai – Investors file case with RERA over Dubai project delays

source ArabianBusiness
 A group of around 30 investors has filed an official complaint at the Real Estate Regulatory Agency (Rera) over ongoing delays and specification changes at the Vue de Lac and Vista del Lago developments in Dubai.

Investors on the Al Attar project at Jumeirah Lake Towers accused the developer of unreasonable delays and changes being made to apartments without the consent of owners, Construction Week Online reported.

“We have been promised the project since then end of 2007. It was then pushed to 2008, then the end of 2008, and now he’s saying 2011 – which will never happen, because up to date they’ve only finished the piling,” investor Makram Mohamed told the website.

Many asserted that apartment specifications have changed so drastically that they no longer wish to purchase property in the project and want a full refund.

Investors are unhappy at what was described in a letter from Al Attar as “some small changes”, where two-bedroom apartments have been changed to one-bedroom ones.

Al Attar had revised the prices of the apartments in line with the reduction in apartment size, but investors said that they had bought two-bedroom apartments specifically and a smaller alternative was not acceptable.

“Because of the change of designation and all of this delay, we don’t want this property any more. The majority of people investing were buying to live in this property. Ninety per cent of our group wanted to live in this. Now they’ve changed the designation, we don’t need it. I bought a two-bedroom; you can’t give me a one-bed plus study,” said investor Shailendra Sainani.

“The majority of us need our money refunded and the costs absorbed. [Al Attar] needs to resell the project from the beginning.”

In addition to changes in designation, many investors are also concerned that delays to the project will result in a huge interest bill arising from finance agreements that can only be concluded following apartment handover.

Some investors took out finance agreements in 2006 under the impression that the project would be handed over in 2008. They are now facing the prospect of paying five years’ worth of interest on finance agreements, should the project be delivered according to a new completion date of 2011.

Some investors also query Al Attar’s ability to deliver the project on time.

“Can we still believe Al Attar can deliver in 2011, if they couldn’t even start construction in the last three years?” said one investor.

The group has filed a case with Rera because they say that Al Attar Properties is refusing to communicate with them except through a lawyer.

No-one from Al Attar was able to comment on the case or development.

The case has now been filed with Rera, who said a decision on the steps it would take would be forthcoming in the next few days.

Dubai Property Court – It´s Court Time

source Emirates Business

Abdul Qader Moosa, Chief Justice, Property Court, has said rights of real estate investors in Dubai are reserved under the laws enforced in the emirate.

He said Dubai has a specialised property court and advanced laws that go along with real estate developments and protect the rights of all parties of projects – investors, developers and contractors. Moosa told Emirates Business that Property Court judgments are more accurate and faster than those in many other Arab countries. This year the time a case takes at the Property Court of First Instance has gone down to 45 days from 57 in 2008.

Meanwhile, the time a case takes in the full [appeals] court has risen to 90 days in 2009 from 80 days last year because of the increase in the number of cases this year. It is a very short time in comparison with the years cases take in any other Arab country, he said.

A year has elapsed since the establishment of the Property Court. What are the court’s missions and achievements?

The court was established on June 15, 2008, by order of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. It was part of the establishment of several specialised courts with an economic nature. Sheikh Mohammed believed the economic activity and progress of Dubai required the establishment of such courts, which aimed at fast and cordial settlement of financial and economic disputes.

Three specialised courts were set up: commercial, civil and real estate. Now Dubai has six specialised courts of first instance, which also include the civil status, labour and criminal, in addition to the previously mentioned courts. The emirate’s court system had to be updated to go along with the development taking place at the economic level in terms of the volume of projects as well as the growing number of workers and employees.

Real estate cases are those related to disputes emerging from acts or transactions related to property or brokerage, except for rent cases that are exclusively handled by Dubai Municipality’s Rent Committee.

The partial [first instance] real estate cases cover disputes whose values do not exceed Dh100,000. Such cases are heard by a court presided over by one judge. Meanwhile, full [appeals] cases are concerned for disputes with a value of more than Dh100,000. They are heard by an appeals court with three judges. And, like other judicial disputes, each real estate dispute case is allowed three litigation degrees (first instance, appeals and cassation). Only cases with a value of no less than Dh200,000 can be heard by the Court of Cassation.

What are the most recurrent real estate cases heard by the Property Court?

The court hears various types of cases, such as those related to demands of contract termination, contract validation, writing and handover of contracts, in addition to brokerage cases.

For instance, in contract termination cases, one party asks for the termination of a contract on the basis that the second party has failed to abide by the contract’s conditions. A buyer might ask for contract termination for failure by the developer to abide by conditions such as the completion of the project as scheduled. And, if proved, the court has to order the termination of the contract and the return of instalments paid, plus the proper compensation.

What about the size of cases heard by the Property Court, the litigation time and the percentage of completion?

The Property Court of First Instance received some 12 cases in the last six months of 2008. Judgments were given in five cases. Hearings usually took three months. In the first six months of 2009 the court has received 50 cases, and 43 were decided. Hearings are still on in the remaining seven cases.

The appeals Property Court heard 137 cases during the last six months of 2008. Twenty were decided while the rest were deferred to the 2009 judicial season. Each case took three months. Meanwhile, in the first six months of this year, the court registered 883 new cases, giving a verdict in 168 over a period of three months.

What are the judicial departments affiliated to the Property Court?

The court has five judicial departments, including three full [appeals] departments, one partial [first instance] and one for the enforcement of judgments. The latter is presided over by a judge who enforces the judgments issued by notifying the parties concerned to act within 15 days or face legal measures such as seizing of bank accounts, property, cars or even stocks.

In the light of the relatively short age of the court, how useful is the Property Court for the real estate sector of Dubai?

The presence of specialised courts in any country helps boost the confidence of those dealing with the subject they speacialise in. And the reality is that the real estate sector has acquired a large percentage of the emirate’s economic activity. The presence of a specialised real estate court working according to the principles of “justice for all” and adopting accuracy and speed in the settlement of disputes contribute to making Dubai an important attraction for investors in the region’s real estate.

How has the real estate crisis reflected on the cases heard and the types of disputes?

For a start, one has to stress that the volume of cases heard does not reflect the developments under way in the real estate sector, since the court is relatively new. This is also because of the presence of other specialised bodies and institutions, such as the Land Department, the Real Estate Regulatory Agency, the Contractors Association and others. And with the start of the real estate crisis, we noticed a state of fear as investors were concerned about the money they injected in property. The launch of the court coincided with the start of the financial crisis late last year, and we used to receive many queries from investors. We were surprised with the many cases of contract termination with developers by investors who fear that projects may not start. In fact we used to reassure buyers that there was an escrow account in which went all the money paid by the buyer. We reassured them that there was no fear their rights would be lost. That period witnessed many contract termination cases for failing to pay instalments. However, the number of such cases was very small compared to the volume of the emirate’s real estate projects.

What are the challenges facing Dubai’s real estate sector now?

In the light of the volume of projects completed, as well as those under way, I believe the biggest challenge is the simultaneous development and updating of laws that regulate the sector to go along with the developments. And in the absence of co-ordination and co-operation between us and the Land Department and Rera, both strategic partners, we work to update our legislations and laws to suit the sector’s needs. Also, as a property court, we have made a strategy that aims to expedite and facilitate litigation, reactivate partnerships with the bodies concerned, and to pass accurate judgments, modernise and develop real estate legislations in the light of the cases we hear.

What about the currently enforced laws and legislations?

At present we work under a number of laws, legislations and bills, including Bill No85 of 2006 on the real estate broker register, which allows officially recognised brokers to practice. There is also Law No13 of 2008 on the primary real estate register, which regulates the registration of property between the parties, and it is mostly off-plan sales. This is in addition to Law No7 of 2006, which is related to the permanent real estate register and includes the registration of property after it is completed. There is the Property Registration Law No3 of 2006, which defines areas where non-UAE nationals can own property, and Law No8 of 2007, which obliges developers to open an escrow account for each project and where investors’ money is deposited. Each project has a separate account, and it is not allowed to seize another project’s account to collect debts due on the developer.

What advice would you give to real estate investors?

Before buying property, an investor has to make sure that the developer, broker and the project where he intends to buy, are registered. Many investors buy from non-registered brokers or developers, or buy property that is not registered with the Land Department. Also, they have to deposit their money in the escrow account of the project, which guarantees their rights in case of any dispute. They need to be aware of the laws that regulate the real estate sector and which are available on the website of the Property Court and the Rera.

PROFILE: Abdul Qader Moosa Chief Justice, Property Court

Abdul Qader Moosa holds a bachelor’s degree in law and the police sciences diploma from Dubai Police Academy. He graduated from the Police Academy in 1994 and served as Chairman of the Lawyers’ Committee. He obtained a diploma from Dubai Judicial Institute in 1998. He was appointed deputy public prosecutor in 1995 and public prosecutor in 1998. In 1999, he became a judge in the Court of First Instance. In 2005, he was promoted to a judge of the Appeals Court and was appointed the chief judge of the Court of First Instance in May the same year.

In September 2006, he became the chief judge of the Labour Court. Moosa has won several awards, including the Distinguished Judge Award under the Dubai Courts Excellence Awards.

Damac Dubai – UK TV news investigation

Dubai – 29. July 2009

In a report broadcast Monday night in the UK, Channel 4 News spoke to unhappy British investors with property developer Damac who have yet to see a return on their money in the Dubai market.

While some wanted quick returns, others simply wanted an apartment in the sun – not least David Hunter of Oxfordshire who said he had handed over £60,000, so far, for an apartment at Damac’s Lotus development.

Hunter said a Damac representative told him at the time (February 2007) of purchase that construction on the development had already started.

Three months later Hunter found out otherwise when it emerged that the plot was occupied by a UNICEF building. Hunter not surprisingly said he ’should have been told’.

Citing documents, Channel 4 claimed Damac had been selling developments off-plan without having title to the land in the first place – a practice outlawed by the Dubai Government last August.

Another document, dated from ‘late last year’ alleged that almost one quarter of the firm’s projects had been put on hold.

Meanwhile, a Harrow NW London resident who bought off-plan in the Flamingo Heights development 18 months ago, told the broadcaster he had paid three instalments totalling £70,000.

”I asked them in writing what the current state (of the development) was before I made my investment. I was assured that the foundations had been laid and construction was well under way at the site.”

With the Flamingo Heights development showing no evidence of construction when Channel 4 recently visited it Ludmila Yamalova of Al Sayyah Legal Consultants – to whom Channel 4 took the investor’s complaint – said he may have a case as a statement claiming foundations that had been laid when in fact they hadn’t, could amount to misrepresentation.

Erik Pekarski, former VP Customer Relations at Damac said the line being put out to customers was that ‘progress is ongoing, development is ongoing and construction is ongoing’.

Customers would continue to scream and yell at you as they should, because they had been put off for months, he added.

Damac has, in some cases, since offered alternative flats either complete, or near completion. However, many investors Channel 4 spoke to said they wanted their money back but, like the Harrow investor, had been informed by Damac that there is a ‘no refund’ policy.

When asked about the ‘no refund’ policy an unnamed former manager at Damac said the company took a tough line. David Hunter meanwhile says he has hired a lawyer.

In a statement to Channel 4 News the company confirmed it didn’t have a refund policy, except within ‘the provisions of the regulatory framework’.

It also denied any allegations of wrongdoing and said investors interviewed by the broadcaster were ‘not a representative group’. The company added that it had no intention or policy to mislead customers.

Addressing the allegation that the company had claimed foundations had been laid at the Flamingo Heights development when in fact they hadn’t Damac said: ”It is possible to have a rogue element who communicated information which was inaccurate and not endorsed.”

It added that the Flamingo Heights project tender is due to go out shortly.

source of this report Arabian Business

Sheikh Maktoum Hasher Maktoum Al Maktoum – Iranian’s lawsuit reveals royals’ power in UAE

source WoMy BlogsrldTribune 09 June 2009

A  member of the royal family (Sheikh Maktoum Hasher Maktoum Al Maktoum)  in the United Arab Emirates has for the first time been sued by an Iranian executive on charges of fraud.

Shahram Abdullah Zadeh has sued the brother-in-law ( Sheikh Hasher Maktoum Al Maktoum) of the emir of Dubai ( Sheikh Mohammed bin Rashid Al Maktoum) in an unprecedented civil action in the UAE. The 37-year-old Iranian national has accused the brother-in-law, Hasher Maktoum Bin Juma’a Al Maktoum, of trying to take over Zadeh’s real estate firm.

“He thought he could do it all because he’s a sheik,” Zadeh said

Shahram Abdullah Zadeh CEO Al Fajer Properties 2008

The suit has challenged the transparency of the justice system of Dubai, which requires foreign investors to take on a UAE partner. Zadeh said he reverted to a civil action when prosecutors refused to file criminal charges against Hasher.

Zadeh, a life-long resident of Dubai, said he selected Hasher as the required UAE partner in Al Fajer Properties, established in 2004 and now worth $2 billion. Zadeh said he and Hasher fell into a dispute amid delays in building a billion-dollar office tower.

The economic downturn in the UAE has harmed a range of partnerships with foreign investors. In Dubai, the commercial capital, police have detained nearly 20 executives on suspicion of fraud. None of the detainees was connected to the ruling Al Maktoum family.

“There is no room for corruption and the corrupt,” Dubai ruler Mohammed bin Rashid Al Maktoum said. “In all corruption cases, people are not only prosecuted and punished, administrative and legal holes that they exploited to commit their crimes are plugged.No one in the emirates is above the law and accountability.”

Zadeh said Hasher Maktoum Al Maktoum, who ignored two summonses, exploited his connections to the ruling family to have the Iranian arrested. In February 2008, Zadeh was imprisoned for 60 days and pressed to renounce links to Al Fajer.

As Zadeh languished in prison, Hasher Maktoum Al Maktoum was said to have taken over Al Fajer and appointed his son chief executive officer. By the time, he was released, Zadeh found that his office safe was ransacked and cleansed of any documents that linked him to the company.

At one point, Zadeh appealed to Dubai’s emir. He said the emir did not respond to the complaint against his brother-in-law.

“We understand that Al Fajer Properties is controlled by a powerful member of Dubai’s ruling family,” Moses Oye, who represents investors in another Al Fajer project, said.

Still, Al Fajer continues to operate. On April 15, Al Fajer and the Dubai Real Estate Regulatory Agency, RERA Dubai,  announced the first transfer of property using a new official online system.

Photo: Sheikh Maktoum Hasher Maktoum facing lawsuits from Investors of Ebony and Ivory Towers - also named Jumeirah Business Centre) developer in Dubai is Al Fajer Properties

Hasher’s son, Maktoum, was identified as president of Al Fajer.  Zadeh was not mentioned.

Foreign investors have demanded an investigation of another Al Fajer project, Ebony Ivory.

The investors, alleging fraud, have called on the Dubai Real Estate Regulatory Agency to force Al Fajer to issue a refund.

“We have paid approximately $140 million and have a signed contract from Sheikk Maktoum Hasher  Maktoum Al Maktoum,” Oye, who represents investors from Britain, Canada, India, Iran, Pakistan and the United States, said. “Now, we want our money back.”

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

Al Fajer Properties – The former CEO of Al Fajer Properties Shahram Abdulla Zadeh was jailed in 2008 – Today 2009 President of Al Fajer Maktoum Hasher bin Juma Al Maktoum – A part of the Dynasty Zarooni Scandal ?

http://online.wsj.com/article/SB123457503562586691.html

DUBAI — Amid the movers and shakers of this glittering city, Shahram Abdullah Zadeh cut a wide swathe. He cruised around town in a white Bentley and dined with royalty as his company developed one of the emirate’s premier office complexes.

But last February, a phone call from Dubai’s state security effectively ended it all.

Hauled in and locked up for 60 days, Mr. Zadeh says he was interrogated about his role in Dubai’s freewheeling real-estate sector and his business relationship with the brother-in-law of Dubai’s ruler, Sheikh Mohammed bin Rashid Al Maktoum. When released, Mr. Zadeh says he had been frozen out of the real-estate company he had helped start.

Mr. Zadeh’s experience, compiled though court and company documents, offers a rare window into the murky business world that helped transform this city from an empty coastline into a metropolis. It also may offer a cautionary tale for investors lured to the city, which bills itself as the modern face of a new Middle East. Dubai is one of seven semi-autonomous emirates that make up the United Arab Emirates.

The U.S. government and human-rights groups have long criticized the judicial system in the U.A.E for a lack of independence and oversight. In the good times, investors didn’t fret much about these shortcomings. Now, some of the same deals that helped build Dubai are coming undone — in particular, a tradition of off-the-book business partnerships between Emirati citizens and elite expatriates like Mr. Zadeh, who was born in Iran.

Mr. Zadeh claims his detention came after a business dispute with his partner at Al Fajer Properties, Sheikh Hasher bin Juma’a Al Maktoum and his son, Sheikh Maktoum bin Hasher al Maktoum. Both men are members of the extended family of Dubai’s ruler, Sheikh Mohammed bin Rashid Al Maktoum. Mr. Zadeh alleges the two men took control of the firm while he was in custody, according to a lawsuit he filed with Dubai’s public prosecution office last year.

Mr. Zadeh has not been charged with a crime. But for the past year, authorities have held onto his passport, making it impossible for him to travel or find work.

“I used to believe in the miracle of Dubai. But now I see it all as a mirage,” said Mr. Zadeh, 37. Sheikh Hasher denies any wrongdoing. He says he was not responsible for Mr. Zadeh’s jailing and that he removed him from the company because Dubai authorities said he had offered bribes, an allegation Mr. Zadeh denies.

“I don’t need to defend my reputation. He does,” Sheikh Hasher said in a telephone interview. “This man is crazy. He is a crook with a sweet tongue.”

Some of Mr. Zadeh’s claims are impossible to verify independently. His only copy of the real-estate partnership agreement is missing, and official company documents show the Sheikh Hasher as sole owner. Dubai’s security services, the public prosecutors’ office and the Dubai ruler’s court all either declined to comment or didn’t respond to repeated requests for comment.

Last fall, the Emirates’ Human Rights Association, a government body, wrote to authorities asking for an explanation about why Mr. Zadeh’s passport was being held. The group did not receive any response, according to his lawyers.

Mr. Zadeh grew up in Dubai, attending school with the children of some of the city’s top families. He managed his family’s hotel and retail holdings and decided to go into business himself in 2000. Real-estate development was off limits to foreigners, even longtime residents like himself. So, he turned to a common practice — a silent partnership with a U.A.E. citizen.

Typically, such partnerships involve an Emirati acquiring a business license and then granting his foreign partner management control. The foreigner either pays an annual fee to the Emirati or the two share profits. The terms are set forth in a parallel set of documents, separate from those submitted to the government. Such contracts are so common that courts here have upheld them in disputes, according to commercial lawyers here.

In 2004, an old friend of Mr. Zadeh’s father brokered an introduction with Sheikh Hasher. The sheikh owns Al Fajer Enterprises, a conglomerate that includes a large construction and contracting arm.

In affidavits filed with Dubai’s prosecution office, Mr. Zadeh contends that he and Sheikh Hasher verbally agreed to a partnership, signing a contract on Feb. 1, 2006. The partnership, Mr. Zadeh says, established the two men as co-owners of Al Fajer Properties. The men would split profits equally and would invest equal amounts of capital. The contract named Mr. Zadeh as chief executive.

Mr. Zadeh provided $335,000 in start-up capital, and he invested another approximately $30 million in the company, according to bank documents reviewed by The Wall Street Journal. Mr. Zadeh’s affidavits contend Sheikh Hasher didn’t contribute any capital. Sheikh Hasher denies the equity partnership ever existed.

Business took off quickly. One of Al Fajer’s biggest projects was a planned $750-million development of five office towers, set just inland from Dubai’s man-made, palm-tree-shaped island. Mr. Zadeh bought three of the five plots for the 40-story towers with his own money, according to financial documents. With investors lined up for units, he then awarded $215 million worth of contracts to the construction arm of Sheikh Hasher’s Al Fajer Enterprises, according to company documents.

But by late 2007, the contractors were behind schedule, according to company documents and former employees. Al Fajer Properties was facing fines for the delays, and buyers were starting to complain. Sheikh Hasher wanted payments to continue to his companies, but Mr. Zadeh claims he said no. The sheikh complained in a series of text messages that unless Mr. Zadeh released more cash, his contracting companies would go bankrupt.

On Feb. 21, 2008, Mr. Zadeh claims, he received an unusual phone call from State Security, asking him to come in that evening for a talk. When he arrived, , he claims that police blindfolded him, put him into a sport-utility vehicle and drove him to a detention center.

In the eight weeks he was jailed, Mr. Zadeh says he was never accused of a specific crime or shown an arrest warrant. Instead, he says, he was repeatedly interrogated about his personal life and Al Fajer’s operations, and gave his interrogators the combination to the company’s safe after they asked for it. “They told me that if I did not cooperate that they would ruin me,” Mr. Zadeh said.

Mr. Zadeh contends the only copy of his partnership agreement with Sheikh Hasher was in the safe. Former employees of Al Fajer say the company safe was emptied while Mr. Zadeh was jailed.

On March 6, Sheikh Hasher’s son, Sheikh Maktoum, was named the new chief executive of Al Fajer Properties. Sheikh Hasher hired international accountants to audit Al Fajer’s books, according to former employees. He then presented the findings to employees and select clients, accusing Mr. Zadeh of embezzling funds. Phone calls and emails sent to lawyers and accountants of Al Fajer Properties were not returned.

Sheikh Hasher says Mr. Zadeh stole money from him, but did not provide evidence, or the audit, to back his claim. Mr. Zadeh denies it.

Prosecutors refused to investigate the case, citing an order from Dubai’s attorney general, an official appointed by the ruler. In November, Mr. Zadeh tried one last option. He approached the ruler’s diwan, or court administration, and asked for mediation from Sheikh Mohammed himself.

So far, there has been no reply.

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Where Are The Locals?

Forbes     March 11, 2009

Seven suspects have reportedly been singled out by the authorities, but all of them are foreigners.

Dubai’s anti-corruption probe seemed in full swing Tuesday, after seven expatriate businessmen were reportedly accused by prosecutors of taking part in a $500.0 million fraud at Dubai Islamic Bank. The suspects included three Britons, two Pakistanis, one Turk and one American, according to the Associated Press, raising concerns that local Emiraatis might not be held as fully accountable as the expat brigade.

“Some might say that it’s evidence of the anti-corruption drive, but again, where are the Emiraatis?” wondered Christopher Davidson, a British academic who has authored several books on Dubai and the United Arab Emirates. “There have to be the local sponsors, the line managers, the people whose desk at which the buck stopped.”

The alleged fraud involved a company called CCH, which according to reports was linked to some of the named suspects and may have forged documents to fraudulently obtain funds from Dubai Islamic Bank. The bank issued a statement on Tuesday claiming its exposure to CCH was around $330.0 million and that it was chasing down assets “in a range of countries.”

The former chief executive of Dubai Islamic Bank, Saad Abdul Razak, was reportedly taken into custody last year for questioning, as part of the authorities’ probe of the real-estate sector, but his name does not seem to have made the final list. Press reports claim that a handful of local Emiraati executives have also been interrogated, including Sami al-Hashemi, ex-CEO of real-estate developer Mizin, and Abdul Salam al-Marri, head of the Lagoons development on Dubai Creek.

Although Dubai’s defenders cite the example of a former cabinet minister, named in press reports as Khalifa Mohammad Bakhit al-Falasi, who was sentenced to two years in jail in February for an unrelated case of fraud and embezzlement, the truth is that very few local Emiraatis have been charged or punished as a result of such investigations.

Expatriate businessmen have also accused the Dubai authorities of torture and detention without charge, including Zack Shahin, ex-CEO of Dubai Islamic Bank’s real-estate subsidiary Deyaar Properties, and Shahram Abdullah Zadeh, former manager of developer Al-Fajer Properties. (See “Desert Storm In Dubai.”)

Zack Shahin is still behind bars and still has not been charged, according to one of his American lawyers, James Pitts, who told Forbes that there were around 40 other foreign businessmen in a similar situation in Dubai.

When asked whether Shahin might have provided names to the authorities in exchange for a lighter potential sentence, or exemption from the charge sheet, Pitts replied: “I am certainly not aware of any such arrangement.” 

Read also: Desert Storm in Dubai

Read also : Madoff of The Mideast Denies Charges 

Dubai – Forbes – Al Fajer Properties Scandal – Battle over the Books – Behind the $870 million ”rescue” of a royal developer

original published Forbes

March 08. 2009 12:36AM UAE / March 8. 2009 8:36PM GMT

On Feb. 3, Al-Fajer Properties, a high-profile real estate development firm owned by the brother in law of Dubai’s ruling sheik, announced a 3.2 billion dirham ($871.2 million) restructuring of its operations. Under the leadership of its new president, Sheik Maktoum bin Hasher al-Maktoum–the eldest son of the company’s owner, and nephew of Dubai’s ruling sheik–the company explained it had liquidated its land bank and sold off its remaining inventory after a “rigorous” business review in order to strengthen its balance sheet.

But sources close to Al-Fajer tell Forbes that the restructuring was actually a wholesale “rescue” from financial ruin as an independent entity, after nearly three years of alleged mismanagement under former manager Shahram Abdullah Zadeh, a flamboyant, Iranian-born businessman who was fired last year and who claims to still be owed at least $1.9 billion by Al-Fajer.

Forbes has consulted documents–including bank statements, company contracts and employee interviews drafted by an auditing firm, which was called in to help conduct the business review last year–that purportedly tell the story of how Zadeh allegedly forged company contracts, kept fraudulent, unaudited accounts and moved money back and forth between Al-Fajer Properties and other companies owned by him.

Sources close to Al-Fajer say the new president, Maktoum, was called in by his father to fix the so-called “financial shambles” after an employee indirectly alerted the elder sheik to the company’s financial situation by requesting cash in early 2008. Documents show a cash balance of approximately $8.2 million when Maktoum arrived, which was restored to $163.4 million to $190 million 60 days later.

The sheik, say sources close to the company, did this by unwinding investments that would have saddled Al-Fajer with massive liabilities–in the “hundreds of millions” of dirhams–narrowly escaping the real estate slide that hit Dubai months later after the collapse of U.S. investment bank Lehman Brothers in September. Since then, property prices have fallen an estimated 20% to 25%.

Al-Fajer’s cash balance as of February 2009 was not made available to Forbes, but sources close to the company hint that nearly all of it has been plowed back into construction projects.

Zadeh flatly denies any wrongdoing and claims that the so-called “rescue” was a full-blown theft of a company he had owned and financed alone throughout the course of its existence. Moreover, he denies that the company was a financial mess and claims that his erstwhile partner, Maktoum, breached his trust to take control of a successful firm.

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“I was the sole investor, and Al-Fajer Properties was my company,” he says. “Sheik Hasher Maktoum has not invested a single dirham into the company; his only contribution has been the real estate license.”

The payment for this license, which cost $82,000, sat in a bank account from the company’s inception in 2004 and was not used as operational capital, Zadeh says.

Zadeh claims that Maktoum, his father and others together “cooked the books” and took control of Al-Fajer Properties while he was detained in jail by the authorities, without being charged, between February and April 2008. After being blindfolded, tortured and interrogated for weeks about unfounded bribery allegations and his operations at Al-Fajer in detail, Zadeh says he emerged from jail only to find a letter demanding he cease all involvement with the company.

Zadeh says he believes his detention was the result of a false report. Sources close to Al-Fajer say that any such claims did not come from them.

The battle has already spilled into the courts, a potentially embarrassing development for a company linked to Dubai’s ruling family. After filing two unsuccessful criminal complaints against Al-Fajer last year, Zadeh said his lawyers filed a civil lawsuit against the company on Feb. 26 at the Dubai Courts, claiming he was still owed $1.9 billion.

Although Al-Fajer Properties is said to have filed a criminal complaint against Zadeh in late February, alleging fraud and embezzlement of funds, the company’s lawyer would not confirm this. “I am aware of no suits against me,” Zadeh says.

Zadeh does not deny moving funds between Al-Fajer and other companies he owns, but claims that he put the money into the company’s account in the first place and later took it back as his “investment.” He said that no money was missing, though he admitted there had been no auditing of the company accounts because the firm was understaffed and had big ambitions.

Sources close to Al-Fajer also confirm that no money appeared to be missing; Zadeh is said to have made up the balance of withdrawn funds with later payments back into the firm.

The corporate tussle casts no direct shadow on the reputation of Dubai’s ruling family, even though Al-Fajer’s operators are one degree removed from Sheik Mohammed bin Rashid al-Maktoum. But it’s another example of the dark side of Dubai, one more blow to its image as a spectacular hub for global investment. After recently being forced to borrow $10 billion from the United Arab Emirates’ central bank in Abu Dhabi to help its enterprises pay short-term debts (see “Dubai’s Jolt Back To Reality”), Dubai is bracing for more bad news as its gross domestic product growth plunges from 8% or so in 2008 to an expected 2.5% this year.

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Al Fajer Properties Sheikh plans counter claim

source Zawya (AFP)

DUBAI, May 25, 2009 (AFP) – A Dubai sheikh being sued by an Iranian businessman over 1.9 billion dollars in property investments plans to file a counterclaim demanding compensation for losses, his lawyer said on Monday.

Shahram Abdullah Zadeh, the former chief executive of Dubai-based developer Al-Fajer Properties, filed the initial lawsuit against the firm and  Sheikh Hasher Maktoum bin Jumaa al-Maktoum, in February, claiming he was the sole investor and real owner of the company.

“We have requested time to file a counterclaim to demand compensation from Shahram Zadeh,” lawyer Samir Jaafar told AFP following a fourth hearing in the case on Monday.

Zadeh accused the defence of “running away from responding to the lawsuit” against Sheikh Hasher, a brother-in-law of Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum.

He said Sheikh Hasher was registered as owning Al-Fajer PropertiesAl-Fajer Properties
Al Fajer Properties, because being a foreigner he could not register it under his own name.

He told AFP his defence had requested the appointment of an auditor to trace capital inflows into the company, and said despite claims that he was just an employee he never took a salary or had an employment contract.

“He was supposed to earn a share of profits made under his management. But the company did not make any profits,” Jaafar responded.

Al-Fajer Properties, which since February 2009 has been run by Sheikh Hasher’s son, Sheikh Maktoum, filed two complaints with Dubai police in February and March, accusing Zadeh of embezzling 114 million dirhams (31.06 million dollars).

A representative of Zadeh’s lawyer, Salim al-Shaali, called the two claims false and said a complaint about them has been lodged with the public prosecution.

Zadeh is demanding the recovery of all assets of Al-Fajer PropertiesAl-Fajer Properties
Al Fajer Properties, estimated in the lawsuit at seven billion dirhams (1.9 billion dollars).

The judge adjourned Monday’s hearing to June 17.

Al Fajer Properties – Dynasty Zarooni – Investors Petition – 500 signatures

Al Fajer – Ebony & Ivory – Petition – Ordered to Pay 500 Million

Al Fajer Properties – Dynasty Zarooni – Ebony Ivory case – Dubai Court grants bail to Kabir Mulchandani

source GulfNews May 21, 2009

Dubai: Dubai Public Prosecution has granted bail to a senior executive of a real estate company who is being interrogated over alleged financial irregularities, Gulf News has learnt.

“The Dubai Public Prosecution granted bail to Dynasty Zarooni Real Estate’s Chairman Kabir Mulchandani. yesterday, but the interrogation continues over his alleged fraud and swindling charges,” a senior public prosecutor told Gulf News on Thursday.

Lawyer Eisa Bin Haider confirmed that his client was released on bail on Thursday.

The Case Dynasty Zarooni – Al Fajer Properties
Jumeirah Business Centre 7,8,9 -
Ebony Ivory Towers – Jumeirah Lake Towers

The Public Prosecution has been questioning Kabir Mulchandani., an Indian, and the firm’s president, an Emirati national, Hilal Al Zarooni, over alleged fraudulent charges.

Salem Al Sha’ali, the legal representative of investors who were reportedly swindled, said earlier some of his clients lodged nearly 30 complaints worth millions of dirhams against the suspects.

More about this case Dynasty Zarooni - Al Fajer Properties ( Jumeirah Business Centre – complaining investors) from the past

Al Fajer Properties – Dubai Court Case – Lawyer rubbishes lawsuit against Dubai sheikh

source BusinessMaktoob and  Zawya

Dubai Monday, May 04, 2009

The defence lawyer( Samir Jaafar) for a Dubai Sheikh ( Hasher Maktoum bin Juma Al Matoum, brother in law of H.H. Sheikh Mohammed bin Rashid Al Maktoum) being sued by an Iranian businessman over $1.9 billion property investments  on Monday rejected the lawsuit as baseless.

“All his allegations and the sums that he claims to have pumped into the company are unfounded,” lawyer Samir Jaafar told news agency AFP after the third hearing in the case.

Shahram Abdullah Zadeh has filed the $1.9 billion case against Sheikh Hasher Maktoum bin Jumaa Al-Maktoum and the Dubai-based real estate developer Al-Fajer Properties.

Zadeh insists he was the real owner and sole investor in Al-Fajer, which is registered under the name of Sheikh Hasher, a brother-in-law of Dubai’s ruler, Sheikh Mohammad bin Rashid al-Maktoum.

“There are surprises in the documents that we have presented to the court which will turn the case upside down,” Sheikh Hasher’s lawyer Samir Jaafar said, declining to elaborate.

“We believe that the lawsuit will be rejected after the court goes through the documents that we have presented,” Jaafar added.

Legal sources close to the case, asking not to be named, said the defence has charged that the sums which Zadeh says he invested in the company were in fact the “company’s money that he misused to appear as if it was his own”.

Zadeh, for his part, demands the “recovery of all material assets of Al-Fajer Properties“, according to legal documents obtained by AFP.

These include liquid assets and property, which are estimated at 7 billion dirhams ($1.9 billion), and 9 percent interest since the suit was filed.

His lawyer Salim al-Shaali, who asked the judge for time to study the defence document, said that at the next hearing on May 25 he will ask for an auditor to be appointed to look into the company’s accounts.

“The expert would decide who pumped capital into the company and … whether the defendants paid any money,” he told AFP.

Zadeh charges Sheikh Hasher made no investment in Al-Fajer and that he acquired the licence under the sheikh’s name only because Emirati law does not allow non-Gulf citizens to register real estate firms under their own names.

“For every dirham that Sheikh Hasher can show the court he has invested in Al-Fajer Properties, will give him the company and an extra $10 million bonus,” Shahram Zadeh told AFP after the latest hearing, which he did not attend

Shahram Zadeh said he started up the company from scratch, pumping in cash “as and when the company needed”, and that he only withdrew part of his initial investments after the company expanded from property sales.

“The Sheikhs claim I was an employee,” said Zadeh.

“My question to the court is what employee (can be) the sole investor, work for four years with absolute single authority signing billions of dirhams on cheques, contracts … but work without a salary or an employment contract?”

In addition to Sheikh Hasher, Zadeh is suing his daughter, Sheikha Maryam, a partner in the company, and son Sheikh Maktoum bin Hasher Juma Al Maktoum, who was made president of Al-Fajer after Zadeh was sacked in February.

Zadeh said he was detained by Dubai police after he was sacked and then held without charge for 60 days, and that his passport was confiscated and is still being held.

“I still don’t know why I was arrested,” he said.

The case comes as several executives from high-profile Dubai firms are being held on suspicion of embezzlement and as the once-booming regional business and tourism hub struggles to stave off the impact of the global economic crisis.

Dynasty Zarooni

Al Fajer Properties

GulfNews The first report about this case in the local UAE press

Compensation for breach of contract – How to Avoid Court? Here’s how…

source Rootsland
Over the last 10 years, Dubai has gained international attention due to its extensive growth and progress, particularly in the projects and construction sectors. During that period, deals were often done and contracts entered into quicker than if those deals were being carried out in less dynamic markets.

 It seems that commercial parties relied heavily on their ability to negotiate solutions to any dispute rather than relying too heavily on the terms of their contracts or resorting to litigation or other formal dispute resolution procedures. The same parties may have also taken comfort from the obligation on contracting parties to act in good faith imposed by the UAE’s Civil Transactions Law (the Civil Code).

 Of course the current economic climate is very different. Now financing is more difficult to obtain. This has reduced confidence that negotiation alone will resolve disputes. As companies compete for the limited credit available, contracts are being more extensively negotiated and scrutinized by all parties (including lenders). Parties are no longer relying on the market’s continued growth to push deals through or their obligation to act in good faith. The focus is shifting towards identifying what dispute resolution procedures should apply and what remedies are available if the other contracting party breaches its contractual obligations. One of the remedies receiving greater attention is the damages payable if a contracting party is in breach of a contract. Of course, the protection provided by damages will depend heavily on the offending party’s ability to pay in this market.

Time to review

 Most contracts should have provisions dealing specifically with what will happen when a breach of contract occurs. Often an overarching termination provision exists, in addition to provisions relating to curing defaults, damages and events such as force majeure or change in law, and these all play a role in determining the options available to contracting parties in a variety of circumstances.

 The current environment highlights the need for solid contractual provisions and should be taken as an opportunity for all players in the project and construction sector to regroup and focus on contracts that they have entered into and those that they are about to enter into. Everyone involved in project and construction deals should be asking themselves what they are entitled to if the contract is breached by the other party.

 

Consideration should be given to whether contracts yet to be entered into should specifically address these issues. But what if the decision is taken not to do so or an existing contract does not address damages? The Civil Code provides an entitlement to compensation for breach of contract even where the contract itself does not provide for such compensation.

Damages under UAE Law

The purpose of damages is to compensate a party for any loss suffered as a result of default by counterparty to a contract. If damages for a breach of contract are not fixed under a provision of the law or in the contract itself, the Civil Code gives the court discretion to assess compensation “in an amount equivalent to the damage in fact suffered at the time of the occurrence”. The focus here is on the actual loss suffered by a party and gives the court a broad discretion to determine an appropriate award of damages on the basis of the facts and evidence before it. However, how is the ultimate determination made and what limits are imposed on the amount of compensation that may be awarded?

Other provisions of the Civil Code that do not specifically relate to contractual damages may give some guidance as to how compensation may be assessed by a court: “In all cases the compensation shall be assessed on the basis of the amount of harm suffered by the victim, together with loss of profit, provided that it is the natural result of the harmful act”.

 The key element of this provision is that a party suffering loss will be compensated for that loss, including any loss of profit, which flows naturally from the default. The explanatory memorandum to the Civil Code says damages are payable in respect of the actual loss suffered as well as loss of expectation (that is loss of an opportunity to obtain a benefit under a contract or to avoid a loss).

 Each type of damages claimed will need to be substantiated and shown to result from the breach. Consequential (or indirect) losses will generally only be recoverable where it can be shown that the party causing the loss did so with a malicious intent. While it is important to keep in mind the award of damages is always at the court’s discretion, a specific damages regime in a contract can have the benefit of providing greater certainty as to a party’s right to contractual damages and can assist parties negotiate ways of avoiding recourse to court in this challenging environment.

Shahram Zadeh against Al Fajer Properties Maktoum Hasher Juma Al Maktoum – Comment of the Month

April 10, 2009 comment from Salahudin

I am a lawyer & familiar with such disputes known as financial cases.

Its actually very simple, the judge has to appoint an Accounts Expert (Court Appointed Auditor), to examine the accounts of Al Fajer Properties, and it will be very clear if Sheikh Hasher Maktoum has invested anything. I believe the lawyer of Sheikh Hasher Maktoum, Sheikh maktoum Hasher & Al fajer will do their best to close the case before the court appoints an Expert to avoid the embaressement.

If Sheikh Maktoum Hasher Al Maktoum succeeds in closing the case without the court Auditor examining Al fajer accounts, then it will be a big loss to dubai justice system because it shows they are afraid the truth will come out!!!

Sheikh Hasher Maktoum should be smart and try to settle the case with Dr.Zadeh Shahram before it becomes a nationalembaressement for Dubai ruling family.

__________________________________________________________

April 10, 2009 comment from Tom

If the sheikhs win this case, it will be the end of foreign investor’s trust in dubai. This will be a test for dubai, is it really a safe & secure investment hub as they portray it???? Or the laws are not applicable to the ruling family?

__________________________________________________________

April 10, 2009 comment from Al Fajer Victim

This is going to be a test case for dubai. This will reveal the depth of the corruption & behind the scenes torture, illegal arrest, fabrication of cases, all to protect the few sheikhs like sheikh hasher maktoum & his well known crook son who just thursday threatened me in front of my wife that if I complain about al fajer “it will have very bad consequences, I don’t want you to disapear” Shame on you sheikh maktoum hasher, you are nothing but a thief with everyone.

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

DUBAI, Apr 08, 2009 (AFP) –

A Dubai court postponed on Wednesday a 1.9 billion dollar lawsuit by Shahram Abdulla Zadeh ( Iranian) gainst members of the ruling family over an allegedly lost property investment to give the defence time to prepare.

Lawyer Hussein al-Jaziri asked for a “long period of time to respond to the case,” but the judge set May 4 as the date for the next hearing.

No one represented the defence during the first hearing, on March 11.

Iranian Shahram Abdullah Zadeh claims he invested the 1.9 billion dollars as the sole capital of a company, Al-Fajer Properties

Under United Arab Emirates law, only UAE and Gulf citizens may register property firms, and ruling family member Sheikh Hasher Maktoum bin Jumaa al-Maktoum is listed as the owner.

“I was the sole investor. Al-Fajer Propertiesis my company. Sheikh Hasher’s only contribution has been the real estate licence as a sponsor,” he said in March.

Zadeh, who was sacked as company president last year, is demanding the “recovery of all material assets of Al-Fajer Properties,” according to legal documents obtained by AFP.

These include liquid assets and property, which are estimated at seven billion dirhams (1.9 billion dollars), and nine percent interest since the suit was filed.

“We have enough documents to prove he was the sole investor,” Zadeh’s lawyer Salem al-Shaali told AFP after the first hearing.

Sheikh Hasher is a brother-in-law of Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum. Also named in the suit are his daughter, Sheikha Maryam, a partner in the company, and son Sheikh Maktoum, who was made president of Al-Fajer after Zadeh was sacked.

Their names were only made public on Wednesday.

Zadeh said he was detained by Dubai police at the time he was dismissed last year and held without charge for 60 days, and that his passport was confiscated and is still being held without explanation.

The case comes as several executives from high-profile Dubai firms are held on suspicion of embezzlement and as the once-booming regional business and tourism hub struggles to stave off the impact of the global economic slowdown.

ak/al

More about the case Al Fajer Properties
which must be seen also in relation to the pending case Dynasty Zarooni

Dubai law pins down property defaulters – If the developer has not been able to start construction “without any negligence or omission on the developer’s part”, the developer may keep 30 per cent of the money paid by the buyer to that point

source The National

The Dubai Land Department is planning to issue an amended property law that will determine refunds for investors who default on their payments based on construction progress of the project, according to lawyers briefed on the matter.

The move will bring clarity to the property market in Dubai, where a credit squeeze and the effects of the global financial crisis have led to defaults by home buyers. But some investors have criticised the amendment for being too heavily in favour of developers.

Lawyers say the amendment to article 11 of Dubai Law 13 of 2008 will stipulate that in cases where a buyer defaults and the developer has constructed at least 80 per cent of the project, the buyer loses all money paid to that point. The home can then be auctioned to compensate the developer for the rest of the cost.

If a developer has completed at least 60 per cent of the project and the buyer defaults, the developer is entitled to keep 40 per cent of the purchase price.

But if a developer has completed less than 60 per cent of the project, it can only keep 25 per cent of the purchase price.

If the developer has not been able to start construction “without any negligence or omission on the developer’s part”, the developer may keep 30 per cent of the money paid by the buyer to that point.

Developers would have to refund any money due to the purchaser within one year, or within 60 days of the resale of the home.

A legal briefing from the law firm Clyde & Co said the amendment “provides much anticipated clarification regarding the procedures required to be followed by developers in respect of defaulting purchasers, as well as the rights of developers to retain purchaser monies upon cancellation”.

The original law specified that if a buyer defaulted on payments to the developer, the buyer would be able to recover 70 per cent of any money they had turned over to that point.

But when the property market started to face difficulties last autumn, the Real Estate Regulatory Agency (RERA) issued an interpretation of the law that said the developer could retain 30 per cent of the total price of the property. In some cases, this meant the developer could keep all payments a buyer had made to them.

Officials from RERA later admitted that the interpretation was an emergency measure intended to prevent a wave of defaults that would cripple the property sector.

The new amendment, called Dubai Law No. 9 of 2009, will not only provide more specific terms but be retroactive for all property contracts signed in Dubai. If a contract between a buyer and a developer has a contrary clause, it will be rendered void, according to the Clyde & Co briefing.

Emad Eldin Farouq, a senior legal counsel with the Dubai Land Department, told a panel last week that the amendment had been signed into law and would soon be published in the official gazette of Dubai, according to an article in Xpress, which first reported the story. The amendment would “maintain the confidence of investors and safeguard the real estate of Dubai”, Mr Farouq said, according to Xpress.

But some investors said the amendment did not go far enough in protecting investors from developers who had delayed construction indefinitely.

“It is taking away our rights from the way the law was originally written,” said Nigel Knight, a homebuyer and member of the Dubai Property Investors Group.

The investors’ group handed the Land Department a petition last week asking for a meeting to discuss concerns it has with the amendment.

A Dubai Land Department spokesman could not be reached yesterday.

Diary of a distressed property investor, Part IV – - RERA and other Departments you need to survive ? your property nightmare in Dubai

source Kippreport

We know that property investors are struggling, and for the most part, we know why. But what most of us don’t know are everyday struggles they’re going through. One investor agreed to write a journal of her experiences for Kipp. We asked her to be ruthless: she obliged.

Click here to read Part I

Click here to read Part II

Click here to read Part III

Ah Rera. I loved the new regulations and announcements you made over the past eight months, and the threats you were making to incompliant developers raised my hopes that you’d come through for me.

I was wrong. Mind you, I know you have good intentions. All the announcements you’ve made recently are very nice, but it’s too bad that no one in your building has heard of them.

After months of waiting for my good-for-nothing developer to come through with either an announcement that they’ve broken ground or that they’ve cancelled the project, I decided to go to Rera to understand my rights, and to know what I would need to do to cancel my contract and get my money back.

Before I went, I called the authority a number of times to know what documents I needed to have with me to argue my case. Aside from the contract and the receipts, Rera asked me to prepare a letter explaining everything that had happened up until that point, and to outline – in detail – why I wanted to cancel my contract. I wrote it, printed it and filed it along with the hundreds of papers I had gathered about my developer.

I was ready!

Unfortunately, however, Rera wasn’t. I was told to get a number and wait for my turn at counter two. There was no one attending to counter two. I waited. I sat there with a file on my lap determined not to lose my temper, and waited for over an hour and fifteen minutes. No one showed up. I asked around if someone actually works at counter two, and I was told to be patient. So I waited some more.

And then, the guy sitting at counter one asked me what my issue was. I told him, and he said: ‘You shouldn’t be waiting here. You should go to the fourth floor, room 413, and speak to a legal consultant.’

So I went to room 413, where I found a waiting room with three people: two men and one woman, each sitting behind a desk chatting. I sat down and waited. Finally, one of the consultants turned to me and asked me what the problem was. I explained the whole thing. He said I should take my case to the Dubai Courts, and to speak to someone in the real estate section. I asked him why I had been told to come to Rera. He said he didn’t know.

Neither did I.

So I went to the Dubai Courts. I asked where the real estate department is, and I was taken by a helper to the department, and that’s when it hit me: no wonder developers feel they can do what they want. The department was made up of four men, two of which were throwing paper balls at each other, the third guy, the receptionist, was playing a game on his phone, and fourth man, the only one who was helping, was neither in mood nor capable of speaking English.

I spoke to him with my broken Arabic, explaining the mess I’m in and what I need from my developer (my money, my dignity, plus 9 percent interest). He was helpful, and once we got talking, he proved to be helpful. But the process he outlined hurt my brain.

He told me to draft a letter stating all the laws my developer has broken, and have it translated in Arabic. Then I should go to the public notary at the Dubai Court and have the letter authenticated. The court would then send the letter to the developer in the hopes that the mavericks would run to their escrow account and withdraw my cash.

If that doesn’t work, he said, go to court.

Court! I have never gone to court before. I didn’t even know how much hiring a lawyer costs. So I called a number of British and Emirati law firms to get an idea.

Apparently, here’s how it works: if I seek legal representation from a foreign lawyer, I’d have to pay him or her up to AED1,800 an hour for the ground work, but I’d also have to pay court fees and hire a local lawyer – who’d get up to 15 percent of what the court awards me – if my case goes to court. So, my foreign lawyer would act as a consultant to my local lawyer; in short, I’d have a team of lawyers, and I could kiss my present and future savings goodbye.

Or, I can go straight to a local lawyer and pay him or her directly. But then I wouldn’t have peace of mind.

It’s a tough choice, especially given that what little money I have is tied in a phantom property.

I was ready to give the translator and typist the letter that I drafted for Rera, but then I realized that I still have no idea what my rights are. How am I supposed to know if my developer has broken property laws if I don’t know what the laws are? And what am I supposed to understand of the property laws if most of the people I encountered at Rera and the court each told me a different story? The only laws I can reiterate are those that have appeared in the press, such as the much-contested and highly controversial Law 13. And to be fair, I don’t even know what it actually says, I just like the fact that investors have won cases because their lawyer’s cited it in court; last week an investor won his money back because his developer failed to register the transaction 60 days after it took place…thank you Law 13.

Incidentally, does anyone know how to find out whether your property or transaction has been registered with the Land Department?

In any case, I decided against having my letter translated. I didn’t want my developer to read a ‘threatening’ letter that had gaps. I wanted them read something that’ll knock them unconscious.

All I need now are the laws. Does anyone know where I can find them…in English?

The Case Dynasty Zarooni – Dubai Prosecutors Rejected Bail of Kabir Mulchandani

source WallStreetJournal 7starsdubai

Dubai prosecutors Sunday rejected a bail application from Dynasty Zarooni’s Chairman Kabir Mulchandani who is being held by police on 450 million U.A.E. dirhams ($123 million) fraud allegations, according to documents seen by Zawya Dow Jones.

Mulchandani, who couldn’t be contacted by Zawya Dow Jones, has previously denied any wrongdoing.

Ayman Merdas, a lawyer for Global Advocates & Legal Consultants representing Mulchandani declined to comment when called by Zawya Dow Jones Monday.

Mulchandani applied for bail on March 11 but was refused March 22, according to the Public Prosecution document seen by Zawya Dow Jones.

The Dubai public prosecutor handling the Dynasty Zarooni case couldn’t be reached Tuesday.

-By Stefania Bianchi, Dow Jones Newswires, +9714 364 4967 Stefania Bianchi@dowjones.com

more about this case from Archive 7StarsDubai

Al Fajer Properties Dubai Court Case : Anyone can sue anyone, whether they are from the ruling family or not,’ Tamimi said.

source REUTERS March 11, 2009

Dubai court began a hearing against three members of the emirate’s ruling family after businessman sought $1.9 billion in compensation for the alleged seizure of his firm.

The claimant, Shahram Abdullah Zadeh, a Dubai-based Iranian businessman and property owner, filed the civil suit, alleging that his business had been taken over by Sheikh Hasher Maktoum Al Maktoum, according to case documents obtained by Reuters.

The court handling the case against Al Fajer Real Estate and members of the Dubai ruling family began the trial but adjourned to April 8 after defendants did not attend.

‘We attended the session but the defendant did not attend and the session was adjourned to April 8,’ Salem Al Shaali, Zadeh’s lawyer from Al Shaali & Co, told Reuters by telephone.

Sheikh Hasher had sponsored Zadeh in line with the United Arab Emirates law which requires foreigners to have a UAE national as a partner or sponsor to carry out business activities, the documents showed.

Sheikh Hasher declined to comment by telephone or respond through email. His son and daughter could not be reached by telephone.

The suit is likely to draw wide attention as a test case for Dubai, home to many Western banks and a regional business hub.

Dubai has fashioned itself as a tourist destination and business-friendly centre for many international firms, and captured global attention by building palm-shaped islands in the sea and the world’s tallest building.

Last year, as Dubai’s booming real estate market reached dizzying heights, the emirate launched a high-profile anti-corruption campaign that saw the arrest of several well-known business figures.

But the prolonged detention of several Dubai property executives as part of the probe has been criticised by groups such as Amnesty International.

Zadeh accuses Al Fajer company, Sheikh Hasher, his son and his daughter, of involvement in the case, according to case documents. The case names the daughter, Sheikha Meryam, as a partner of the firm, and the son, Sheikh Maktoum, as a manager.

Zadeh alleged that Sheikh Hasher and Sheikha Meryam have ’seized all the company has from cash monies, movables, properties, and others’ in March last year, according to case documentation.

The seizure of the company occurred while Zadeh was held in custody of Dubai police, according to Zadeh.

‘I was arrested for 60 days on February 21, 2008 and until this day I don’t know what law I have broken, and I have not been charged with anything. I still don’t know why they have kept my passport for over one year,’ Zadeh told Reuters.

The chief of Dubai police, major general Dahi Khalfan Tamim, confirmed the arrest to Reuters by telephone and said that Zadeh was held on charges of bribery on order of the public prosecutor, charges that Zadeh denies. The public prosecutor could not be reached for comment.

Abdullah Zadeh’s lawyer, Salem Al Shaali, said he expected the case to be decided on its merits.

‘We haven’t yet seen anyone, whether from the ruling family or other, escaping the rule of law,’ he told Reuters.

Essam Al Tamimi, lawyer at Al Tamimi & Co. told Reuters by telephone that the judicial system in the UAE ‘is very independent from the government and the ruling family’.

‘Anyone can sue anyone, whether they are from the ruling family or not,’ Tamimi said.

Archive Al Fajer

Al Fajer Properties Case opened on Wednesday – lawsuit also targets Sheikh Hasher Maktoum`s daughter as a partner of the firm and the son, Sheikh Maktoum Hasher Maktoum Juma Maktoum

DUBAI, Mar 11, 2009 source Zawya

An Iranian businessman ( Shahram Abdulla Zadeh )  is suing members of Dubai’s ruling family for close to two billion dollars over real estate investments, in a case which opened on Wednesday.

Shahram Abdullah Zadeh, former CEO of Al-Fajer Properties
who was fired in 2008, has filed the lawsuit against the firm and its owner Sheikh Hasher Maktoum bin Jumaa al-Maktoum, a brother-in-law of the emirate’s ruler, Sheikh Mohammed bin Rashid al-Maktoum.

The lawsuit also targets Sheikh Hasher’s daughter as a partner of the firm and a son, Sheikh Maktoum, who has since been appointed president of Al-Fajer, according to legal documents obtained by AFP.

The case demands the “recovery of all material assets of Al-Fajer Properties
which gave no immediate reaction to the opening of the case.

Zadeh insists he was the real owner of the company and the only investor.

He had used Sheikh Hasher’s name to obtain the firm’s licence, as foreigners are not allowed to register real estate companies under their own name in the United Arab Emirates.

“I was the sole investor. Al-Fajer Properties
is my company. Sheikh Hasher’s only contribution has been the real estate licence as a sponsor,” he told AFP.

Zadeh is demanding seven billion dirhams (1.9 billion dollars), which “includes the plaintiff’s investments and the return on them,” his lawyer Salem al-Shaali said.

“We have enough documents to prove he was the sole investor,” he added.

Only a representative of the plaintiff’s lawyer was in the Dubai court of first instance for the hearing, which lasted a few minutes. The court’s list named Al-Fajer as the defendant, with no mention of the Maktoums.

The judge referred to them by numbers before the hearing was adjourned to April 8.

Zadeh has said he was detained by Dubai police without charge for 60 days last year, at the same time as he was dismissed, and that his passport was confiscated for a year, without an explanation.

The civil case comes as several executives from high-profile Dubai firms are held on suspicion of embezzlement and as the once booming regional business and tourism hub struggles to stave off the impact of the global economic slowdown.

ak/hc

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

Al Fajer Properties Scandal – Comment of the day

Comment of the day – to 7starsdubai by Sulaiman

May be Altik you have been coming here for 30 years and have seen the locals stealing from the foreigners. But that is wrong to say all locals are the same. The big fuss is that its the first time a sheikh from the al maktoum family stealing a company from its true owner, threatening the staff and then going ahead to partner with a crook like kabir mulchandani in a mass misrepresentation campaign showing construction photos that don’t exist and cheating investors thanks to the arrogant support of sheikh maktoum hasher al maktoum the nephew of the dubai ruler.

Dubai is not a bad place and has wonderful people, its just that the law is not enforced equally and that has been more evident recently. Dubai can not afford to continue to allow such injustice towards investors while a junior member of the royal family is pocketing the money.

Sheikh mohammed himself is a man of law and order, its the clan around him who are corrupted and take advantage of the situation. That happens in many countries by the way, but normally the courts are supposed to be independent, in here unfortunately, dubai police, public prosecution, courts are all biased towards prominent locals who get away from such criminal acts as al fajer properties and dynasty zarooni.

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Maktoum Hasher Maktoum Al Maktoum Interview – The easy money maker – From the Archive

Sheikh Maktoum Hasher Maktoum bin Juma al Maktoum loves to win – on the racing track and in business, writes Andrew Cave

original published telegraph uk

Sheikh Maktoum Hasher Maktoum Al Maktoum is sitting surrounded by bodyguards trying to explain how easy it has been to make money in booming Dubai.

“If you invested 10pc down, say $300,000, in new-build properties and waited for them to be built and rented out, over five years the rent increased so much that if you sold them you could get profits of $10m,” he says at his family-owned Jumeirah Carlton Hotel in Knightsbridge.

“

Dubai has had the highest yield return for offices anywhere in the world, and it is still very high-yielding.”

Similar returns have apparently been available all over the tiny emirate state, according to Maktoum, a nephew of Dubai’s ruler, Sheikh Mohammed.

Large villas on The Palms, the controversial offshore development popular with Premiership footballers, could be bought for £630,000 six years ago, he says. They now fetch £2.5m.

“Anyone who bought there would have made a killing,” says Maktoum, who clearly did so himself. “I bought a couple,” he confirms, adding that his investment success helped increase his company’s value tenfold in four years.”

Maktoum, 30, who is dyslexic, seems to have found that grand prix racing cars are pretty profitable too, even if they did wreak collateral damage on his slender frame.

“I have broken every bone in my body except my spinal column motor racing, skiing, mountain biking: anything that involved danger,” he says.

At the age of 26, Maktoum set up A1 Grand Prix as a winter “world cup of motorsport” to rival Formula One, launching the venture in 2004 and selling out last year after a successful first year of competition. Hedge fund group RAB Capital bought 80pc of the venture for a reported £100m.

So how much money did he make?

Maktoum starts to look nervous. He’s apparently not allowed to say, as part of the contractual arrangements of the sale, but suggestions by a trade newspaper that he pocketed £5m profit look to be a bit light.

“I cannot say I did not make £5m,” he says eventually, “but had someone offered me that, I would not have taken it.”

“I achieved all my financial goals,” says Maktoum. “I had a very, very nice return on my investment. It was a project for me to prove myself; something for me to get my teeth into. And it has been a huge success.

“I sold it because I achieved my financial targets. It took me three years. It was a very challenging project but it has proved what I can do.

“A1 was a big risk. I planned the whole project myself.” Maktoum hadn’t lain idle before that. He helped his father run Al Fajer Group, one of the largest office contractors and developers in Dubai and was one of the founding investors in the first Virgin Megastore in the United Arab Emirates.

He also became a big personal investor in property. Now he plans to go into consumer electronics through his holding company DIHC.

So is he setting himself up as Dubai’s answer to Sir Alan Sugar?

Maktoum shrugs off the comparison but is hugely excited about the mass market product he is patenting. He thinks it can become very, very big. But does he really need to make even more money? He takes the question seriously. “When you achieve most of your dreams by the age of 30, you can become very introspective,” he says.

“The most important things in life are friends and family. I think you have to achieve a blend. You have to try to give something back. I don’t want to be the richest man in the human race. That’s not my game.”

Instead, he says he has been approached to help his state government in a fund management project and also has opportunities to get involved with hedge funds and to go on the board of a US private equity group.

Maktoum has the well-mannered poise of many of his oil-rich contemporaries. Still single, he is bashful about his private life and the delicate question of how much he is worth. He is predictably supportive of Dubai’s increasing involvement in western capital markets, such as Dubai Ports World’s £3.3bn takeover of Britain’s ports and ferries group P&O in 2005, and Dubai International Capital’s purchase of Tussauds Group.

He also applauds Sheikh Mohammed’s huge development of Dubai’s tourism industry to make up for the expected loss of oil revenues.

“It’s a very efficient way to move,” he says. “If you are the government, you want to make the economy efficient and generate less red tape.

“Sheikh Mohammed has seen the challenges ahead and is responding to them. He is a real visionary.

“There is still a lot of value being created in Dubai. Last year we had one of the biggest stock market crash anywhere in the world, with stock prices going down by 60pc to 70pc, but it is still a pretty rewarding place, which has had some of the best stock market growth anywhere in the world.

“Fifty years ago, Dubai was a little desert oasis. Dubai now is like the swinging 1920s in America. We have had a big crash. It is not to say that we will not have a big crash again, but there has been a lot of success as well.”

It’s easy to be sanguine about a financial crisis when you took sufficient precautions beforehand. Maktoum’s claim that he has a “gut instinct” for finance and markets seems to have been borne out by his actions this time.

“A month before the crash, I thought something was happening and sold a lot of my investments,” he says.

“Part of my success is that I am not greedy… You want to leave a party while it is still going on. You don’t want to leave at 3am. I want to leave something when it feels good.”

http://www.telegraph.co.uk/finance/2813490/Business-profile-In-the-financial-fast-lane.html

The Network of Hasher Al Maktoum bin Juma AL Maktoum – Owner Al Fajer Group – or why is Al Fajer Properties an untouchable developer in Dubai

Hasher Maktoum bin Juma Al Maktoum owner of Al Fajer Group in Dubai is:

Board Member of the Dubai Executive Council whos members are:

http://www.arabdecision.org/show_func_3_12_5_0_5_9305.htm

http://www.arabdecision.org/list_cvs_3_12_5_0_5_10165.htm

Dubai Executive Council

• Chairman of Dubai Executive Council    (Mohammad Bin Rashed Al Maktoum)
• Deputy Chairman of Dubai Executive Council    (Ahmad Bin Said Al Maktoum)
• Board Member of Dubai Executive Council    (14  Cv′s available)  ( his name can be ind here)
• Secretary General of Dubai Executive Council    (Mohammad Abdallah Al Qarqawi)

• His Excellency Qadhi Said AL MUROOSHID
• His Excellency Mohammad Bin Ali AL ABBAR
• H.E Mr Qassim Sultan AL BANNA
• Mr. Khalifa Mohammad AL KHALAFI
• Sheikh Hashar AL MAKTOOM
• His Excellency Minister Mohammad Abdallah AL QARQAWI
• Mr. Hamad Sheikh Ahmad Hamad AL SHIBANI
• His Excellency Mattar Mohammad Ahmad AL TAYER
• Mr. Sultan Ahmad BIN SULAYEM
• Khalid Ahmad BIN SULAYYEM
• Ibrahim Mohammad BOU MALHA
• Khalfan Ahmad HREIB
• His Excellency Dr. Khalifa Mohammad Ahmad SULEIMAN
• H.E General Dhahi Khalfan TAMIM

Hasher Maktoum bin Juma Al Maktoum owner of Al Fajer Group in Dubai is:

Director of  Dubai Information Department

http://www.arabdecision.org/show_func_3_12_5_0_5_7454.htm#detail

Dubai Information Department    (Show Institution Details)

• Director of Dubai Information Department    (Hashar  Al Maktoom)
• Dubai Media Corporation
  • Chairman of Dubai Media Corporation    (Mohammad Bin Rashed Al Maktoum)
  • Board Member of Dubai Media Corporation    (9  Cv′s available)
  • Al Bayan Press, Printing and Publishing Establishment
    • Chairman of Al Bayan Press, Printing and Publishing Establishment    (Khalid Mohammad Ahmad)
    • Member of Al Bayan Press, Printing and Publishing Establishment    (4  Cv′s available)
    • Director General of Al Bayan Press, Printing and Publishing Establishment    (Sami  Al Qamzi)
    • Al Bayan Newspaper
      • Responsible Editor in Chief, Al Bayan Newspaper    (Hashar  Al Maktoom)
      • Executive Editor in Chief, Al Bayan Newspaper    (Khalid Mohammad Ahmad)
      • Director of Information Technology in Al Bayan Newspaper    (Faisal  Bin Haidar)
    • Al Usra Al Asriya Magazine
      • Executive Editor-in-Chief,Al Usra Al Asriya Magazine    (Sami  Al Riyami)
    • Al Emarat Al Yaum Magazine
  • Dubai Radio and Television
    • Chief Executive Officer of Dubai Radio and Television    (Hussein Ali Loutah)
    • Councelor in Dubai Radio and Television    (Ali  Jaber)
    • Director of Public Relations    (Adel Omar Mohammad)
    • General Manager of Dubai Radio and Television    (Ahmad Said Al Qaoud)
    • Councelor in Programs Producing and Buying Affairs    
    • EDTV
      • General Manager of EDTV    (Ali  Khalifah)
      • Deputy General Manager of EDTV    (Maha  Gargash)
    • One TV
      • General Manager of One TV    (Rashed  Al Mroushid)
      • Deputy Manager of One TV    (Najla′  Al Awadi)
    • Sama Dubai Television
      • General Manager of Sama Dubai Television    (Abdel Latif  Al Qarqawi)
      • Deputy Manager of Sama Dubai Television    (Ahmad  Al Mansouri)
    • Dubai Sports Channel
      • General Manager of Dubai Sports Channel    (Ahmad Abdallah Al Sheikh)
      • Deputy Manager of Dubai Sports Channel    (Rashed  Amiri)
    • Dubai 33
    • Dubai Business Channel
    • Dubai AM
    • Dubai Arabic FM
    • Dubai English FM
    • Dubai Production Center

 

 

and the reponsible editor chief of AL Bayan Newspaper – Government of Dubai

and last but nit least

the chairman of Tennis Emirates

http://www.tennisemirates.ae/pages/Home_page.php

RERA Dubai – Dubai Property Investor Group Petition – Surprise

http://www.thenational.ae/article/20090222/BUSINESS/942576581/1051/rss

DUBAI
The Real Estate Regulatory Authority (RERA) and a group of private property investors will combine to create an investor’s advisory panel that will provide feedback to the Government as it tries to resolve disputes.

Marwan bin Ghalita, the chief executive of RERA, agreed to the plan during a meeting with the Dubai Property Investors Group, a coalition of more than 350 investors that was formed after sales began to slow last year. Group members say they are concerned about the safety of their investments and ability to get their money back if a developer cancels a project or refuses to start construction.

“We want to protect the real estate investors,” Mr Ghalita said. “We are studying project by project… Once we have enough information about a project, we will intervene as a regulator.”

Ludmila Yamalova, a lawyer with MAC Davidson & Associates and a member of the investors group, said she was encouraged by the meeting with Mr Ghalita.

“Until today’s meeting, we felt that the Government was in denial,” she said. “But he was very welcoming to investors. He said we all made mistakes, investors and developers. Now we need to solve the problems and move forward.”

Dynasty Zarooni Fraud Dubai – Some statements from Investors

 http://www.dnaindia.com/report.asp?newsid=1221052

Kabir Mulchandani, who was arrested in Dubai in connection with an alleged realty scam, is also alleged to have floated another scheme of three 40-floor buildings( Jumeirah Business Centre 7, 8,9 )  in Jumeirah opposite the Dubai Marina — the most posh locality of the Emirates.

Full page advertisements were run in papers, making him the largest advertiser of the Emirates during the period, said Mohammed Marzooq from Kerala. “He showed us the picture of a building with a podium, three-storeyed car parking and a complete floor for a departmental store. It was half complete and the rest of the 35 floors were to be built in the next one year”, Marzooq said.

Atul Patel, a UK-born Indian , a multinational from US, told DNA over the phone that he had “booked a 10,000 sq ft flat in the 35-floor building called Ebony Ivory at Jumeirah for 3.5 million dirhams.”

“I paid the entire amount because I was dealing with the company for some other work. During a vacation in Europe recently, I happened to meet someone who was unhappy with the project. On my return, I went to the site and found that I too had been duped royally,” Atul said.

When cornered by 12 investors, Marzooq said Mulchandani flew them to Nice (in France) in his jet and treated them to a cruise vacation. He showed them properties in Nice. Claiming them to be his own, he asked them to invest there for speedy returns.

“He convinced all of us to sign a cheque, promising that it wouldn’t be encashed till their return to Dubai. Upon arriving at Dubai we found that the cheque had already been encashed,” Marzooq said.

A complainant told DNA that Mulchandani threatened him with deportation due to his clout in the UAE.

CEO RERA Dubai: “Dubai is like a movie star, and just like a movie star everyone is looking at us, adding more pressure.”

KippReport

http://www.kippreport.com/kipp/2009/02/12/is-dubai-acting-smart/?bnr=1

“Dubai is like a movie star, and just like a movie star everyone is looking at us, adding more pressure.”

That’s what Marwan Bin Ghalita, the CEO of Dubai’s Real Estate Regulatory Agency (Rera) told Emirates Business, explaining that the city’s success is leading to incorrect media rumors about cancellations of property projects in the city.

A recent report by HSBC said that $75 billion worth of projects are being cancelled in the UAE, but a Morgan Stanley report put the number at $263 billion.

Rera’s CEO, however, says the authority is still “studying the market at present.” He rubbished a list that is doing the rounds, telling Al Bayan that “The list was not accurate and not true simply because it was not issued by Rera, Department of Lands or any official relevant body. Those behind the list are only seeking to raise fears and panic so as to make narrow gains.”

“We understand the feelings of worry resulted from the impact of the global financial crisis but we are against the unjustifiable panic, exaggeration and hitting under the belt by some for the sake of making illegitimate ends,” he added.

While the list is possibly inaccurate (Kipp did try to ascertain some projects earlier, but was unable to confirm the status of several projects), it has been more than three months since the effect of the economic slowdown began to be felt in Dubai’s real estate sector.  Hundreds of people have been laid off from their jobs in the property sector, with developers blaming it on postponement or cancellation of projects; and financial houses like HSBC and Morgan Stanley have already come out with their lists.

Rera will be releasing “accurate data next week that would show the true picture of Dubai’s real estate market.”

“We didn’t announce any cancellation of projects especially those sold to investors, and this is a stabilizing factor which can contribute to further boosting confidence in the vibrant real estate market in Dubai,” Ghalita told Al Bayan. “We want to send a clear message that we have confidence in the city,” he told Emirates Business.

Well, Kipp isn’t sure how confident investors are of the movie star’s talents.

 

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.

RERA Hits Back – Dubai RERA CEO said: “The investor should feel happy when he sees the authorities hit with an iron fist all those who put interests of the city and investors at risk.

http://www.7days.ae/storydetails.php?id=73857&title=RERA%20hits%20back

Dubai Real Estate Regulatory Authority (RERA) has denied receiving a letter signed by 300 real estate investors, developers and advocates expressing concerns over the fate of their investment in the emirate.

In their letter, they demanded RERA act before prices in the real estate market crash, according to a report published by Zawya Dow Jones news web site, which also blamed the RERA CEO of declining to comment on the issue.

Marwan bin Ghalita, CEO of Dubai Real Estate Regulatory Authority (RERA), branded the news as absolutely untrue. “Personally, I did neither receive a letter of this kind nor any call from the said news web site or other,” he affirmed in a statement.

He added that RERA could not have made any regulatory achievements in the real estate market if it had not been keeping regular contacts with developers, brokers and investors alike.

It was reported that the petitioners demanded RERA to take measures to bring the situation under control especially following recent financial investigations into several property companies, a move which raised questions about RERA standards.

Commenting on this, the RERA CEO said: “The investor should feel happy when he sees the authorities hit with an iron fist all those who put interests of the city and investors at risk. It’s illogical that such a measure could feed concerns… on the contrary it should send a message of confidence and assurance across the board.”

He explained that RERA had, since its creation about one year ago, been taking tremendous efforts to regulate the real estate sector by issuing flexible regulations at bar with the highest possible level of transparency.

Answering a question about a list being circulated on the internet about tens of cancelled or delayed developments, the RERA CEO affirmed: “The list was not accurate and not true simply because it was not issued by RERA, Department of Lands or any official relevant body. Those behind the list are only seeking to raise fears and panic so as to make narrow gains.”

Affected Dubai Property Investors started Petition to RERA Dubai in January 2009

to get more information please click on this link:

http://groups.google.com/group/dubai-property-investors/browse_thread/thread/8efbb7983955fc97?hl=en

 

the link to the letter, hand delivered Petition, to RERA Dubai Januar 2009, against Real Estate Practices that harm Dubai

http://dubai-property-investors.googlegroups.com/web/The+Petition144.pdf?hl=en&gda=EtP61kUAAABCDKK3M95qOHhW6MrAvHpOv6-qWixPv2gLwjFoEVch5D-z-44yj33cbUGq43XpXhMcn8WIbWh5zqeDKtDBmq67Gu1iLHeqhw4ZZRj3RjJ_-A

or

http://groups.google.com/group/dubai-property-investors/files?hl=en

An Example of : The differenence between PR and Reality – 5 Towers Jumeirah Business Centres will be delivered in September 2009 ?????

Jumeirah Business Centre 1 , Developer Al Fajer Properties  was launched Dezember 2005. Sold within a few weeks after the launch, said by the company. The completion of this Office Tower was announced first for end 2007 , after this end 2008 and now end….. of year ……… ???

The History between PR and Reality show this pictures:

Happy going ? …. 2006  

 

 

 

 

 

 

 

Construction Status of Jumeirah Business Centre 1,launched in December 2005,  Plot G2, Jumeirah Lake Towers, Al Fajer Properties 

 

 

Jumeirah Business Centre  1 by Al Fajer Properties Construction Status in May 2007

 

 

 

Panorama of February 2009 shows that the Towers around Jumeirah Business  Centre 1( those Towers around also launched in 2005) are still ready.

The completion of the Jumeirah Business Centre 1, the first ever launched Tower of Al Fajer Properties is…………. ??????????

Latest interview , February 2009,with the project Manager , construction company, for Al Fajer Properties:

o3. Feb. 2009 7days.ae  

 http://www.7days.ae/storydetails.php?id=73328%20%20%20%20&page=local%20news&title=Riding%20out

………“[The atmosphere in construction] is a bit depressed, but I think Dubai and the UAE in general is much better off in general than the rest of the world,” said Andre van Schalkwyk of Al Ahmadiah Contracting and Trading (AAC), who is site manager of Al Fajer Properties’ Jumeirah Business Centre.

He added however, that his workers are more confident of their position, as he believes AAC will outlive the downturn.

“The workers are not anxious, AAC has a very stable working environment and we tend not to over extend ourselves, which makes it much easier to get through downturns, particularly of this magnitude. I think we’re a lot better off than a lot of other companies,” he said.
Van Schalkwyk has been working in construction in Dubai for six years and has always found it challenging.
“[Challenges] are very simple – usually time and Dubai has a knack for changing things very suddenly!”
“It’s the changing environment that is your biggest challenge in the whole construction industry,” he said.

His current development with Al Fajer Properties is the largest he has been involved with since coming to Dubai, although he has been part of big projects such as Ibn Battuta Mall.
Jumeirah Business Centre is a group of five high-rise office buildings in the Jumeirah Lakes Towers development, which are scheduled to be delivered this September.

“The biggest challenge [with this project] is having to do five towers running exactly on the same timeframe, while not being located on the same plot. They’re in the same area but not on the same plot, that is a serious challenge, because projects are usually phased,” van Schalkwyk said.
Back when the centre got started, he also had to deal with the cement shortage, which he said affected them “quite seriously”.However, he is “fairly confident” of reaching the September deadline for the new development.
“After His Highness Sheikh Maktoum bin Hasher Al Maktoum came on board, it changed the whole management structure of the Al Fajer Group and we’re now managing to accelerate the project quite dramatically. We’re actually doing very well – we’re running slabs at around six, sometimes five, working days cycles,” he said.
When Sheikh Maktoum became president of Al Fajer Properties (AFP) in March last year, workers were working days and knocking off at night, but now construction takes place round the clock with the workers doing shiftwork in order to meet the delivery date.

In fact, a lot of changes have taken place at AFP so that it can streamline its business and meet its obligations.
Joseph Paul, finance manager at AFP, told 7DAYS that a “planning and financial restructuring” had taken place last March, which resulted in the entire land bank of the company being disposed of by the middle of last year.
“[This] has turned out to be an excellent decision, keeping in view the current drastic devaluation of land,” he said.
“Because of apt and timely decisions, AFP is still in a robust position to operate with zero debt, even in this worst scenario of world economic recession.”

Van Schalkwyk also sees the upside of downturn, particularly for real estate and construction.
“I think there will be a lot more stability and sense in the market. My personal belief is that the downturn at the moment is a bit of a blessing in disguise – it will stabilise the market and I believe we will get a much more healthy growth afterwards,” he said.

And despite the myriad announcements of job cuts in the sector, he feels construction won’t stay down for long.
“I think in the next two to three years, the workforce will shrink overall – but then it will grow again,” he said.

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

 

 

Dubai Dynasty Zarooni Fraud Allegations Widen,Bail At AED400M

http://www.zawya.com/Story.cfm/sidZW20090124000023/%3D%20Dubai%20Dynasty%20Zarooni%20Fraud%20Allegations%20Widen,Bail%20At%20AED400M/

By Stefania Bianchi         Of ZAWYA DOW JONES         DUBAI (Zawya Dow Jones)–Dubai’s public prosecution has raised the bail to 400 million U.A.E. dirhams ($108 million) for Dynasty Zarooni’s Chairman Kabir Mulchandani, who is being held by police on fraud allegations, as more aggrieved investors lodge complaints, officials said.         Mulchandani, whose mobile phone was turned off when called by Zawya Dow Jones Thursday, has previously denied any wrongdoing.         An official at the public prosecution told Zawya Dow Jones that Mulchandani is being held on allegations of “fraud and embezzlement” and that he would have to pay the full bail amount in order to be released.         According to lawyers at Al Shaali & Co., one of a number of Dubai-based law firms acting on behalf of the investors pursuing Mulchandani, the cases against the Indian businessman and Dynasty Zarooni involves projects in Dubai and Abu Dhabi worth more than AED5 billion.         “We’re currently handling about AED500 million worth of cases,” Said Al Akkad from Al Shaali & Co. said Thursday.         The law firm says the final value of cases against Dynasty Zarooni could rise much higher as other investors involved in Dynasty Zarooni’s apparent AED21 billion real estate portfolio come forward.         “There are a lot more investors out there who want to file complaints against Dynasty Zarooni. The whole process takes a long time,” said Al Akkad.         Mulchandani was arrested by police in early January and has since been referred to the public prosecution. Mulchandani’s bail was set at AED76 million when he was first arrested.         Hilal Al Zarooni, Mulchandani’s local partner in Dubai, referred Zawya Dow Jones to his lawyers Global Advocates & Legal Consultants when called. Global, who are also representing Mulchandani and the company Dynasty Zarooni, declined to comment on the case.         COMPLAINTS         Investors at six of Dynasty Zarooni’s developments worth approximately AED6.35 billion have so far lodged complaints with the police, according to Al Shaali & Co.         The complaints so far refer to property at the company’s Ebony & Ivory, Berlin Tower, K Hotel, Panoramic Heights, Sheffield Classique and Al Quorashi Tower developments. The cases include the taking of deposits and installment payments without depositing the money into an escrow account, the issuing of contracts worth just AED1 after the full value of the property has been paid and the misrepresentation of property during the sale.         Some investors at the Ebony and Ivory project in Dubai’s Jumeirah Lake Towers district have also lodged a complaint with the police against Dynasty Zarooni for allegedly misleading them about the progress made on the building’s construction. Prominent advertising campaigns in Dubai showed pictures of the Ebony and Ivory real estate project under construction 24 hours a day, but a visit to the site by Zawya Dow Jones revealed that no work was underway.         In an advertising campaign published in local media last year the company said that as a company it had earned AED20 billion in revenue, as well as AED6 billion for its investors.         Lawyers say Mulchandani is also being investigated for allegations that he conned a small group of wealthy investors into pledging large sums of money with the promise of a hefty monthly return.         Investors interviewed by Zawya Dow Jones say Mulchandani received subscription fees of AED300,000 a month from 12 members of the so-called “investment club”. Mulchandani promised a return of a million dirhams a month after six months after investing their money in Dubai real estate projects.         The investors say Mulchandani has so far failed to deliver any returns, or their initial capital.         By Stefania Bianchi, Dow Jones Newswires; +971 4 3644967; stefania.bianchi@dowjones.com         (Majdoline Hatoum in Dubai contributed to this article.)         Copyright (c) 2009 Dow Jones & Co.         Click here to go to Dow Jones NewsPlus, a web front page of today’s most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=CqhgwHGrhVjWVDlKy6lCLA%3D%3D. You can use this link on the day this article is published and the following day.         (END) Dow Jones Newswires         January 24, 2009 03:54 ET (08:54 GMT)

Investors in a dilemma – Aspire Real Estate is handing over his company`s project Jehaan to a third party

http://www.zawya.com/story.cfm/sidGN_31012009_10280558/UAE%3A%20Investors%20In%20Dilemma%20As%20Jehaan%20Project%20Changes%20Hands

Saturday, Jan 31, 2009

Gulf News

 

Dubai: Owner and chairman of property developer Aspire Real Estate , Harry Kantaria, is handing over his company’s Dh530 million Jehaan project to a third party.

Kantaria told investors that he has sold the Jehaan project, which has been beset with problems.

He owes an undisclosed sum to investors in refunds, according to people who bought units in the project.

“One investor heard that Harry has sold the project to a third party investor. So I texted Harry and he confirmed the same to me,” one investor told Gulf News. Kantaria later confirmed this to Gulf News on Thursday.

“The project is in the process of being handed over to another party who has shown keen interest and has also met the land department regarding the same,” Kantaria said in an email.

While the details have yet to be ironed out, the handover will hopefully spell good news for the project’s patient investors who have been battling with Kantaria for months over promised refunds.

They have been requesting refunds for Jehaan in Jumeirah Village South which was supposed to be ready by January 2009 but construction hasn’t even started. Some investors have even paid in full and yet received no contract. And genuine refunds have been scarce, investors said.

However, those who did receive their money back found that the cheques bounced and one investor said she was informed by Kantaria’s bank that there is no money in his account.

“The man at the bank told me that his account exists but there is no money,” the investor said.

Kantaria told Gulf News back in December that the project’s escrow account was set to be in place by January.

Calls made to the Aspire  offices went unanswered.

original published GulfNews

Dubai Property Buyers may move court for cancelled off-plan contracts

http://business24-7.ae/Articles/2009/1/Pages/01282009_c77c5faf7c0e4120b77817701e56af04.aspx

Property buyers can contest their “terminated” off-plan contracts, signed after August 31, 2008, in the newly set-up Property Court, but will have to go through the Dubai Land Department (DLD), a senior government official said.

“The purchaser will be further able to seek compensation from the Property Court if he establishes a ground for the termination,” Emad Eldin Farouq, Senior Legal Counsel, Dubai Land Department, told Emirates Business.

In November 2008, the Land Department in an administrative circular, said developers – not buyers – would have to initiate the official procedure to cancel the off-plan transactions. But for sales contracts, signed before August 31, 2008, the terms and conditions of the contract will be applicable for the two parties under the UAE Civil Code. However, these would not have to go through the DLD.

In the internal administrative circular, the department gave the interpretation of the meaning and practical application of Article 11 of the Law No.13 regulating the interim real estate registration. According to this circular, in case of a termination of an off-plan contract, the developer shall be entitled to 30 per cent of the purchase price plus 30 per cent of the any further monies paid above 30 per cent of the purchase price.

“In case of a cancellation of an off-plan contract where the purchase price is Dh1 million and the purchaser has paid 40 per cent of the property value, then the maximum claim the developer can make is of Dh330,000 (30 per cent of Dh1 million and 30 per cent of the remaining 10 per cent),” he said.

“If a buyer wants to contest this, he can go to the Property Court which shall apply the civil jurisdiction on this. Nobody can prevent the buyer from going to the court. Further, the Property Court may or may not agree with this and they can choose to either cancel these terms or they can adopt it or they can apply any other rules to this. The Property Court will look at it based on the rules and regulation in place under the Civil Code Law,” added Farouq.

Legally any agreement can be terminated either amicably, voluntarily or can be terminated by a court order based on the facts.

Under the Civil Code, the purchaser has the right to terminate the contract if there is a breach by the seller. The purchaser is entitled to refer the matter to the appropriate court with jurisdiction (which is now the Property Court)

Mohammad Kawasmi, Senior Associate Al Tamimi & Company, said: “We are not aware if the administrative circular issued by the DLD will hold true in the Property Court and they can choose to override the circular.”

Earlier this week, Farouq told this newspaper that investors facing cash-flow constraints can approach the Dubai Land Department for rescheduling payments for their properties.

Register online

Developers will have to register their off plan and completed units through the Dubai Land Department’s online registration system, said Farouq.

Called Oqood, the new system will enable effective implementation of Law No13 of 2008 for regulating the interim real estate register in the emirate.

Developed by Emirates Real Estate Solutions for the Dubai Land Department, the Oqood online interim registration process will lead to minimising conflicts arising between developers, investors and sellers, while contributing to cutting down the escalating off-plan selling and reselling costs.

Charges will be the same as levied by the Dubai Land Department – one per cent of the total value paid by the seller and one per cent to be paid by the consumer. Following the issuance of Law No 13, developers now have to register all their units prior to launch of the project and only then can they proceed with their sales.

The law aims to create further consumer ease and protection within the Dubai realty market.

From Google Video search

http://video.google.de/videoplay?docid=4416649692877507769&ei=l_9xSa2OGKXy2wKJ5cG0BQ&q=dynasty+zarooni

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

Diary of a distressed property investor, Part II

original published: Kippreport.com

We know property investors are struggling, and for the most part, we know why. But what most us don’t know are the everyday struggles they’re going through. One investor agreed to write a journal of her experiences for Kipp for the next month. We asked her to be ruthless: she obliged.

We’ve withheld her name for legal reasons.

I went to Rera last week. And when I finally got someone to talk to me about my concerns, I was confronted with a Dubai truth: some government employees’ brains go on vacation well before the public holidays begin. I was advised to return after the New Year’s celebrations.

“Why?” I asked.

“It’s a holiday,” said a young attendant.

“What holiday? It’s the 29th (of December)?” I asked, a little hysterically.

I didn’t get a response from him. And that taught me another Dubai truth: any sign of hysteria, anger, disapproval or discontent on your part will result in an immediate breakdown of communication on theirs.

But rather than wait until 2009 to sort my property situation out, I decided to keep looking for answers and solutions to my problem. Here’s what I discovered:

Business Partner of Al Fajer Properties – Chairman Dynasty Zarooni arrested in Dubai

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dynasty Zarooni Chairman – Criminal Business Partner of Al Fajer Properties Dubai – arrested

http://www.bi-me.com/main.php?id=29498&t=1&c=33&cg=4&mset=

UAE. The head of a Dubai-based real estate firm has denied reports that he had been arrested on allegations of fraud.

Kabir Mulchandani, Chairman of property investment consultant Dynasty Zarooni, said in an interview for Gulf News there was no police arrest warrant against him.

“I know some complaints have been lodged with the police by some people against our firm but these people gave cheques that bounced. They have no legitimate reason to complain,” he explained over the phone.

He said the company was “in good shape.”

Company President Hilal Al Zarouni said the company is “functioning properly”. Both executives said they didn’t know if the police were investigating the complaints.

Lawyer Salim Al Sha’ali, who represents a number of complainants, said the complaints are related to an alleged fraud scheme.

“We have been studying the legalities of the case… and we believe that there is a supposed crime of conning people out of money,” he said.

The Federal Penal Code and the property laws issued lately are the legal grounds in this case, argued the lawyer. Sources said the complaints involve some 30 investors with at least US$1 million each invested with Dynasty Zarooni.

However, Mulchandani denied the accusations and said he has “all the documents that support our position that those people have reneged on their commitments”.

Reports yesterday claimed clients said they paid AED 300,000 per month for which Mulchandani promised a return of AED 1 million a month after the first six installments. But Kabir Mulchandani said that the montly payment was a fee for investors to secure first refusal on properties sold by Dynasty Zarooni at pre-launch prices, an average discount of between 2% and 5%. And he insists no returns were ever guaranteed.

“There is not a single document, email, a fax, an SMS, that anybody can produce in Dubai or elsewhere in the world that in any way represents that we guaranteed any form of return,” he said.

He added that many investors had actually made far more than the guaranteed return he is claimed to have given, despite the slump in the property market.

He said: “This is a case of people having a situation where they can’t meet their obligations, which is unfortunate, but they shouldn’t have over-traded. You can’t buy what you can’t pay for.”

He said those making the complaints against him had bounced post-dated cheques given to the company for both the membership fee and for the properties they purchased.

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

Kabir Mulchandani is also the founder of Baron International, the Mumbai company that pioneered cheap colour TVs and music systems under the brand names Aiwa and Akai, a firm which came under scrutiny from the DRI and Enforcement Directorate in India.

Dynasty Zarooni markets ready-to-move in properties constructed by Dubai real estate company Al Fajer. The firm 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.

Dubai’s Real Estate Regulatory Authority (RERA) is probing the company’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 are reported to have told Indian newspapers that the firm had also not followed the local rule of depositing sale proceeds of real estate properties into a government-shared escrow account.

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 Hussein, is reported as saying: ”We have received complaints of 30 investors from India, Russia and the UK. The 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 US$1 million with the firm.”

According to Hussein: “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 number 8 in line with the directives of Dubai’s ruler Sheikh Mohammed.”

Law No.7/2006 Concerning Land Registration in the Emirate Dubai

Law No.7/2006 Concerning Land Registration in the
Emirate of Dubai
We, Mohammed bin Rashid Al Maktoum, Ruler of Dubai
Having considered the Federal Law No. 5/1985 promulgating the Civil
Transactions Law and its amendments;
the Federal Law No 11/1992 promulgating the Civil Procedure Law and its
amendments;
the Local Law No 7/1997 concerning Land Registration Fees; and
the Local Decree concerning the Formation of Land Affairs Committee of the
year 1960;
do hereby promulgate the following Law:
Chapter One
Title and Definitions
Article (1)
This Law shall be cited as “The Land Registration Law of the Emirate of Dubai
(No 7/2006)”.
Article (2)
In this Law, the following words and terms shall have the respective meanings
assigned to each of them, unless the context requires otherwise:
The UAE :
the United Arab Emirates.
The Emirate:
the Emirate of Dubai.
The Government: the Government of Dubai including any of its
Departments, Authorities or Public Corporations.
The Ruler : His Highness The Ruler of the Emirate of Dubai.
The Department: the Department of Lands and Properties.
The Head: the Head of the Department.
The Director: the Director General of the Department.
Land anything of a permanently fixed nature which cannot
be removed without damaging or altering its form.1
Rights over Land: any principal or accessory rights over Land.
1 The original Arabic word is “‛aqār” which literally means immovable, the equivalent of French
immeuble. The underlying concept of “landed property” may also be expressed by the term “real
estate”.
Land Register: a collection of records kept by the Department in
written or electronic form in an electronic register,
detailing the description of the registered Land, its
location and the rights over it.
Land Unit: any plot of Land and all that is located thereon such
as buildings, plants or otherwise, situated in one
Land Area without being separated from its other
parts by any public or private property and without
any part of it having a right or an encumbrance which
its other parts do not have.
Land Area: a group of Land Units demarcated by principal roads
or fixed and clear signs with an accredited name and
a distinctive number in accordance with the practice
of the Department.
Person: a natural or a legal person.
Chapter Two
Scope of Application and Right of Ownership
Article 3
This Law shall apply to Land situated in the Emirate.
Article 4
The right to own Land in the Emirate shall be restricted to citizens of the
United Arab Emirates, citizens of the Cooperation Council for the Arab States
of the Gulf, the companies totally owned by any of the foregoing, and public
joint stock companies. Foreign Persons may, subject to the approval of the
Ruler, be granted in certain areas the following rights:
(a) The right to acquire absolute ownership of Land without restrictions as
to time.
(b) The right to acquire usufruct or leasehold of Land for a period not
exceeding 99 years.
Chapter Three
General Provisions
Article (5)
The originals of documents and judicial decisions in pursuance of which
registration is made shall be kept in the Department, and shall not be moved
outside its premises. Interested parties, judicial authorities or experts
appointed by them, as well as competent committees may have access to
such originals and obtain a certified copy thereof in accordance with the
provisions of this Law.
Chapter Four
Jurisdiction of the Department
Article (6)
The Department shall have exclusive jurisdiction to register the rights over
Land and the leaseholds mentioned in Article 4 of this Law. For this purpose,
the Department may do any of the following:
(1) determine the areas to be surveyed or re-surveyed and certify the
maps drawn therefor;
(2) prescribe rules in relation to surveying and inspection, as well as in
relation to issuance of maps relating to Land Units;
(3) prepare model forms of contract relating to real estate transactions;
(4) prescribe rules concerning organizing, archiving and destruction of
documents;
(5) prescribe rules in relation to using computers in storing and recording
data;
(6) lay down rules in relation to regulating and keeping a register of real
estate brokers;
(7) prescribe rules in relation to evaluating Land;
(8) lay down rules in relation to voluntary sales of Land by public auction
and supervision of such sales;
(9) determine the fees payable for services rendered by the Department;
and
(10) establish branches of the Department as the Director may deem
appropriate.
Chapter Five
The Land Register
Article (7)
A Land Register shall be maintained in the Department to record all rights
over Land and any changes that might take place in respect of them. This
Register shall be conclusive evidence against all and everyone unless it is
proved to be the result of fraud or forgery.
Article (8)
Subject to the provisions of Article (7) of this Law, all electronic records shall
have the same weight of evidence as that of their hard copy written originals.
Chapter Six
Registration
Article (9)
All transactions that create, transfer, change or cancel rights over Land shall
be recorded in the Land Register and final judgments confirming those
transactions shall also be likewise registered. No transaction shall have any
effect unless registered in the Land Register.
Article (10)
Any undertaking to transfer a Right over Land shall be limited to an obligation
to pay compensation if the obligor is in breach of his undertaking, whether the
undertaking contains a provision to pay compensation or not.
Article (11)
If the estate of a deceased contains Rights over Land then the certificate of
inheritance shall be registered in the Land Register and disposals by any heir
of any of these rights shall not be effective or recognized against third parties
unless registered in the Land Register.
Article (12)
The Department may for the purpose of settlement entertain applications for
registration submitted by Persons in possession of Land that is not registered
in their names.
Chapter Seven
Alterations or Corrections of Records in the Register of Land
Article (13)
The Department may, on the application of an interested party or on its own
initiative with notification to those concerned, correct clerical errors in the
records of the Land Register.
Article (14)
In co-ordination with the relevant authorities, the Department shall update its
records of Land Units and of what is located thereon such as buildings, plants
or otherwise.
Chapter Eight
The Maps
Article (15)
(1) For the purpose of the registration of Land Units and Land Areas, the
following maps shall be relied upon:
(a) typographic master map;
(b) map of Land Unit; and
(c) map of Land Area.
(2) Each Land Area shall have its own separate map indicating the Land
Units located on it and the numbers thereof.
(3) Each Land Unit shall have its own separate map indicating its site,
boundaries, width and length, area, its features, constructions located
on it and the numbers given for its neighboring units.
Chapter Nine
Dividing and Merging
Article (16)
If the dominant Land Unit is divided up, the right of easement shall remain in
existence in favour of each part of it, provided that that does not increase the
burden to the servient Land Unit. However, if the right benefits only some of
such parts, the owner of the servient Land Unit may apply to the Department
for the termination of the right in respect of the other parts.
Article (17)
If the servient Land Unit is divided up, the right of easement shall remain in
existence over each part of it. However, if the right is not in fact used over
some of such parts, and it is not possible to use it over those parts, the owner
of each part thereof may apply to the Department, in accordance with the
provisions of this Law, for the termination of the right in respect of his part.
Article (18)
Easement rights cease to exist by the acquisition of the dominant and servient
Land Units by the same owner.
Article (19)
If a Land Unit which is encumbered by an accessory Right over Land is
divided into two or more Land Units, then each such new Land Unit will be
encumbered by the whole accessory Right over Land. The new owners may
agree with the beneficiary of the accessory Right over Land for the division of
it in such way so that each new Land Unit will be encumbered by only part of
it, to be determined by mutual consent.
Article (20)
If two Land Units merge and one of them is encumbered by an accessory
Right over Land while the other is not, then the accessory Right over Land
shall extend on the whole of the new Land Unit without the approval of the
merger by the beneficiary of the accessory Right over Land. However, if each
of the two Land Units is encumbered by an independent accessory Right over
Land, then the beneficiary of each such accessory Right over Land must
approve the merger.
Article (21)
Any alteration in the Land Unit by dividing or merging shall be registered in
the Land Register.
Chapter Ten
Ownership Documents.
Article (22)
The Department shall issue documents relating to Rights over Land on the
basis of the actual records of the Land Register.
Article (23)
Without prejudice to the provisions of any other law, apartment buildings and
multi-story buildings shall be treated as a single Land Unit and shall have one
record in the Land Register to be supplemented by records stating the names
of the owners of the apartments, stories and common parts.
Article (24)
(1) Ownership documents mentioned in Article (22) of this Law are
conclusive evidence of the Rights over Land contained therein.
(2) In the Land Unit record shall be set out any conditions, promises or
restrictions concerning Rights over Land and other obligations.
Chapter Eleven
Final Provisions
Article (25)
Provisions of the Federal Civil Transactions Law No. 5/1985 and its
amendments shall apply to all matters not provided for by this Law.
Article (26)
(1) Any agreement or transaction made contrary to the provisions of this
Law shall be null and void, as shall also be null and void any
agreement or disposal made with the intention to contravene the
provisions of this Law
(2) The nullity of such agreement or disposal may be invoked before the
Court by every Person having an interest, as well as by the
Department, or the Public Prosecution, and such nullity may also be
ordered by the Court on its own initiative.
Article (27)
The Decree dated 6 November 1977 concerning Civil and Criminal Cases in
Respect of Transactions Relating to Disposals of Lands in the Emirate of
Dubai shall be repealed.
Article (28)
The Head of the Department shall issue all the necessary regulations,
decisions, orders and instructions for the implementation of the provisions of
this Law.
Article (29)
This Law shall be published in the Official Gazette and come into force as of
the date of its publication.
Mohammed bin Rashid Al Maktoum
Ruler of Dubai
Issued in Dubai on:
13 March.2006 AD
13 Safar 1427 AH

Government of Dubai Dubai Lands Department Law No.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government of Dubai

Lands Department

Draft Law No. 8 of 2007

Concerning Real Estate Development Trust

Accounts in the Emirate of Dubai

Draft Law No. 8 of 2007

concerning Real Estate Development Trust Accounts in the Emirate of Dubai

We, Mohammed bin Rashid Al Maktoum, the Ruler of Dubai,

After perusal of Federal Law No. 5 of 1985 in respect of Civil Transactions, as

amended;

Law No. 7 of 2006 in respect of real property registration in the Emirate of Dubai; and

Law No. 3 of 2006 specifying the areas where non-UAE nationals may own real

properties in Dubai,

Do hereby issue the following Law:

Chapter One

Definitions and General Provisions

Article 1

This Law shall be named “Law No. 8 of 2007 concerning Real Estate Development

Trust Accounts in the Emirate of Dubai

Definitions

Article 2

In the application of this Law, unless the context requires otherwise, the following terms

and expressions shall have the meanings as set out opposite each of them:

The Emirate

 

 

: The Emirate of Dubai

Department

 

 

: The Land Department

President

 

 

: The President of the Department

Director

 

 

: The General Director of the Department

Register

 

 

: The Register prepared at the Department to register

developers

Trust Account

 

 

: The bank account of the real estate project in which the

amounts received from off-plan units buyers or the project

financiers will be deposited.

Trustee

 

 

: The financial institution or bank approved by the Department

to manage a trust account.

Competent Authorities

 

 

: The government authorities which grant licenses to

developers.

Developer

 

 

: A natural or corporate person licensed to buy and sell real

properties for development purposes. The term shall include

the master developer and sub-developer.

Real Estate Development

 

 

: The construction of multi-storey buildings or complexes for

residential or commercial purposes.

Unit

 

 

: An allocated part of the property sold by the developer to

third parties.

Article 3

The provisions of this Law shall apply to developers who sell off-plan units in real estate

development projects in the Emirate and, in consideration, receive payments from

buyers or financiers.

Article 4

A special register to be named “The Developers Register” shall be prepared at the

Department. The names and particulars of developers licensed to carry out real estate

development activities in the Emirate shall be recorded in the said register. No

developer may carry out the said activities unless it is registered in the said register and

licensed by the competent authorities pursuant to regulations issued in this regard.

Article 5

After obtaining a written permit from the Department, a developer may advertise in local

or foreign media or participate in local or foreign exhibitions to promote selling off-plan

units in the Emirate. The Director shall issue the resolutions as required to regulate the

requirements for advertising in the media or participating in exhibitions.

Chapter Two

Creating a Trust Account

Article 6

- A developer wishing to sell off-plan units must apply to the Department to open a

trust account. The application should be accompanied with the following:

1. Trade license and Dubai Chamber of Commerce and Industry membership

certificate;

2. Title deed of the plot to be developed, if any;

3. A copy of the contract between the master developer and the sub-developer;

4. Architectural designs and preliminary engineering plans approved by the

competent authorities and the master developer;

5. A financial statement of the costs, revenues and expenditure of the project

certified by a chartered auditor;

6. An undertaking by the developer to commence the project construction works

after obtaining the master developer’s approval to sell off-plan units;

7. the sale contract form between the developer and the buyer.

- The Department shall issue its approval to the developer to open a trust account if

the above documents are provided, otherwise the Department shall require the

developer in writing to complete the documents or provide the required information.

Article 7

The trust account shall be created under a written agreement between the developer

and the trustee. Under the said agreement, the amounts paid by buyers of off-plan units

or received from the financiers shall be deposited in a special account to be opened in

the name of the real estate project.

The said agreement shall set out the terms for managing the account, the rights and

obligations of the contracting parties and other terms and conditions. A copy of the

contract shall be lodged with the Department.

Article 8

The Department may add a note regarding the purchase agreement between the

master developer and the sub-developer in the record of the plot owned by the master

developer. Further, the buyer of an off-plan unit may apply to the Department to add a

note regarding the purchase agreement entered into with the sub-developer in the

record of the plot on which the project is to be constructed.

Article 9

Subject to Article 4 of Law No. 7 of 2006 concerning real property registration in the

Emirate of Dubai, sole proprietorships or companies may obtain a license from the

competent authorities to carry out real estate development in the Emirate in accordance

with the requirements and regulations in this regard.

Chapter Three

Management of the Trust Account

Article 10

1. A trust account shall be opened in the name of the project and shall be used only

for the purposes of developing the real estate project. The amounts deposited in

the said account may not be attached in favor of creditors of the developer.

2. A developer carrying out several projects should open an independent trust

account for each such project.

Article 11

The Department shall prepare a register includes names of financial institutions and

banks who act as trustees. A trustee should be proficient in managing trust accounts.

The agreement between the Department and the trustee shall set out the duties of the

trustee and the terms under which the trust account is managed.

Article 12

The trustee should provide the Department with periodical statements of the revenues

and expenditure of the trust account. The Department may assign an auditor to audit

the statement and data. Further, the Department may at any time require the trustee to

provide it with such information or data as it may deem necessary.

If the Department finds any violation of the provisions hereof or the executive

regulations issued hereunder, it shall advise the trustee of such violation in writing and

request it to rectify the same within a specific period of time and advise the Department

in writing of such rectification.

Article 13

The depositors or their representatives may inspect the accounting records related to

them and request copies thereof. Representatives of the official authorities may also

inspect the records and obtain copies thereof.

Article 14

If the developer mortgages the project in order to obtain a loan from financing

institutions or companies, the developer should deposit the mortgage amount in the

trust account, and such amount shall be disposed of in accordance with the provisions

of this law.

Article 15

1. A trustee should withhold at least 5% of the trust account deposits after the

developer obtains the completion certificate. Such withheld amounts shall be

paid to the developer only one year after the units are registered in the names of

the buyers and title deeds are issued in their names.

2. In the events of unforeseen circumstances resulting in the non-completion of the

project, the trustee should, after consultations with the Department, take

measures as required to maintain the interests of depositors.

Chapter Four

Penalties

Article 16

Any person who:

1. deliberately provides the competent authorities with inaccurate documents or

data in order to obtain a license to carry out real estate development activities;

2. knowingly offers for sale units in unreal real estate projects;

3. embezzles, illegitimately uses or spends payments made to him for real estate

development purposes;

4. an auditor who deliberately prepares false report regarding the result of auditing

the financial position of the developer, or deliberately hides material information

in such report;

5. a consultant who knowingly certifies false documents in relation to the real estate

project; or

6. a developer who deals with a broker who is not registered in the real estate

developers register in accordance with the provision of regulation 85/2006

concerning real estate brokers in the Emirate of Dubai

shall be punished by imprisonment for no less than one month and a fine, or either

punishment.

Article 17

A developer shall be de-registered in the following events:

1. if it is declared bankrupt;

2. if it fails to commence the construction works within 6 months from the date of

the approval granted to it to sell off-plan units without having an acceptable

excuse;

3. if the license granted to it by the competent authorities is cancelled;

4. if it commits a violation under Article 16.2, 3 or 4 hereof; or

5. if it commits a violation of the laws and regulations regulating the real estate

activity in the Emirate.

Chapter Five

Final Provisions

Article 18

Existing developers at the time the provisions of this Law become effective should

adjust their positions to comply with the provisions hereof within 6 months from the date

this Law is published in the Official Gazette. The Department may extend the said

period as it may deem fit.

Article 19

The Department may charge administrative fees against the services provided under

this Law.

Article 20

Any provision or procedure in any law or regulation shall be cancelled to the extent the

same is in conflict with the provisions hereof.

Article 21

The President shall issue the resolutions required to implement the provisions hereof.

Article 22

This Law shall be published in the Official Gazette and come into force from the date of

its publications.

Mohammed bin Rashid Al Maktoum

Ruler of the Emirate of Dubai

Issued in Dubai on this day ____________2007

Corresponding to ______________1428 A.H.

An amended copy of the draft law, prepared on 14.03.2007

119,843 cases were presented to the emirate’s courts in the first 10 months of the year.

http://www.business24-7.ae/articles/2008/12/pages/12292008_391955b8c8864e38a77481c0445215ec.aspx

Foreign experts in judicial and international economic affairs are helping to develop the operations of commercial courts set up in Abu Dhabi earlier this year.

The specialists are drawing up a strategic plan for the coming years that will enable the courts to arbitrate in economic disputes, including those involving the Abu Dhabi stock market.

The source said there were no plans to scrap the courts as the department regarded them as highly important.

Meanwhile, the department’s annual report said yesterday 119,843 cases were presented to the emirate’s courts in the first 10 months of the year.

The interview mysteriously disappeared from Arabian Business December 13 2008

found in a comment:

http://www.revu.nl/12737 and http://www.skyscrapercity.com/showthread.php?p=29679964

Interwiew can be read here:

http://fraudconstructions.wordpress.com/about/

 

Taking over Niki Lauda
by Jamie Stewart

Saturday, 13 December 2008

 

The Niki Lauda Twin Towers project in Business Bay has run into problems that have resulted in claims and counter-claims from developers
ACI Real Estate and Define Properties, The Real Estate Regulatory Agency (RERA), and anxious investors. With Define Properties unavailable for
response despite repeated attempts to get in touch, ACI projects director Joerg Grunwald talks about the future of the project to Jamie Stewart in an exclusive interview.

Can you make clear the roles of ACI and Define Properties with regard to the Niki Lauda project?It’s a development from Define Properties. ACI had bought the entire project – the land – and sold it. The responsibility for construction lied on Define. But we saw that Define was struggling in the process of doing the construction and the site had been idle for more than two months. This is what concerned us and our investors. They wanted to know the situation. Until now we have had to refer back to Define as they were the developers but now we have been forced to involve ourselves more.

 

There’s a completely new reorganisation taking place as we speak. Define will be in combination with ACI together. ACI will be the vendor, and will be involved in the construction and the development itself.

What was the nature of the problems that Define ran into?

Financial problems. They could no longer afford to pay contractors.

When did you realise Define was in trouble?

It became clear two weeks ago. That’s when we decided to take action.

So what is the current construction status of the project?

In the previous plans the foundation used a traditional piling system which has now been changed to a raft foundation. Define has produced a third party survey as is obligatory for the approvals for a raft foundation. That has been done and the results were positive so a raft foundation will take place in due course.

ACI has identified the construction company for the same (to be named in mid-December) which will also do not only the construction but also the raft. The contracts will be signed in due course. Mid-December will be very exciting for us and also for our investors.

International Foundation Group (IFG) says it is owed US $680,000 (AED2.5 million). Will ACI or Define be paying this?

That and all open invoices that have been accrued over the last month will be settled either through Define or ACI or a newly formed company which I cannot disclose details of as yet.

Will this new company be a joint venture between yourselves and Define?

Most probably yes.

Investors have expressed concern about the whereabouts of monies paid to date. Is the money being held in an ESCROW account in line with RERA Law 8 2007 (concerning guarantee accounts of real estate developments in Dubai)?

Yes.

100% of it?

One hundred percent of our obligations for the entire building of Nikki Lauda is. That is clearly in our existing contract with Define Properties with the approvals from RERA with the certain conditions of this contract also fully approved by RERA. So the investor’s money is safe in the ESCROW accounts.

To reiterate, 100% of it?

I cannot comment on how many funds have fully gone to the ESCROW accounts. I believe some percentages were taken out for advertisement, for admin and as such but all that goes along with the regulations of RERA law no 8.

RERA Law 8 says that the money has to be used to pay the construction costs, such as the money owed to IFG. So if the money is there, why can’t IFG be paid out of that account?

This is a subject that we must clear up. Why have they not been paid? Money has been paid into the ESCROW account from our side. This is clearly recoverable. Why they have not been paid so far is under investigation but nevertheless, whatever it takes, all debts to third parties within the field of the construction will be paid off in full.

A lawyer representing the investors has said there is a clause in the contract between ACI and Define that says ACI is entitled to 40% of all investor’s money and that Define retains the other 60%, and that ACI have a letter from RERA which confirms and allows this agreement, and allows it to withdraw its premium at any time. Is that accurate?

Yes that is correct. Whatever contractual terms we agreed on with Define have all been approved by RERA.

Is this agreement in violation of RERA Law 8 2007?

RERA’s Law 8 has been changed various times over the last month. With amendments, new clauses and so forth. We just took advantage of the possibilities of a contract that we entered with Define Properties which are in line with the regulations.

Have the regulations changed since you signed the contract?

In various aspects yes. With the retention of monies; with the amount of monies to be withdrawn from the ESCROW account for certain purposes; and others with the termination clauses and so forth. Many times. But we are always in line with those.

But whatever it takes and whatever clauses are to be obeyed and followed we saw that the construction stalled and this is not acceptable for us because it is our reputation. Our name and our brand stands behind it. We take it seriously and that is the reason why we have now initiated this transition of Define Properties in combination with ACI to continue the construction immediately.

Did ACI and Define approach RERA to have this share clause put into the contract?

Frankly speaking the percentages of what has been withdrawn or was legally allowed to be withdrawn I cannot comment on. I am not in the finance department – I am director of projects and my concern is to keep things going.

Will ACI cancel any projects?

No.

Have you taken over all of Define’s projects, such as Define Essence?

That will be revealed in a press release in mid-December.

Can you estimate the new construction timetable for Niki Lauda Twin Towers?

As a rough calculation, raft foundations will commence very soon and take about four months, then basements and super construction will take around 15 months. So 19 months in total. Detailed figures will be given once we have signed the contracts with the new company.

Do you have a message for those who have invested in the Niki Lauda Twin Towers?
We are doing our best to raise the trust and confidence of our investors despite these difficult times. We see massive lay offs from other developers, other mergers, and so forth. We are propagating confidence and we will show that we fulfill and deliver what we promise.

We have not been able to get in touch with Define Properties. Have all the staff been told to go home until this has cleared up?

Yes that is true. Rest assured that things will commence in a professional way now. We will do our best to safeguard the interests of other Define clients as well. From those Define projects which are proceeding and where sales have already commenced and clients are to be honoured with their contracts we will also honour that. Later this month – the picture will be clear

Interpol – Money laundry – Malika worked for Define Properties in Dubai – ACI – Niki Lauda Towers

original published:http://www.revu.nl/12499.Ex-spionne%20Malika%20K.%20staat%20op%20straat

original translated by google: http://translate.google.com/translate?sourceid=navclient&hl=en&u=http%3a%2f%2fwww%2erevu%2enl%2f12499%2eEx%2dspionne%2520Malika%2520K%2e%2520staat%2520op%2520straat Malika K., the Moroccan ‘Mata Hari’ from Slotervaart, is dismissed by her company Define Properties in Dubai. It says the director of the company Tarek Kandil in an e-mail. Last week showed that he still Kandil, Malika had suspended “pending the investigation into the allegations” which in his opinion firm were unfounded. . Under pressure from intelligence Kandil has drawn a different conclusion, the work is finally dissolved Monday. Malika’s lawyer mr CMJ Zillikens confirmed yesterday morning in each case the suspension against Revu. According Zillikens the suspension is the result of a “defamation campaign from the Netherlands.” ” “We see what the consequences are,” says Zillikens, it aimed at the continuing online publications of former police officer and private detective Jacques Smits, who was hired by her ex in an attempt to control their son back. Kandil has threatened with legal action if he does not stop with publications about the company. Zillikens together with criminal lawyer Han Jahae last week spoorslags traveled to Dubai. What it wants is discussed Zillikens not say, except that it is a “good trip” and there was more news will soon follow. Malika worked until March of this year by property developer Omniyat Properties. Since she was fired when the company informed brought her back. Smits knew that include telling customers to Omniyat Malika by referring to

Tarek Kandil, an Egyptian who has just started Define Properties.

Kandil had worked for Omniyat, but was fired for unclear reason, as sources tell Revu. Tarek Kandil then dove at Schon Properties, responsible for projects such as Dubai Lagoon and Schon Business Park. The company became discredited because of the various construction projects but did not want rafts and investors suspected that they were taken by the nose. Tarek Kandil to Define Schon left to be examined.

Define Malika has for almost all funds governed by an Egyptian dealer who they already knew, sources tell Revu. Her resignation means to Define also possible that her visa will be revoked and they will have to leave Dubai. In May, the full bench that her 8-year-old son back to the father in the Netherlands, but Malika opposes the extradition of the child. Whether there is a relationship with the custody dispute is not clear, but her ex-husband Mohammed B., owner of an Amsterdam reiswinkel was last Friday when he robbed money and passports of over four hundred customers to airline Royal Jordanian would bring. The robbers have the vault with all the money and a few hundred passports taken. The location of the incident is a massacre, according to eyewitnesses. The two predators would firmly establish the name of Malika have said. The shop was closed Monday. “This is the end of his shop,” says a friend who for years assisted Mohammed state. “We were all scared for a long time that this would happen.” Mohammed B. has many times against Malika declaration made threats and violence, but her lawyers say that the stories B. sucks his thumb to prevent Malika her child in Dubai may hold. Jan Libbenga Jan Libbenga Malika werkte voor inlichtingen én criminelen Malika worked for intelligence and criminals Malika K. Malika K. duikt op in Dubai shows up in Dubai Malika naar Dubai door wangedrag ex-man Malika to Dubai misconduct by ex-husband Wordt Malika K. Is Malika K. uitgeleverd? extradited? this is an google translation from the original report:

Malika K., the Moroccan 
'Mata Hari'  from Slotervaart 
 who as a former spionne 
would have earned millions 
 with the laundering of 
dirty  money, 
is reported in Dubai.  
Sources told Revue this weekend that she has an apartment at the Dubai Marina.

She also has a new job. About her residence were several stories in recent weeks the round. So that they heard Revue in June with a false passport would have landed in France and from there to the Netherlands would be brought, but at different addresses in the Netherlands where they could stay observation teams have found nothing. Since Dubai has no extradition treaty with the Netherlands, authorities can no way. Cees Korvinus lawyer, who for many years the interests of Malika’s ex-husband represents in a custody case, early this year has already called for justice for extradition and that following the publication in Revue last week again done. At the time that there was contact with head Interpol in Dubai to take action, the judiciary refused to provide further details. . The prosecutor wrote that they do not know what the situation is. The publications on Malika in Revue, Telegraph and other newspapers have many disconnected.

Define Properties. Sources refused

Revue not only to her home address

but also on the new job of Malika

This brand new property 
developer,Define Properties  
 in Number One Tower on 
Sheikh Zayed Road in Dubai 
is largely run by former 
managers  of Omniyat, 
the company 
Malika was dismissed 
on March 16.

Director is Tarek Kandil, formerly sales manager at Omniyat.

The name of Malika is nowhere to be found on the website of the company, but it is to see the photo of the press in early June.

The company says now have a working capital of 500 million Dirham, and would have bought land sales worth 1.7 billion Dirham. . The main project is the construction of the Nikki Lauda Twin Towers, which should be completed in 2010. . Director Kandil promised opposite business magazine Business Emirates’ Define that no building plans launches as they do not actually completed, it aimed at the many fraud cases so slowly that Dubai is a very bad name have worried. Supervisor Real Estate Regulatory Agency (Rera) currently doing research on mala fide developers who buy contracts sell many occasions, with no other purpose than to fat profits to gather. . Some of these developers are even funded with money arms from Egypt. Middlemen purchase contracts let criminals’ pre launch ‘on the basis of the beautiful building plans and models,” Frank knows Englishman of Ultra Scan, a Dutch agency that specializes in financial fraud cases. It is a pyramid game that once burst out. ” Damac blies het zogenoemde Palm Springs-project af toen bleek dat men niet eens beschikte over bouwgrond. Certainly eighty investors have from England earlier this year from Dubai developer Damac Properties put under pressure because the luxury apartments were sold but not delivered, even stronger: Damac blew the so-called Palm Springs project off when it became clear that not even available on plot . . Later that was again denied and the company will now still six months to the construction to begin. In June unveiled the Egyptian Telegraph – El Fagr (The Dawn) – in a page article filled an even bigger scandal surrounding a 30 million-acre area covered by the denominator Gamsha Bay to the Red Sea Riviera in Egypt by Damac would be developed as a vacation area. Prime Minister Ahmed Nazif was at the presentation in 2006 and since then there have been 100 million euros to purchase contracts signed. Until various ministries in Egypt peril smoking: the area contains mines, there is oil under and is not suitable for human habitation. Indeed, this area is no formal ownership of Damac. Malika K. diverted, while they worked for rival Omniyat, (criminal) to customers Damac, which they 8-9 percent commission was, according to intelligence data. Piquant detail is Damac El Fagr according to former agents of the secret service as sellers had hired. During his investigation into possible investment frauds of Palm Invest private detective Englishman has an account code detected by Malika at Credit Suisse in Lugano, which they used for money laundering. From this account would be tens of millions of dollars were transferred to Dubai. At Schiphol by the Royal Military Police on August 16 arrested again a money courier who claims that he works for Malika. The man flew from Amsterdam to Milan and from there would go to Dubai. . The Royal Military Police would like this against Revu not confirm. We do not have communications arrested persons, unless we come out themselves.” The arrest of a Turkish money courier in October 2007 was for intelligence agencies to cause great alarm to save on their ‘Malika’. They had to investigate suspicious money flows in the fight against international terrorism, but showed itself at the center of this network are. Jan Libbenga also http://www.revu.nl/12003 http://translate.google.com/translate?sourceid=navclient&hl=en&u=http%3a%2f%2fwww%2erevu%2enl%2f12003

International intelligence agencies and criminals are hunting the

32-year old Malika K., a Dutch infiltrators on the wrong side of the

line landed, and that during her work for intelligence agencies grew

into a broker in criminal relations.

The Amsterdam of Moroccan descent is suspected from its place of Dubai international drug shipments to finance and facilitate, including XTC-Dutch merchants. According to rough estimates in recent years, there were more than 100 million euros through her hands. Many criminals showed their traditional money laundering addresses in the lurch for Malika K.. Attempts to her earlier this year failed to hold. Malika M. is wanted for money laundering, fraud, receiving stolen goods, arson, kidnapping and the commission for liquidation.

http://fraudconstructions.wordpress.com/about/

Advice from RERA Dubai – Investors urged not to fall prey to ’spam’ mails

original published Dec. 18. 2008 EmiratesBusiness24/7

http://www.business24-7.ae/Articles/2008/12/Pages/12182008_6320ce3fdd1743309faf8b7f9849a6b2.aspx

Dubai’s Real Estate Regulatory Agency (Rera) has advised investors not to fall prey to “spam” mails, which misinterpret property laws and ask investors to stop payments to developers.

“People have been mislead by those mass e-mails and phone calls and so they have been coming to us for clarifications. We have assured them of all help, if there are any problems,” Rera Chief Executive Officer Marwan bin Ghalita told Emirates Business.

“The dissemination of such false information is both highly misleading and deceptive to investors. This will directly cause investors to lose money if they do not thoroughly read their contracts and seek proper legal advice.” The agency has urged investors to consult with Rera for any official information on Dubai’s property market.

“We appeal to investors to only work with registered professional real estate agents and developers, and to always check the validity of the source of emails, phone calls and newspaper articles.”

A list of all registered agents and developers is updated and available on Rera’s website. However, it has made clear that it cannot protect investors who seek consultation and advise from unprofessional agents or property advisers.

The agency is in the process of establishing a free legal panel to provide consultation to investors.

“The best way to protect your rights as an investor is to seek information only with us by submitting an enquiry through the ‘contact us’ section of our website, www.rpdubai.com, or by contacting our call centre directly.”

All complete official enquiries submitted to Rera will be responded to within 48 hours. Rera has further reiterated that all property laws introduced to the market are there to protect the market and the individual investor, and “these will remain as such”, Ghalita said.

 

 

The Times of Flipper over ? Ouf! That’s pretty gloomy

Reassuring investors during disputes is paramount

http://www.arabianbusiness.com/540868-reassuring-investors-during-disputes-is-paramount

………And it’s during these uncertain times that one would hope that established authorities and regulatory bodies are there for support and guidance.

The Government of Dubai has done a sterling job in guaranteeing bank deposits across the Emirate, and government-controlled developer Emaar Properties has been pro-active in attempting to stimulate the stuttering residential sales market.

In fact, rather than behaving like a skittish kitten in a roomful of barking dogs, government agencies in the Emirates have demonstrated remarkable aggressiveness to deal with the problem.

But legal wrangles, such as that what is brewing between prominent developers ACI Real Estate and Define Properties and Dubai’s Real Estate Regulatory Agency (Rera), has left a bitter aftertaste in the mouths of would-be investors in the Niki Lauda Twin Towers dispute.
…………………….

http://www.arabianbusiness.com/540868-reassuring-investors-during-disputes-is-paramount

The Times of Flippers are over ?

Once ACI Robin Lohman said in an interview:

“It is simple. We develop and we flip. We make people money”

http://www.arabianbusiness.com/505737-the-brand-master

comments about ACI:

http://www.skyscrapercity.com/showthread.php?t=538159&page=4

The Result of Buy and Flip ? German Developer ACI Real Estate Dubai- The Boris Becker Tower is facing a delay as its contractor files for bankruptcy protection

The Michael Schumacher Business Avenue and Boris Becker Business Tower projects have been pushed back as the South Korean firm hired to build them has filed for protection from bankruptcy, Construction Week has learned.

Shinsung Engineering and Construction, the South Korea-based contractor building the developments, requested court protection to avoid bankruptcy in South Korea earlier this month.

As a result, Michael Schumacher Business Avenue will be delayed by 150 days, and the Boris Becker Business Tower will be delayed by 60 days, according to Joerg Grunwald, director of projects at ACI, developer of both projects

http://www.arabianbusiness.com/540847-projects-delayed-as-contractor-seeks-bankruptcy-protection

German Developer ACI Real Estate Dubai under investigation from RERA Dubai

Sunday, December 14, 2008
ACI Real Estate Projects Schumacher and Boris Becker delayed as contractor seeks bankruptcy protection – Construction & Industry – ArabianBusiness.com

Also under investigation from RERA Dubai: Niki Lauda Towers – German Developer ACI Real Estate Dubai

http://www.arabianbusiness.com/540840-aci-steps-in-to-save-niki-lauda-twin-towers-project
ACI Real Estate Projects delayed as contractor seeks bankruptcy protection – Construction & Industry – ArabianBusiness.com

The Michael Schumacher Business Avenue and Boris Becker Business Tower projects have been pushed back as the South Korean firm hired to build them has filed for protection from bankruptcy, Construction Week has learned.Shinsung Engineering and Construction, the South Korea-based contractor building the developments, requested court protection to avoid bankruptcy in South Korea earlier this month.As a result, Michael Schumacher Business Avenue will be delayed by 150 days, and the Boris Becker Business Tower will be delayed by 60 days, according to Joerg Grunwald, director of projects at ACI, developer of both projectshttp://www.arabianbusiness.com/505737-the-brand-master

 

and

http://dubai7stars.blogspot.com/2008/09/new-property-law-number-13-of-2008.html

and

ACI steps in to save Niki Lauda Twin Towers project

http://www.arabianbusiness.com/540840-aci-steps-in-to-save-niki-lauda-twin-towers-project

What is Law No. 8 Dubai Lands Department Government of Dubai

http://www.dubailand.gov.ae/ld_website/pdfs/trust_law_eng.pdf

Dubai Property Price Reduction – How Low can they go – Finding a Floor

original published ArabianBusiness.com by Rob Corder 12.12.2008

http://www.arabianbusiness.com/540902-finding-the-floor

In times of market turbulence, be it in stock markets, commodity prices or real estate sales, the six million dollar question for investors is: where is the floor?If futures traders consider $40 oil to be as low as it can go, the market should see a buying spree that will push prices up from that level.There is evidence that stock market traders saw the floor for the Dow Jones Industrial Average at 8000; the FTSE 100 at 4000, and the Dubai Financial Market General Index at 2000 (traders love round numbers).

Because so much property in Dubai is a tradable commodity – it is traded as paper rather than as somewhere to live – the price has fallen far faster than even the most pessimistic of commentators predicted.Buyers evacuated the market during September in such a rush that it was impossible to judge the value of property.

As a result, there were virtually no transactions, a situation that continues to the present day.

The market will only restart when buyers feel the price of property has found some sort of floor, from which it will begin to rise. But what is that number?

There is no reliable index of property prices that can be used as a guide but, if there were, I think the floor would be at 30 percent of peak prices. In other words, buyers will only return to the market when 70 percent has been wiped off the value of villas and apartments in the city.

I do have one caveat: the market for completed property will significantly outperform the market for un-built property because rental rates are so high that the financial case for buying property is more compelling if families subtract the inescapable cost of rent from their cost of owning a property – even if it is depreciating in value.

To explain why I think the floor for the property market is 30 percent of peak values, you have to consider what drove prices to their peak before summer this year, and what are the prevailing market conditions today and for the year ahead.Much of my thinking is outlined in my last commentary “Property Poker”.

To summarise, amateur gamblers that made quick money flipping property in the boom times kept reinvesting their profits in more and more expensive developments. This has continued to the point where very few of them hold cash, but they all hold property in which they have made hefty down payments – normally 30 percent of the asking price.Very few of these speculators can afford to be holding the freehold to these properties when the building is complete, because at this stage they need to raise the other 70 percent of the asking price in the form of a mortgage.
And, guess what, the banks will not be lending them the money because they will not take a risk on an asset that is already worth dramatically less than its original sale price.

If speculators cannot raise the finance to pay the outstanding balance, they run into default, a situation that is currently very poorly regulated (a subject I will return to in another article, and I would love to receive comments on at the end of this article).

But the best guess at the moment is that the original developer will repossess the property, leaving the speculator with nothing. The full 30 percent down payment will be lost, and there is even speculation that developers will pursue defaulters for any further losses they incur as repossessed properties flood the market.This is why I think 30 percent of the peak is the floor.

The least bad scenario for a speculator is to dump all properties before they get handed any keys to completed villas and apartments. At least they get their original stake back, even if they have made no profit during the period they owned the property on paper.

The complication for this theory is at what point you consider the peak of the market to be. This is will come down to speculators’ portfolios, and is dependent on when they bought their properties.If they bought off plan in 2007, they saw their portfolios grow in value by roughly 50 percent in the first half of 2008, so the 30 percent rule applies to the price at which they bought property, not the value at its peak in mid-2008. (The vast majority of speculators that bought before 2007 will have already flipped the properties since so can be largely discounted).
This points to even worse news for those that bought right at the peak this summer. Speculators bailing out at 70 percent below the price they bought at in 2007 will sell at around 80 percent below the value of the summer peak. Taking this additional negative factor into account, and building in the more positive impact on prices created by people moving from renting to buying, I think the 30 percent theory is the best I can offer.

Regrettably, my greatest fear is that 30 percent is optimistic.

If buyers do not collectively agree that this is the floor they will stay out of the market until it falls even further.This will leave masses of speculators trying to raise mortgages to cover the outstanding 70 percent balance of the price at which they bought, and very few able to do so.Developers will be left pondering whether to exercise their rights over defaulters, or support speculators by giving them more time to pay – probably by delaying the completion of thousands of properties.

When all this pain has worked through, Dubai will emerge as a strong and vibrant metropolis in which hard working families will be able to own property at reasonable prices, and get on with the businesses of building lasting rewarding lives in the city

Dubai developers may find alternatives – through bulk selling of units to private equity funds and hedge funds

No payment defaults on Dubai luxury units

Dubai is not witnessing payment defaults on high-end properties by buyers, according to the Real Estate Regulatory Agency (Rera).”

Every project on the ground and under construction would be completed. Master developers are intact and the high-end third party developers may find alternatives to carry on with their projects through bulk selling of units to private equity funds and hedge funds,” Marwan bin Ghalita, Chief Executive Officer, Rera, told Emirates Business.”

We recently saw a sales transaction for a Dh24 million property. Ultimately, the fate of a luxury property will depend on the affordability of a buyer.

“Ghalita said lending in the market would have to be eased in order for real estate buying to increase and gain momentum.

He told Reuters that developers should review their projects that had not yet been launched, or where only a few units had been sold.”

This is not a good time to start a new project if you don’t have enough liquidity to construct. Slowing down is very important and this is what we at Rera asked the developers to do about a year back. Slowdown and review is very important for the real estate market,” he said.Prices for “affordable” off-plan properties could pick up in the second quarter of 2009 if banks increase lending, he said.Ghalita said Rera would enforce a law on the registration of off-plan property sales.Rules for time shares were also being finalised.”People will be selective in where they put their money. It’s not like before where people came to buy anywhere,” he said.

Untangling a web of discontent – The National Newspaper – Sent Using Google Toolbar

original published: TheNational

http://www.thenational.ae/article/20080908/BUSINESS/984362566/1137

Overseas investors in off-plan properties in Dubai are turning to the internet to monitor their ventures – and to air their grievances against developers.

The proliferation of online property forums is giving foreign homebuyers unprecedented access to fellow investors, as well as to the latest information on their properties.

The property blogs are also being used to air grievances, albeit anonymously, with some websites, such as http://www.dubai7stars.com/ , geared specifically towards complaints against projects and developers.

The number of web forums created by groups of investors who have shared bad experiences with a particular project is also on the rise.

One example is a site set up by investors in the long-delayed Ivory Tower, a 20-storey residential project in Dubai’s International media Production Zone, which is being developed by the Saudi Arabian firm Sokook Investment Group.

With no sign of the project starting construction three years after it was launched, and with little information from the developer, the site was the only way for home buyers to gauge what was happening with their investment, as well as for those unfamiliar with the Dubai market to exchange knowledge on what their legal rights might be.

“

As an isolated investor, the site has been an immense help to me in finding other aggrieved investors, particularly those living in Dubai,” said Richard Moore, a UK-based investor in Ivory Tower.

 

 

“It also allowed us to share legal knowledge and ideas on how to proceed – we have delegated different jobs to different people so we can work as a more effective and collective group. If it wasn’t for the website, I would have been completely at the mercy of the developer, as my estate agent had washed his hands of the situation.”

But as the blog gathered momentum and attracted the media’s attention to the saga, it was mysteriously closed down.

Complaints about Ivory Tower posted on http://www.skyscrapercity.com/ – a global forum for building enthusiasts – were also culled by the site’s mediator, under the premise that “skyscrapercity.com is not the place to vent anger against developers”.

“I can only suspect that individuals who the content was harming had this done,” Mr Moore said.

While the internet has become a crucial means of communication for overseas property buyers, it has also been used to start vendettas against some developers.

Kabir Mulchandani, the chairman of the property investment firm Dynasty Zarooni, recently became the online target of an alleged smear campaign when anonymous bloggers accused him of fraudulently selling property in a Dubai project to investors in his home country of India.

The campaign reached such a wide audience that newspapers in India – where Mr Mulchandani was involved in a high-profile case of tax evasion in the late 1990s – reported the story. One newspaper quoted a source at the Dubai Real Estate and Regulatory Authority (Rera) as saying it was going to question Mr Mulchandani about the fraud allegations. Rera later denied giving the newspaper a quote. http://www.mumbaimirror.com/net/mmpaper.aspx?page=article&sectid=15&contentid=200808232008082302260752817e4982d

http://www.gulf-news.com/business/General/10240118.htmlStill, because of the allegations, Rera examined the case and cleared Mr Mulchandani and his company of any wrongdoing. Mr Mulchandani believes a former employee was behind the online campaign.

 

“Financially, we have grown very quickly, and when you grow very quickly you make a lot of enemies. This was a clear campaign to damage us,” he said.

Mr Mulchandani said that his past was also used against him.

“I did have some issues in India regarding taxation. I was a very high-profile businessman and had a business that ran into trouble. We went to litigation and won that litigation. I have made mistakes in the past and have paid my dues,” he said.

Dynasty Zarooni made the unusual move of responding to the accusations on the website in an effort to defend itself.

http://www.skyscrapercity.com/showthread.php?p=24219792

Mr Mulchandani said: “The people writing on blogs should reveal their identity. I believe if you have something to say then say it with your name on it. If these people were genuine investors they should have contacted us with their problem and we would have solved it. We can’t keep responding to them online, it’s humanly impossible.”

The web accusations were particularly upsetting to Hilal al Zarooni, the local partner and president of Dynasty Zarooni.

“My family has been in real estate here for 50 years and we’re very well-known people,” he said.

“It is not good for our company, or for Dubai, for false things to be made on the internet. I think there should be some sort of regulation on this, because today, genuine businesses and a genuine project can be seriously damaged by blogs.”

While there are no defamation laws in Dubai specifically governing online content, an online author found guilty of making false accusations against an individual or company faces similar penalties to those charged with defamation using other forms of media. “The penalties for such crimes are imprisonment of between one and six months and/or a fine of up to Dh5,000,” said Miriam McGregor, an associate at the law firm Clyde & Co.

Marwan bin Ghalita, the chief executive of Rera, said the authority was not planning to ban online property blogs, but a developer had the right to sue anyone who published false information about it online.

“These blogs aren’t helping anybody, and most of the information on them aren’t true,” Mr Ghalita said.

“There is freedom of speech and you can’t keep people quiet, but if they have a complaint they should go through the proper channels.”

Alexander McNabb, a group account director at Spot On Public Relations, said property developers should embrace the internet as a way of communicating with customers and use it to update them on a project’s progress.

“The trouble with property companies in Dubai is that they’ve traditionally got away with running hyperbolic advertisements making claims about properties, but never actually having a dialogue to follow it up with the people who have bought in,” he said.

“The internet is a symptom of a consumer-driven market, so if you’ve been criticised online you either fix what you’ve been criticised for or you get online and take part in that dialogue. You don’t just have the site shut down.”

Mr McNabb said that many investors in property, particularly those who lived overseas, would appreciate online communication with developers.

“Property companies have to learn to communicate with their customers,” he said.

“Most people online will appreciate the dialogue rather than silence. And if you’ve got unhappy customers, how long can you afford to simply ignore them?

“Developers need to learn about online communities and maybe start up their own online communities where customers can go to a specialised site and monitor the progress of the project.”

agiuffrida@thenational.ae
other Blogs about Dubai Property problems:

www.dubai-real-estate-crisis.blogspot.com/

http://www.skyscrapercity.com/

Section: Property & Investment in Dubai: Your questions about the market

link:

http://www.skyscrapercity.com/showthread.php?s=0a5f2c649abcacfc28e8ba379850736e&t=490764&page=352

Palm Springs Damac Investors Group

http://damaconcovered.wordpress.com/

Dubai hit by economic downturn – 24 Nov 08

UAE: Delayed, Downsized or Scrapped!

UAE: Delayed, Downsized or Scrapped!

05 December 2008Dubai -

Several major construction projects in Dubai have been delayed while others could be cancelled altogether, as the credit crisis forces developers to reconsider budgets.

Announcements that Nakheel Trump International Hotel and Tower and Meraas’ Jumeirah Gardens project are to be postponed come after months of speculation about what effects the global recession would have on the construction industry.
“I think a number of development projects have been put on hold rather than cancelled altogether,” said Ronald Hinchey, resident partner at property consultants Cluttons.

“I think the authorities will take steps to inject liquidity into the market, which is what this problem has been caused by in the first place.”

Hinchley added that off-plan residential developments, especially in areas such as Jumeirah Lake Towers and the Marina, were especially vulnerable to cancellation.

Those which were in the process of being built stood a much greater chance of being completed, he pointed out. A government seminar will be hosted by Minister of Public Works Shaikh Hamdan bin Mubarak Al Nahyan on December 24 to discuss the implications of the financial crisis on the construction sector.

The industry accounts for 20 per cent of the UAE economy and represents the major thrust of the initiative to diversify the economy away from oil.

However, according to a report by Al Mal Capital, growth in the industry will slow from 20 per cent to 15 per cent next year, and 13 per cent by 2010.
But these problems may not have been unforeseen.

Shortly after the announcement of the Dh350 billion Jumeirah Gardens at Cityscape in October, investment bank EFG Hermes wrote in a briefing note: “While these projects received a lot of attention due to their scale, we believe their timing cannot be considered to be ideal given the reduced appetite for new projects as a result of the global crisis.

“Moreover, the tighter liquidity picture raises the question of funding, which was not particularly addressed.”

Khaleej Times took a closer look at a few of the major projects here which have been delayed, downsized or could be cancelled amid the new climate.
Construction Company Could Lay Off 5,000 Workers

DUBAI – Up to 5,000 jobs could be cut in a Dubai-based construction firm, a senior source in the company said.

In addition, at least three major projects run by the company have been cancelled, as well as a number of other smaller projects. The job cut would reflect a 10 per cent cut in the companyís staff which, as one of the Middle Eastís largest construction companies, has nearly 50,000 workers.

The senior official, who spoke on condition of anonymity, said that uncertainty had gripped the workforce.

Up to 150 jobs have already been lost in one project, and the work force is also being reduced in the other projects, the source said.
A new wave of job cuts was expected around December 10, he added.
“I’ve been working for the company for less than a year and it could be a case of last in, first out”, he said, adding that both senior and lower levels of the workforce were being affected.

“Banks are tightening lending, so some developers are unable to pay for the construction costs and jobs are being cancelled,” he said.

An official spokesman for the company was unavailable for comment at the time of going to the Press.

Jumeirah Gardens Announced at September’s Cityscape exhibition, Jumeirah Gardens promised to be one of the largest developments in Dubai’s history with a cost-estimate of Dh350 billion.
The timing of the development, which covers residential districts as well as the kilometre-high ‘One Dubai’ tower, was questioned shortly after its announcement.
Despite doing away with some of the streets in Satwa, unconfirmed reports suggest that the project may have already been scrapped.
Several senior staff at project developer Meraas have been laid off.

“In a worldwide economic downturn, any corporate must analyse the market and ensure that its business strategy is aligned to make the most of new opportunities,” an official spokesman for the company said.

Porto Dubai It was announced as a residential offshore development that would offer direct views of the Burj Al Arab from the villas built on ‘tiers’ cut into the island. However, the current design of Porto Dubai is already a smaller one from that originally conceived by consultants two years ago.
Asteco Property Management acted as an adviser on the initial stage of the project but stopped work after it ‘changed size and shape’, a source said.

Industry insiders claim that construction at the site may have halted altogether and that 200 staff have been cut from the parent group.

However, the CEO of Zabeel Properties, Robert Norton, who spoke to Khaleej Times denied both accusations, adding that views of construction site have just been obscured by a huge mound of sand.The Palms Nakheel’s Palm Deira is the largest of the three Palm developments and is expected to house one million people. However last month, the developer announced that dredging work was to be scaled back on the project.

Frank Jeuniaux, area manager, of Belgium-based Dredging International, said he expects contracts to be much less readily available in future.

Infrastructural work on parts of Palm Jebel Ali which are not due to be populated until 2011 and 2012 will also be scaled back.

Delays would also occur on Palm Jumeirah at Frond N villas and Gateway Towers.
A spokeswoman for Nakheel said: “Work on Palm Deira is currently being directed to complete reclamation in areas closest to the shore, so that once these areas are complete we can undertake progressive land sales and development.”Trump International Hotel and Towers Located on the trunk of the Palm Jumeirah, the 62-floor, split tower development was expected to offer access to a private beach and yacht club. However last week officials announced that the joint project between the Trump Organisation and Nakheelhad been delayed.

Bloomberg reported on Monday that Nakheel had promised to cover all costs for the Al Habtoor Leighton , whose subsidiary Al Habtoor Engineering is building the project.

“Nakheel is delaying long-dated infrastructure work on some of our projects in order to ensure that our business model is aligned to meet market demand,” a spokesman for the company said. “We have the responsibility to adjust our short term business plans to accommodate the current global environment.”

Hydropolis Originally billed to be completed in 2009, the Jules Verne-inspired underwater hotel was about being as extravagant as they come.
The architectural marvel included a giant retracting roof that would enable open sky events to take place in the main ballroom.

The project, which is the brainchild of developer Crescent Hydropolis, was several years ago valued at Dh1.6 billion and construction began in the summer of 2005.
However, a source at SIBC Industrial Building Consultants, who were initially charge of managing the project, said that the company had not heard anything from the developer for a while.
“I’m pretty sure it won’t be completed by 2009,” he said.

CEO of Crescent Hydropolis, Uwe Hohmann said: “I cannot disclose anything at present. We will meet with our shareholders next week and a decision will be made then.”Arabian Canal Billed as the world’s longest man-made canal, the Limitless project is anticipated to stretch 80km from Dubai Marina to Palm Jebel Ali and includes a variety of residential and commercial developments.

However, the Dubai World company announced that it was reviewing the pace of development of the project with respect to market conditions. The project is a two-stage development expected to be completed by 2025, and a spokeswoman for the company said the first stage is continuing at a ‘torrid’ pace.
It is believed that any delay would be over when subsequent stages would be completed.

Reports have suggested that the company had put on hold the selling of property that would come as a result of the development, but a spokeswoman denied that anything had been formally put up for sale.

martin@khaleejtimes.com

By Martin Croucher
© Khaleej Times 2008

Dubai Property poker

original published:

ArabianBusiness

http://www.arabianbusiness.com/540596-property-poker

by Rob Corder This email address is being protected from spam bots, you need Javascript enabled to view it  on Tuesday, 09 December 2008

For what some might call semi-professional property speculators and others might call amateur gamblers, the game is up.

Flipping properties – the business of buying villas and apartments off-plan and then selling them before they are built – has made millions for the professionals, but is about to cost the amateurs their shirts.

The problem, as with most gambling, is that it becomes addictive and destructive. The value of money changes as you win it. The descent into dangerous addiction for many of these flippers has gone something like this:

They took a punt on their first property around three-four years ago. The earliest property pioneers, who might have bought a luxury apartment off-plan on Palm Island for less than the price of a granny flat in their home country, watched the value of their investment double, treble, quadruple over the first two years.

These were typically high net worth individuals with diversified portfolios who were well-judged in taking a punt on embryonic real estate laws and a visionary development.

Word spread that easy money was being made and the amateurs poured into the market. Conditions were perfect: the market was rising fast; disposable incomes were high thanks to relatively cheap living costs at the time (yes, they really were low four years ago); and banks were ready to lend money to anybody with a reasonable salary certificate.

A gambler would probably have started relatively small, perhaps a modest apartment in Jumeirah Beach Residence. But when that property doubled in value before the tower’s foundations were laid they borrowed again from the bank using the paper profits from their first apartment as collateral.

The banks were even more willing to lend because the punter had a tangible asset as security. Now the player could double-up.

A year or two later, nerves began to set in about the Dubai property market. There was a lot of talk of bubbles bursting and it seemed a good time to cash in those chips. A lot of this profit taking went on at the beginning of 2008, heralding the first signs of a correction.

But the gambler was now hooked. The original investment of 500,000 dirhams had been turned into five million dirhams, and the money was burning a hole in his pocket.

The Dubai market looked like cooling a little, but Abu Dhabi was still red hot. The time for the big play had arrived. Five million dirhams used as a down payment on off-plan property in Abu Dhabi meant the same trick he pulled a few years earlier in Dubai could be repeated in the UAE capital.

If Abu Dhabi followed the same trajectory as Dubai, reasoned the gambler, five million could be turned into 20 million or more.

Then September hit. With hindsight we might now call it the Ramadan Rout. Credit markets seized, making it impossible for property developers to find finance for future projects and individuals unable to borrow money for a mortgage or even a rent cheque.

Confidence evaporated overnight. It was impossible to track the rate property prices were falling because no transactions were taking place. Worst affected was the off-plan market because nobody wanted to buy property that might be worth less when built than it was on paper.

The loss of confidence was not contained to Dubai. Abu Dhabi was hit too. The gambler was suddenly in a cold sweat. When the developer building his properties completes the construction, he will have to find a mortgage to cover the outstanding balance of the price he paid.

But the banks are no longer lending. The properties could already be worth less than he paid for them and the banks do not want to take the risk of lending against a depreciating asset.

If he can’t secure a mortgage, the gambler is sunk and the properties will be repossessed by the developer. The only remaining hope is to sell at a fire sale price before the building is completed.

This is the picture that is being repeated across half-built real estate developments throughout the GCC, and it explains why prices have fallen so far and so fast. Thousands of speculators have to dump their properties before they are completed.

There is no short term fix that will reverse the trend. There is only a hope that prices will eventually fall so far that bottom-feeding investors return to snap up bargains.

The irony is that the same professional property dealers that made a killing on the first off-plan developments will be back to make another killing at the end.

Between times, the amateur gamblers have been on an exhilarating ride, but now many are left to rue one big bet too many.

 

 

Dubai Immobilien – Krise heilt die Scheichs vom Goessenwahn

original published: http://www.spiegel.de/ Germany

09. Dezember 2008, 11:02 Uhr
ENDE DES IMMOBILIENBOOMS

Krise heilt die Scheichs vom Größenwahn

Von Bernhard Zand

Aus die Sause: In nur zehn Jahren hat sich Dubai von einer kleinen Hafenstadt zur Immobilienmetropole gewandelt. Doch damit ist jetzt Schluss – die Finanzkrise erreicht auch die Scheichs und zerstört ihre Träume von Wolkenkratzern und Kunstinseln.

Dubai – Plötzlich waren sie da. Von ihren teuren Villen aus konnten die Bewohner von Jumeirah Beach die acht Baggerschiffe sehen, die Tag und Nacht buddelten, Felsbrocken im Meer versenkten und Sandfontänen in den Himmel steigen ließen. Und das, obwohl die Kunst-Archipele “The Palm”, “The World” und “The Universe” alle weitab vom vornehmen Jumeirah liegen. Was also wurde hier nun wieder aufgeschüttet?

Auf einer Immobilienmesse Anfang Oktober ließ der Scheich von Dubai das Geheimnis lüften: Ein neuer Stadtteil entstehe, genannt Jumeirah Gardens, ein “Venedig am Golf”, eine Fantasiestadt aus Inseln, Wolkenkratzern, Parks und künstlichen Kanälen. Halb an Land, halb ins Meer hinaus gebaut. 70 Milliarden Euro teuer.

Was waren Anfang Oktober schon 70 Milliarden Euro in Dubai?

Anfang November verschwanden die Bagger-Schiffe so plötzlich, wie sie gekommen waren. Wieder rätselten die Strandbewohner – bis vorige Woche die staatliche Entwicklungsfirma Meraas mit einem Geständnis herausrückte, das in Dubai noch von keinem Bauherrn zu hören war: Die Jumeirah Gardens werden “einer Revision unterzogen”, Teile des Projektes wohl “verschoben”. Mit einem erst im Oktober angekündigten 1000-Meter-Wolkenkratzer, einem zusammen mit dem US-Tycoon Donald Trump zu errichtenden Hotelkomplex und einem ganzen Areal von Luxusvillen auf der Palmeninsel werde es vorläufig nichts, gab der Entwickler Nakheel zu. Und kündigte sogleich 500 seiner 3300 Angestellten.

Wolkenkratzer aus Petrodollars

Tatsächlich geht in Dubai ein Immobilienboom zu Ende, wie ihn die Welt noch nicht gesehen hat. In gut zehn Jahren ist aus einer kleinen Stadt, die neben einem Hafen und ein paar Fünf-Sterne-Hotels lediglich einen geschäftigen Flughafen aufweisen konnte, eine Monster-Kommune geworden, die sich mit amerikanischen Millionenstädten messen kann. Die Scheichs bauten und ließen bauen, als ginge jeden Augenblick der Weltvorrat an Zement, Stahl und Glas zu Ende.

Jetzt aber ist es der Weltvorrat an Geld, der zu Ende geht: Dubai ist hoch verschuldet, und die Finanzkrise trifft das Emirat mit einer Wucht, die vor ein paar Wochen noch keiner wahrhaben wollte.

Denn die Wolkenkratzer von Dubai sind mit Petrodollars gewachsen. Nicht mit denen, die das kleine Emirat für die paar tausend Barrel bekommt, die es selbst fördert. Sondern mit den Milliarden, die im Nachbar-Emirat Abu Dhabi, in Riad und sonst am Golf eingenommen, dort aber nicht angelegt wurden. Dubai hatte, im Gegensatz zu diesen Städten, eine Vision zu bieten, in die reiche Araber gern investierten: ein modernes, schrilles und überdrehtes Touristen-, Bank- und Handelszentrum, das es an Prestige und Lebensqualität mit Hongkong, Singapur und den großen europäischen Touristenstädten aufnehmen kann.

Deshalb die Sucht nach Superlativen, daher die klimatisierten Swimmingpools, die Ski- und Eislaufhallen in der Wüste – und daher auch die Schadenfreude, mit der mancher nun der Stadt das Totenglöckchen läutet: “Die Party ist vorbei”, titelte vorige Woche die “Sunday Times” – nach er rauschenden Eröffnungsfeier für das Hotel “Atlantis”, bei der 20 Millionen Dollar verpulvert wurden, unter anderem für ein gigantisches Feuerwerk.

Dabei haben die Immobilienhändler von Dubai nur das getan, was die Scheichs aus Rücksicht auf islamisches Recht bis heute nicht erlauben: Sie haben aus dem Markt ein riesiges Spielcasino gemacht. Wer noch im Oktober auf der Baumesse “Cityscape Dubai” nach einer einzelnen Wohnung fragte, die er selbst kaufen, finanzieren und bewohnen wollte, der wurde lächelnd an einen jüngeren Kollegen weitergereicht.

Die Meister ihrer Branche verkauften lieber etagen-, türme-, wohnanlagenweise – und zwar Gebäude, die nur auf dem Papier bestanden. Ihre Kundschaft waren Spekulanten, die sich im sogenannten Quick-Flip übten: Fünf oder zehn Prozent Anzahlung zur Grundsteinlegung, und dann so schnell und profitabel wie möglich raus aus dem Vertrag. Das Problem: Der Bau-Entwickler verließ sich vielfach auf das Geld der Spekulanten, die wiederum hatten sich ihr Geld oft billig geliehen – ebenso wie die zweiten, dritten und vierten Käufer in diesem Pyramidenspiel, die alle auf den Letzten in der Reihe hofften, der Dubai so unwiderstehlich findet, dass er am Ende jede Miete zahlt.

Banken verschenkten zuletzt Kredite

Die Profite, die damit erzielt wurden, waren beträchtlich: Wer 2003 etwa 500.000 Euro für eine Villa auf der Palmeninsel zahlte, wurde sie diesen Sommer für drei Millionen los. Die Mieten, stets ein Jahr im Voraus bezahlt, waren astronomisch. Seit Oktober aber gehen die Preise drastisch zurück: Mehr als zwei Millionen Euro, sagt der Immobilienhändler Josef Kleindienst, seien die Palmen-Villen im Moment nicht wert. Eine Prognose, wie tief es noch bergab gehen könnte, wagt er nicht. Und wer wie tief in der Kreide steht, weiß keiner – denn eine Kreditaufsicht, die ihren Namen verdient, nimmt dieser Tage erst ihre Arbeit auf.

Dasselbe gilt auch für die Banken, die Kredite zuletzt geradezu verschenkten – bei einer Inflation von zwölf Prozent und Zinsen von etwa neun Prozent. Inzwischen aber sind sie furchtbar knauserig: Wer früher zehn Prozent auf eine Wohnung anzahlte und sich den Rest pumpte, zahlt heute 50 Prozent an und kriegt, wenn er Glück hat, den Rest finanziert.

Vor allem aber wusste bis vor kurzem keiner, wie viele Schulden sich bei der Regierung selbst angehäuft hatten – was zu wildesten Gerüchten führte: Das Hotel Burj al-Arab, das Wahrzeichen Dubais, sei längst versilbert. Der Hafenbetreiber Dubai Ports World, ja selbst die Fluggesellschaft Emirates Airlines stehe vor dem Verkauf. Bis vor zwei Wochen Mohammed al-Abbar, Vertrauter des Scheichs und Chef des halbstaatlichen Immobiliengiganten Emaar, vor die Presse trat und, zur Überraschung seines Publikums, konkrete Zahlen nannte.

Die Regierung sei mit zehn Milliarden Dollar verschuldet, die von ihr kontrollierten Unternehmen mit noch einmal 70 Milliarden. Dem aber stünden Vermögenswerte von zusammen 350 Milliarden Dollar gegenüber, weshalb zur Beunruhigung kein Anlass sei. Die Geschäftsleute am Dubai Creek hörten die Botschaft wohl – was diese Zahlen aber wert sind, kann im Moment noch keiner sagen. Es wäre schließlich das erste Mal, dass die Scheichs sich wirklich in die Bankauszüge schauen lassen.

Aber tatsächlich könnte es dem Emirat gelingen, die Weltfinanzkrise zur längst überfälligen Bereinigung seines Immobilienmarktes zu nutzen. Denn vieles spricht noch immer für den Standort am Golf – trotz der geplatzten Blase.

Da sind zunächst die sechs anderen Emirate, mit denen Dubai in einem Staat verbunden ist. Vor allem mit Abu Dhabi hat Dubai eine grundsätzlich sinnvolle Arbeitsteilung: Dubai ist das Dienstleistungszentrum, über das Länder wie der Irak, Iran und Saudi-Arabien noch immer einen großen Teil ihres Handels und ihrer Finanzgeschäfte abwickeln – während das Nachbar-Emirat auf Ölreserven sitzt, die größer als die von Russland oder Venezuela sind. “Abu Dhabi hat kein Interesse daran, dass Dubai untergeht”, sagt denn auch Eckart Woertz vom Gulf Research Centre.

Davon abgesehen ist in den Jahren, in denen Dubai aufstieg und sich – wenn auch auf Pump – als Wirtschaftshauptstadt etablierte, in der gesamten Region so viel Geld verdient worden, dass die Golf-Araber der Weltfinanzkrise noch relativ gelassen ins Auge blicken können. “Wohin mit unseren Ersparnissen?” fragte, deutlich abweichend von den Trends in Europa und den USA, vor drei Wochen das Wirtschaftsmagazin “Arabian Business”. Auf dem Titelbild war ein Bett zu sehen, aus dessen Matratze die Dollarbündel quollen.

“Am Ende läuft in Dubai alles auf eine Frage hinaus”, sagt der Immobilienhändler Kleindienst: “Brauchen wir die Häuser, die wir gebaut haben, oder brauchen wir sie nicht?”

Eine gute Frage. Die 1,6-Millionen-Einwohner-Stadt Dubai, hat die Rating-Agentur Colliers ermittelt, wird 2009 weitere 5,6 Millionen Quadratmeter Bürofläche zur Verfügung haben – genauso viel Shanghai mit seinen 18 Millionen Einwohnern. Allerdings wachsen auch die Emirate: Laut den ersten öffentlichen Zahlen lebten 2004 noch 3,8 Millionen Menschen in dem Golfstaat, heute sind es 6,5 Millionen.

Die meisten Zuwanderer sind nach Dubai gekommen – und brauchen Häuser.

UAE Property Scandal Number ? – Police seek Al Barakah executive – The National Newspaper

Police seek Al Barakah executive – The National Newspaper

Police and investors are trying to track down the chief executive of Al Barakah, a property developer, in connection with Dh14 million (US$3.8m) worth of bounced cheques.Al Barakah, the group behind the development of the “tallest tower in Ajman”, as well as several projects in Dubai, enticed homebuyers with a guarantee of a 50 per cent profit in six months. To convince them, the company issued post-dated cheques for that time period.

Police say at least Dh14m worth of those cheques have bounced and the company’s chief executive, Imran Khan, has so far eluded investors and law enforcement officials looking for him. The status of the company’s developments, which number more than a dozen in Ajman and Dubai, remains unclear. With many of these guarantees now reaching maturity and property prices falling, investors in Al Barakah have been flocking to its Dubai-based brokerage agency in the hope of cashing in on their memorandums of understanding (MOUs).

“My MOU matured exactly a month back. I have been going there many times. Every time you ask for the CEO, they say he is not there,” said an investor who bought units worth Dh2.5m in Ajman. “I gave them a 20 per cent downpayment in cash and they said it would be refinanced in six months, with 50 per cent returns.”Al Barakah has launched 15 projects in Dubai and Ajman since it began operating last year. The company has sold about 50 per cent of the units in those projects, according to a sales agent of the company.

The National has obtained a copy of one of the MOUs signed by Al Barakah’s Mr Khan, for a unit in the Burj Regent in Ajman.In the document, Mr Khan promises to resell the property within five months at a minimum of 50 per cent profit. The MOU says the details should be kept confidential.Promising 50 per cent returns in six months is not illegal, but David Nunn, a lawyer with Simmons and Simmons, said failing to honour a cheque was a criminal offence.

The National attempted to contact Mr Khan on several occasions in the past two weeks, but he was not available for comment. According to the cheques department of the Rashidia Police Station in Dubai, four cases have been filed against Mr Khan by investors involving bounced cheques totalling Dh14m.“A fifth case is coming up with cheques amounting to another Dh9m,” an officer at the department said. “Many more people are coming to file new cases.”

The officer said police had visited Mr Khan’s house and found it closed and empty. He said police believed Mr Khan was in Dubai, but they had been unable to locate him.Al Barakah’s website describes the company as a Shariah-compliant real estate investment and development group.“For us, business is all about ‘trust and transparency’ and these core principles represent the cornerstone of our business model,” the website says.

The company is not registered in Dubai or Ajman, the two emirates in which it has projects.

According to the Ajman Land Department, no Al Barakah projects are registered, not even Burj Manara Ajman in Marmooka City, a building that is earmarked to become the tallest tower in the emirate, reaching 90 storeys. No work has started as yet on the Burj Manara Ajman site.

Al Barakah Investments is registered in Ras al Khaimah (RAK) Free Trade Zone as an offshore company, an official at the zone said.

Haidar Ali, a sales agent at Al Barakah’s Dubai-based agency, Inside Track, said staff had received death threats from disgruntled buyers. He said he had not been paid for two months.“

People are coming and threatening us. This is why the office is empty,” he said. “We are not the ones who took the money. Our chief executive, Imran Khan, did,” he alleged. “He gave the signature on the MOU with the copy of his passport.”

Mr Khan’s personal assistant, Abdul Qadeer, said Mr Khan was ill. “Imran Khan is not picking up the phone,” Mr Qadeer said. “He is not feeling well, but he is in Dubai.”The National located Mr Khan’s wife at a Dubai hotel, but she said he was not available for comment.Another investor, Maha Abdulwahab, based in Bahrain, purchased an entire floor in Burj Regent, one of Al Barakah’s Ajman developments.
“I paid 10 per cent of the value in a one-time payment and with no escrow account,” she said. “And I am supposed to get my money plus 50 per cent profit in March. I can’t get in touch with the CEO.” Mrs Abdulwahab said she would file a case in Bahrain and get Interpol involved.Mr Ali, the sales agent, said that unfavourable market conditions had impacted Al Barakah. “The market is not good so we didn’t honour our promises,” he said.

Earlier this year, the company announced it planned to develop projects worth more than Dh3 billion in three years.
Its projects to date include Sanali Towersin Downtown Dubailand, the residential development Le Stelle in Dubailand, and the residential and commercial development Al Tafany, in the City of Arabia.
mailto:Arabia.ngillet@thenational.ae

Direct gov’t action called for to support property market – Real Estate – ArabianBusiness.com

Direct gov’t action called for to support property market – Real Estate – ArabianBusiness.com

RichVille, a real estate asset management firm, on Wednesday accused authorities in Dubai of not doing enough to support the faltering real estate market.The company, part of Dubai-based conglomerate Tharaa Holding, said in a report that authorities needed to take direct action to revive the market, which saw real estate prices fall four percent between September and October, according to HSBC.

The global financial crisis has hit demand for real estate in Dubai from foreign investors, which make up a large percentage of buyers, while tightening liquidity has made home financing more difficult.

RichVille blamed the downturn in the market on banks, which have tightened lending conditions in recent months despite the UAE central bank making 120 billion dirhams ($32.7 billion) available to the banking sector boost liquidity.“

The report held the banks in Dubai responsible for the inactivity of the real estate market, even though the central bank has taken measures to support the banking sector and the economy, no direct actions have been taken towards the real estate sector…”
RichVille said in a statement.RichVille said Dubai’s Real Estate Regulatory Agency (RERA) had to play a more active role in developing a rescue plan for the market.“

The report… suggested a rescue plan for RERA to play a much needed leading role that surpasses regulating and documenting, to cooperating with the master developers, government bodies, and main investors to develop a rescue plan…,” the firm said.RichVille called on master developers to delay any upcoming payments by six months to avoid default and “panic in the market”.

The Dubai government last week set up a committee to recommend ways to tackle the impact of the financial crisis on the emirate’s economy, including real estate and banks.Mohamed Ali Alabbar, chairman of Emaar Properties and of the new committee, said on Monday Dubai would pull back on its building spree in light of the financial crisis.

Property developers reassessing sales strategies

Property developers reassessing sales strategies

Dubai-based developers are putting sales of their properties on hold until the situation improves in the emirate’s real estate market, prominent developers said yesterday.”We will definitely reassess sales strategies in the light of the current market conditions. Everything is under review now and we have no new plans for the near future,” said Ali Mansour, Project Director, for Nakheel’s Palm Jebel Ali.

“There are no sales on Palm Jebel Ali happening as of now.

The only sales that happened were in the year 2003–2004,” said Mansour.Palm Jebel Ali is the second of the Palm trilogy being developed by Nakheel.

It is located right in the heart of Jebel Ali, close to the Al Maktoum International Airport and the Dubai Waterfront development. So far, Nakheel has sold 52 plots of land in the Crescent A, 504 units of waterhomes and 1,300 villas at development.According to Nakheel, Palm Jebel Ali will feature signature villas, garden villas and also a wide range of luxury apartments, town homes and penthouses.It is expected that around 300,000 people will live on the development.”Palm Jebel Ali has an advantageous location in a totally virgin area of Dubai.
By the time it is completed, the Al Maktoum International Airport would already have become operational.

Three phases of extension at the Jebel Ali Harbour would also be complete when the Palm Jebel Ali is delivered.

There will be some high-end and luxurious components at the Palm Jebel Ali, but the project will also have other components catering to various market segments,” said Mansour.Limitless, too, has not launched the sales of its Arabian Canal project. Ian Rainelan Raine,

Limitless’ Project Director for the Arabian Canal, said: “We will judge when the time is right to start selling. We have registered a huge amount of interest in the Arabian Canal project but we are not registering sales at the moment.”The Arabian Canal will be one of the longest man-made canals. The excavation of the canal will start near the Dubai Marina area and it will flow inland around the planned Al Maktoum International Airport. It will then meet the sea at the outer end of the Palm Jebel Ali.

Dubai Waterfront will be the first phase of the larger Arabian Canal effort. The developer said financing for the first stage of the project has been completed.

Policy review Rufi Real Estate, Dubai-based real estate developer, is revisiting its strategies and has deferred launch of some of its realty projects until the second quarter of 2009.”We were supposed to launch two residential towers in Meydaan and projects in The World, where we have bought three islands. But we have postponed all that for now,” Mehrooz Manzoor Rufi, Director, Rufi Real Estate, told Emirates Business.Rufi is optimistic about real estate prices picking up by the middle of 2009 in the emirate.Pre-sales take care of 40 to 50 per cent of construction cost and so the company need not look for external borrowing options, said Rufi

Property investors rally to the cause. – The National Newspaper

Property investors rally to the cause. – The National Newspaper

An amendment to a property law in Dubai has brought together a group of angry off-plan buyers who are fearful of losing a third of their investment to developers they believe may not even proceed with construction. According to the new amendment, off-plan buyers wishing to halt their payments have to cancel their contract and forfeit 30 per cent of the total value of the property, instead of only 30 per cent of the money they have paid.

The investors, who formed their group after an online forum on the issue, have yet to see evidence of construction on their projects and fear losing more of their money to developers in the current global slowdown if they continue their payments – but under the new amendment they could lose a third of their properties’ value if they do not. The new administrative circular was issued by the Dubai Land Department on Nov 10 concerning amended Law 13 on the pre-registration of off-plan properties, which was issued in August.

“Many investors have already paid 20 per cent to 50 per cent in projects which haven’t even started, hence they stopped payments in order to avoid further losses caused by possible bankruptcy of the developer,” said Tommy Carlsson, one of the organisers of the Dubai Property Investors group.

“Developers are misusing this interpretation of the law to terminate as many contracts as possible and forfeit our funds instead of finding solutions together with investors.”

Investors fear that developers who already know they cannot proceed with a project will keep the 30 per cent and then later on cancel the project without needing to refund buyers.

The group, which met for the second time on Sunday and is planning to hire a lawyer to represent them, is asking for two things. It suggests that before allowing a developer to cancel contracts, the developer must first submit the audit of its escrow to the Land Department. According to Law 8, developers must audit their accounts, but many of them have not done this yet. “We want developers to prove they have the ability to build,” said Nigel Knight, a co-founder of the group.

Second, contract cancellations should be put on hold if the client has already paid 20 per cent and construction has not started, with the payment plan proceeding only when construction actually starts.“We see that as the responsibility of the Government to make investigations about the developers and find out whom we can trust and who is not OK. We only ask the Government to protect us,” Mr Mohammed said. “We got e-mails from a developer saying we were not allowed to form a group. Somebody even tried to hack [into] our e-mail account.”

Among the developers that investors are concerned about is Schön Properties.

“Some people paid over 60 per cent of [Schön’s] Dubai Lagoon,” said Mr Mohammed, the co-founder of the investors group who did not wish to give his family name. “People ask why they should continue to pay. The developer hasn’t even started construction of their units. The developer is saying that if they don’t continue [to pay] they will cancel the contract and forfeit their money.”

Amlak and Tamweel to sign on the dotted line – The National Newspaper

Amlak and Tamweel to sign on the dotted line – The National Newspaper

Back-door nationalisation.

A sign of distress in the banking sector. A prop to spur further lending for home buyers.

These are just some of the varied reactions to the news that the country’s two largest home finance providers will merge under the umbrella of a federal bank. Analysts are also saying that this is the first major government intervention to prevent the worsening property economy from sliding further as a result of the global credit crisis – and a welcome move at that.

“The whole landscape is changing,” said Chris Dommett, the chief executive at the regional office of mortgage advisory John Charcol. “This makes a lot of sense right now. It shows the emirates are thinking on a countrywide level.”

Amlak Finance and Tamweel, two companies with roughly Dh25 billion (US$6.8bn) in assets between them, will merge and become part of Real Estate Bank, a relatively unknown entity with offices in Abu Dhabi and Dubai, wholly owned by the Ministry of Finance and Industry, the state news agency WAM reported on Saturday.

The result would be a new home finance provider that would “serve as the cornerstone of the mortgage market”, said one government official, according to WAM. However, one senior international Dubai-based banker said it was still not clear whether the two institutions’ main problems had been addressed. “In theory, it is a good idea. But how do you turn two institutions that are in a mess into one combined entity that works well? You just end up with one giant mess.

Both Amlak and Tamweel need to merge with a major bank because what they lack is funds, and banks have that from their depositors.

However, hardly anybody had heard of the Real Estate Bank until now. Is it well capitalised?

Nobody seems to know.”

Some observers credit the authorities with trying to do something, even if the outcome may still be uncertain. The move comes as the credit pressures on property developers and home finance companies have become especially acute.

Amlak announced last week it would stop issuing new home loans as it reviewed its credit policy. Prices have begun softening across the country and once vibrant salesrooms for new towers are patronised by only a trickle of would-be buyers. This has led to a first round of layoffs at property developers and delays of projects that have yet to begin construction.While speculators have been busy trying to get out of the market because price growth has slowed, many regular end-users are still out to buy a home. But without access to affordable loans, they too have been frozen out of the market.

“The business model of Amlak and Tamweel has collapsed,” said Mohieddine Kronfol, the managing director of asset management at Algebra Capital. “As mortgage companies, their business models relied on wholesale funding, interbank borrowing and syndicated loans. All those channels of funding have been compromised by the credit crunch.”Mr Kronfol said the new national home finance provider could begin offering more attractive home loans because it would probably have access to government funds.

The new entity might also have the ability to collect deposits, allowing it another way to keep financing going during down cycles. Amlak and Tamweel are not licensed to collect deposits.

The announcement will push the relatively unknown Real Estate Bank into the spotlight as a leading financial institution in the property industry.
The bank was set up in 1981 and made operational in 1999 to provide loans to Emiratis and government-controlled companies. According to its website, it has only 7,000 customers and was started with Dh2bn in capital. Amlak and Tamweel, meanwhile, have combined assets of Dh25bn and tens of thousands of customers. Combined, they promise to be the largest property finance firm in the Middle East. The problem is neither of them have any money to lend to home buyers.

Mahmood al Mahmood, the chief executive of Al Qudra Holding, hinted last week that Real Estate Bank could take an even larger role in the property economy by also lending to distressed property developers.“We have had this entity for years, but it has not taken a large role,” Mr Mahmood said. “Today, we have an urgent need for it… There are discussions to bring it on track to take part in financing some of the mortgage companies and real estate developers. It would extend facilities whenever needed.”

Still, the announcement appeared to raise as many questions as it answered. No details were given about the structure of the new-look Real Estate Bank or what would happen to Amlak and Tamweel during the merger.Raj Madha, an analyst at EFG Hermes, said the announcement was “extremely positive” for improving the operations of the two companies, but “the main question is what will happen to shareholders”. Like many such mergers, the devil will be in the detail.
Eric Milne, the head of banking and finance for the region at Simmons and Simmons Dubai, said “there isn’t much precedent” for this type of merger. He suspected the merger would need majority shareholder approval.The two main possibilities for shareholders is that they will either be bought out by the Government and the shares will be delisted from the stock exchange, or the shares will be converted into shares in the new company. Either way, the Government is likely to take a controlling interest.

The companies involved provided no further details of the merger. Wasif Saifi, the chief executive of Tamweel, said the company “had been given the details” of the merger under Real Estate Bank and “are just looking at all the aspects of it”.The merger marks the beginning of what is likely to be a series of consolidations in the property industry, analysts said.“We are still on the cusp of a downturn in the UAE,” said John McGaw, the chief executive of the regional office of Killik & Co. “This merger will create a stronger entity. It’s something that needed to be done.”
His optimism will be greeted with relief by government officials, but last night home buyers were demanding the answer to one question: when will the home finance market resume? “This is the one million dollar question,” said the governor of the Central Bank, Sultan Nasser al Suwaidi, said over the weekend.bhope@thenational.aetpantin@thenational.ae

Ratings agency puts ETA Group on credit watch – Real Estate – ArabianBusiness.com

Ratings agency puts ETA Group on credit watch – Real Estate – ArabianBusiness.com

Ratings agency Standard & Poor’s put Dubai-based ETA Group on negative watch on Thursday with a view to downgrading its credit rating due to concerns over the construction and property-dominated firm’s increased leverage.

Standard & Poor’s placed the firm, whose property division has a $10 billion portfolio, on CreditWatch with negative implications with long-term BBB- corporate credit rating, the ratings agency said in a statement.It also put a ‘BBB-’ debt rating on a $300 million senior unsecured bank loan due 2012 issued by subsidiaries Emirates Trading Agency, ETA Star Holdings, and Associated Construction and Investments Co.

The potential downgrade to junk rating is the latest indication Dubai-based companies are feeling the squeeze from tighter lending conditions, a fall in property prices and a collapse in investor confidence as the global credit crunch begins to sweep across the Gulf Arab region’s trading hub.”These actions are due to concerns over increasing financial leverage, the likely adverse effect of the continuing global economic slowdown on ETA’s cyclical activities, and low levels of headroom under financial covenants,” said Standard & Poor’s credit analyst Stuart Clements.ETA’s construction unit is the sixth largest UAE contractor, according to a survey by London-based MEED magazine.

Its real estate arm ETA Star Properties said in October it planned to sell Islamic bonds worth up to $200 million in the first quarter of next year to fund expansion in North Africa and Europe and was planning to develop residential and office towers in the Russian capital Moscow with a value of $600 million next year.”

ETA’s debt levels have risen significantly in recent years to meet increasing working capital demands from both higher commodity prices and the company’s rapid growth in revenue,” S&P said.The group also operates in mechanical engineering, car trading and shipping – all sectors “considered to be highly sensitive to economic conditions”.”The recent collapse in prices in the dry bulk shipping market (81 percent of ETA’s fleet), of about 90 percent from the 2008 peak, may put pressure on some of its time charter counterparties and lead to some renegotiations,” S&P said.S&P will conclude the CreditWatch within 90 days.

ETA Star executive director Abid Junaid could not immediately be reached for comment. (Reuters)

Property Scandal -Dubai developer demands up to 88% increase on price to pay construction costs | Dubai Property

Dubai developer demands up to 88% increase on price to pay construction costs Dubai Property

original published: AME info
http://www.ameinfo.com/176241.html

The company behind the Prodigy development in Dubai’s Jumeirah Village, MiNC, has sent a letter to investors asking for extra capital to cover construction costs after cash flow shortages caused by the withdrawal of project financing by the two funding banks.

The letter from MiNC’s CEO explains the company’s financial situation to investors. MiNC says that despite the land purchase being finalised in October 2006, Nakheel only actually delivered the land for construction in May 2008. This has led to: ‘
A significant negative impact on the project; a doubling of construction-related professional fees and a large increase in government imposed costs.’ In addition: ‘The arrival of the global financial crisis has had a severe impact on the monies MiNC has available to build Prodigy 1.
We are no longer able to subsidise construction of the project; the project needs to be self-funded as originally intended.’

MiNC faces two further problems. New regulations introduced by the Dubai government have meant that the company’s original economic blueprint of using finances from the whole project to fund construction on Prodigy 1 is no longer legal. This has then been compounded by the withdrawal of project financing by two local banks.

Difficult financial situation’We are in an extremely difficult situation,’ Simon Everest, Director of Operations at MiNC told AME Info. ‘Banks have pulled all the finance, so we have the choice of either sitting, doing nothing and waiting it out, like some of our competitors are doing, or we need to find another solution.’ The problems have meant that though most of the units in the seven towers have been sold, and the company’s escrow accounts are up to date, the project is no longer financially viable. MiNC claims that it would make a ’significant and material loss if it were to build this project’ and it ‘can no longer afford to subsidise this loss’, according to the letter sent to investors. As an example, MiNC is asking buyers to pay an additional Dhs326,000 on units originally sold to them for Dhs370,000, a mark-up of 88% on the original price.

The developer also asks that investors pay the increase up front, with the remaining instalments as per the original terms.
The charge will then go to pay for construction costs. In return for this the company is trying to mitigate buyer displeasure by guaranteeing 8% rental returns on the increased purchase price. MiNC is also playing on the fact that, at Dhs1,000 per square foot, the units are still below market rate. ‘The market is short of new buyers at the moment and as they cannot sell at a higher price, they are in effect re-selling the same apartments back to the original owners at an increased price!’ an investor in the project told AME Info.

‘When we spoke with their London office, and contacted their Dubai office, the only options were – give us the money we have asked for or lose your apartment and 30%.
MiNC are saying that per the new law they will be able to retain 30% of the purchase price, even though we are not in default of payment.‘
Responding to this comment MiNC said: ‘We do not intend to confiscate all or part of clients’ deposits, and have not in any way threatened our clients in this regard.’

Permanent suspension of workThe letter continues: ‘The current economic climate and the impact on the property sector are unique… Events outside our control have forced us to make difficult decisions. We believe that our proposed course of action will help us meet this target [of delivery in June 2010]. Failing this, we fear that the project will be suspended, possibly permanently.’ The response from investors contacted has been understandably negative so far, with many refusing the terms: ‘If I wanted to buy an apartment at Dhs1000 per square foot back in November 2006, I could have put a little more in and bought in the Marina. As an investor in this company, I feel like I have been robbed of my savings and profit.

I have looked at the market and apartments in Jumeirah Village are selling for under Dhs1000 in the current market.’ If the response by even a large minority of investors is negative then MiNC will not have the funds necessary to begin construction and those who have advanced the extra money will have their funds returned and the company will wait for bank funding to resume. ‘We initiated a meeting with the Land Department to get them to intercede on our behalf with the banks,’ said Everest, ‘and they put pressure on them but we’ve had no joy. Our next move if the buyers don’t accept the deal is to return the money, sit it out and wait for financing. But it is our intention to build every single one of the units.’

UPDATE: Subsequent to the publication of this article MiNC has issued a statement to AME Info stating: ‘We have taken steps to reduce the premium requested from clients to a maximum of 30% or Dhs200,000 (whatever is the lower), as a handful of purchasers that bought at pre-launch prices (less than Dhs600 per square foot) have rightly pointed out that the premium requested of them was excessive.’

Dubai developers are in denial

Dubai developers are in denial

Some of Dubai companies are in “denial” about the viability of projects in light of the global financial crisis, according to the CEO of Depa “
We are at the denial stage where lots of developers know for a fact that their projects should be cancelled and they’re either not announcing it or they’re saying it’s going to be delayed,” said Mohannad Sweid, speaking on future Dubai growth at the Nasdaq OMX Investor Conference.

“We cannot deny the effect [the crisis] has been having, we are a part of this world and I believe it’s just not right to say we haven’t seen any impact,” he added.In its capacity as an interior contractor in the Gulf region, Sweid said Depa had seen a lot of project announcements that had not necessarily been fully researched and he expected these to stop as the crisis takes hold.”

What we have had in the GCC in the last three years is the difference between reality and non-reality.

“Our market research showed there will be 280 new hotels built over four years within the GCC. That was advertised all the time… If we look at the reality – how many hotels have been delivered – it’s hardly more than five or six hotels a year,” he said.

In terms of risk to his own firm, Sweid was confident that infrastructure projects would still go ahead.”In this region, a lot of infrastructure is not developed yet and these elements of infrastructure have to be developed – it’s not a choice,” he said, citing Dubai’s new metro system as an example.He added that DepaDepa was still on track for growth for next year, but the “fears” were for 2010 and 2011.
© 7Days 2008

Dubai Property Court – Most disputes involve payment defaults

original published http://www.business24-7.ae/

Most disputes involve payment defaults

Disputes involving payment defaults resulting from construction delays form the largest category of cases registered so far with Dubai’s new Property Court.

Seventy-one cases have been registered with the court, which began to deliver judgments earlier this month. All the cases so far have been filed by buyers but officials expect developers will start to launch legal actions too.

The number of cases before the court exceeds 500, as hundreds have been pas-sed to it by the Real Estate Regulatory Agency (Rera).”

The court started considering cases this month and has so far passed judgment on four cases,” Chief Judge Mohammed Yousuf Sulaiman, Deputy Director of Dubai Courts and Cassation Court’s Senior Judge, told Emirates Business.”

Two have gone in favour of the defendant and two against,” he added.Judge Abdul Qadir Moosa, Chief of the Court of First Instance (Properties Court), said: “We can only proceed with cases if the parties involved come to the court and register their contact details. Many people are aware their cases are pending but have yet to come to us. We will go ahead once they do.”The court is currently seeking the advice of real estate experts holding high positions in the government and members of the Ruler’s Court to assist the judges in the decision-making process while passing judgment on cases. The experts who are brought in will have to be approved by Dubai Courts and will have to swear that they will pass on any advice in an unbiased and fair manner.”

The time between the registration of a case and the judgment will on average be 52 days, say officials.
Chief Judge Sulaiman added: “The process is that after registration we notify the parties involved about the case and ask them to register their contact details with us. Then they have a consultation with our team members and we arrive at a decision.

The 52-day timeframe is a record compared with the length of time taken in courts abroad.

Dubai Courts arrive at decisions much more quickly than other courts in the region.”The time is needed because we have to follow the procedures set out by the law but once the decision is made then passing judgment does not take long.”The court has not so far recruited any extra judges but will do so depending on the number of cases that are registered.

Officials are also considering publishing a property guide that will include details of Dubai’s freehold regulations.

RERA Dubai – Trust account a must for Real Estate Brokers in Dubai

Trust account a must

It will be mandatory for real estate brokers in Dubai to open trust accounts by early next year under a new regulation that the Real Estate Regulatory Agency (Rera) plans to issue, Emirates Business can reveal.

The real estate broker trust account law will be issued under the By-Law No85 of 2006 regarding the Regulation of Real Estate Brokers Register.

The move is part of Rera’s initiative to boost confidence and bring transparency to the brokerage industry.”We are in the final stages of setting this real estate broker trust account,” said Rera Chief Executive Marwan bin Ghalita.

The trust account will ensure that all the money that is received or transferred under a deal between the seller and the buyer such as the down payment or commission will go into the trust account only. Currently, the practice in the market is that all money-related transactions between a real estate broker and his client is done in the name of the broker. “But now all [money] will go into the trust account,” bin Ghalita said.However, the real estate trust account model will not be similar to the developer trust account model.

Every real estate broker and brokerage company will have to open an account with a Rera-authorised bank. However, the agency has not yet finalised the bank or banks. “Only when the transaction between the broker and his client is concluded will the money from the trust account be transferred to the brokerage,” bin Ghalita said.By-Law No85 ensured that the Brokers Law is applicable to all real estate brokers who deal in the sale and purchase of property that is registered with the Dubai Lands Department.

In addition to the requirement to obtain and maintain a trade licence from the Dubai Department of Economic Development, a regulated broker is required to apply for registration in the brokers register maintained by the Land Department.

Rera has so far registered 6,180 real estate brokers and 1,859 brokerages.Around 4,500 brokers have been trained by the agency and around Dh7 billion has been received into the developer escrow account.

From flippers to floppers – Banking & Finance – ArabianBusiness.com

From flippers to floppers – Banking & Finance – ArabianBusiness.com

One has to feel for the now extinct species of property pundits known as ‘flippers’.

They came, they saw, they coined it. Now they’ve come a cropper.

It’s hard to muster similar sympathy for mortgage lenders — the Oliver Hardy to the flippers’ Stan Laurel — they happily allowed customers to take out multiple loans with cursory credit checks. Now they’ve left us all in another fine mess, scratching our heads and covered in flour.A few months ago, banks were content to provide multi-million dirham mortgages to customers earning less than 20,000 dirhams ($5445) a month.

Now, HSBC bank has let slip that it doubled the minimum monthly salary threshold on Nov 1 from 10,000 dirhams.The bank claimed in a statement the new credit eligibility criteria “will ensure that customers receive loans that they can afford to repay at a time of considerable uncertainty around the world”.

A few months ago, the same bank offered as much as 90 percent financing on the cost of buying a home. Others pledged to complete deals in 24 hours. Now they wouldn’t risk giving those same customers a loan to buy a bike.

It’s outrageously schizophrenic behaviour that only serves to destabilise markets and erode confidence.

International banks were able to reap handsome profits by charging their customers interest rates of eight and nine percent on so-called ‘variable’ rate mortgages, when the prevailing cost of money was less than half that.They told us their rates were based on movements in the Fed Funds rate, but added in parenthesis and in a smaller font that they reserved the right to ignore it, if they felt like it or if there was an ‘r’ in the month.

The justification for such usurious lending practice and such nebulous terms and conditions, was the “risk premium” applied to fledgling Gulf freehold real estate markets.

Flippers were allowed to prosper because banks and property developers collaborated in a system which encouraged speculation and even required it.

It was the ‘get rich quick’ era, during which those with a little money to put up front could see massive returns, based on a property bubble that some seemed to think would never burst. At the same time, the banks and developers were coining it and happy to hand out money and property deeds to anyone who wanted it.

The stage payment method of buying apartments and villas encouraged investors to place multiple deposits on properties without ever intending to occupy them, while banks granted mortgages to customers, aware that they had no real way of knowing whether those same customers were simultaneously applying for another mortgage at the bank next door.

So we had people borrowing beyond their means and a banking system which was happy to gain as much exposure as possible to an industry supported by real estate-backed debt. That does sound familiar.

Sean Cronin is the editor of Arabian Business English.

Dubai Developers say they will scale back activity – The National Newspaper

Developers say they will scale back activity – The National Newspaper

Dubai’s largest property developers say they are cutting back on activity and reviewing the project timetables in response to the worsening economic climate.The admissions, made yesterday, were the clearest sign yet that developers now consider the lack of credit and slowdown of sales as serious impediments to growth in the months to come.“

There is a recession hitting the whole world and some projects in Dubai are being delayed and some are being cancelled,” said Imad al Jamal, the vice chairman of the UAE Contractors Association. “We are having to curtail expenses and regroup resources.

”Nakheel, the property developer behind the iconic island developments that are becoming synonymous with Dubai, also said it would be “scaling back” some projects.
“We are witnessing a global negative economic movement, and while we believe that the economic fundamentals of Dubai have not changed, we also believe that we have a responsibility to aid this market maintain healthy momentum,” a spokesman said. “

This involves reassessing our immediate business objectives to accommodate the current economic climate. The next few months will see a scaling back of activity around some of our projects.”Nakheel would not identify projects that could be delayed, but in recent weeks it has said activity on Palm Deira and Palm Jebel Ali had shifted to the areas closest to the existing shoreline to allow for progressive sales launches.Analysts said projects likely to be affected included the island developments that have yet to begin, such as The Universe – a planned archipelago abutting the 300 islands of The World.

Union Properties, the developer behind the towering Index building and MotorCity in Dubai, said it had eased the payment plans for some developments and would not announce “any new project until we are clear on the status of the credit market and the appetite of banks to go back into lending”, according to Zaid Ghoul, the chief financial officer.
He said the company had completed 85 per cent of its projects and was focusing on expanding its rental portfolio to Dh5 billion (US$1.36bn) from Dh2.2bn – a move that would secure the company between Dh400 million and Dh500m in annual income.Mr Ghoul also said the company was planning payment schemes such as “rent to own” – where a potential buyer could choose to contribute their rent toward buying the home if they decided within a certain period of time.“
We have always been innovative in coming up with ideas to deal with difficult market circumstances,” he said.Developers with a large portion of their sales in the off-plan category are beginning to appear especially vulnerable in the market.

Damac Properties said it had awarded 60 contracts in the first nine months of this year for construction of projects, but a review of its website shows six buildings finished or nearly finished, 24 in the early and middle phases of construction and 44 projects without significant progress.
Earlier this week, Damac announced 200 layoffs, or about 2.5 per cent of its workforce.
Peter Riddoch, the chief executive of Damac, said the company had “undertaken a review of its construction timetable with a view to rescheduling some of its later projects”.
“
This does not mean that Damac Properties is postponing any projects,” he said. “

We, along with every other company across the world, are simply taking an overall view of our business and prioritising accordingly. It makes good business sense for us to prioritise at those construction sites where we have more advanced status and we have communicated our intentions to our customers.”

Emaar Properties, which announced new payment plans on Wednesday to boost sales, said yesterday it was reviewing its recruitment strategy as part of plans to “reorient our growth strategies and align our business model to tackle new realities”.“
While Emaar continues to be one of the largest employment providers and has been instrumental in creating several hundred new job opportunities – directly and indirectly – it is now crucial that we use efficiency and maximise productivity, which includes revisiting our recruitment policies, and optimising human resources,” a spokesman said.Limitless, which is building a Dh11bn canal that eventually will, be the centre of a city with an estimated 1.5 million people, said it was reviewing the pace of development “on a continuous basis” and would adjust to “reflect market conditions”.

Major Abu Dhabi developers, including Aldar Properties and Sorouh Real Estate, said they were still reviewing the economic situation and had not decided whether to ease payment plans to help buyers.

Adel Lootah, the executive director of the Dubai Property Society, said transparency was the key to restoring confidence during this period.“We need a little bit more communication from the government, the main players and the financial institutions,” he said. “This is a difficult time.”mailto:time.”bhope@thenational.ae

Dubai Developers say they will scale back activity – The National Newspaper

Developers say they will scale back activity – The National Newspaper

Dubai’s largest property developers say they are cutting back on activity and reviewing the project timetables in response to the worsening economic climate.The admissions, made yesterday, were the clearest sign yet that developers now consider the lack of credit and slowdown of sales as serious impediments to growth in the months to come.“

There is a recession hitting the whole world and some projects in Dubai are being delayed and some are being cancelled,” said Imad al Jamal, the vice chairman of the UAE Contractors Association. “We are having to curtail expenses and regroup resources.

”Nakheel, the property developer behind the iconic island developments that are becoming synonymous with Dubai, also said it would be “scaling back” some projects.
“We are witnessing a global negative economic movement, and while we believe that the economic fundamentals of Dubai have not changed, we also believe that we have a responsibility to aid this market maintain healthy momentum,” a spokesman said. “

This involves reassessing our immediate business objectives to accommodate the current economic climate. The next few months will see a scaling back of activity around some of our projects.”Nakheel would not identify projects that could be delayed, but in recent weeks it has said activity on Palm Deira and Palm Jebel Ali had shifted to the areas closest to the existing shoreline to allow for progressive sales launches.Analysts said projects likely to be affected included the island developments that have yet to begin, such as The Universe – a planned archipelago abutting the 300 islands of The World.

Union Properties, the developer behind the towering Index building and MotorCity in Dubai, said it had eased the payment plans for some developments and would not announce “any new project until we are clear on the status of the credit market and the appetite of banks to go back into lending”, according to Zaid Ghoul, the chief financial officer.
He said the company had completed 85 per cent of its projects and was focusing on expanding its rental portfolio to Dh5 billion (US$1.36bn) from Dh2.2bn – a move that would secure the company between Dh400 million and Dh500m in annual income.Mr Ghoul also said the company was planning payment schemes such as “rent to own” – where a potential buyer could choose to contribute their rent toward buying the home if they decided within a certain period of time.“
We have always been innovative in coming up with ideas to deal with difficult market circumstances,” he said.Developers with a large portion of their sales in the off-plan category are beginning to appear especially vulnerable in the market.

Damac Properties said it had awarded 60 contracts in the first nine months of this year for construction of projects, but a review of its website shows six buildings finished or nearly finished, 24 in the early and middle phases of construction and 44 projects without significant progress.
Earlier this week, Damac announced 200 layoffs, or about 2.5 per cent of its workforce.
Peter Riddoch, the chief executive of Damac, said the company had “undertaken a review of its construction timetable with a view to rescheduling some of its later projects”.
“
This does not mean that Damac Properties is postponing any projects,” he said. “

We, along with every other company across the world, are simply taking an overall view of our business and prioritising accordingly. It makes good business sense for us to prioritise at those construction sites where we have more advanced status and we have communicated our intentions to our customers.”

Emaar Properties, which announced new payment plans on Wednesday to boost sales, said yesterday it was reviewing its recruitment strategy as part of plans to “reorient our growth strategies and align our business model to tackle new realities”.“
While Emaar continues to be one of the largest employment providers and has been instrumental in creating several hundred new job opportunities – directly and indirectly – it is now crucial that we use efficiency and maximise productivity, which includes revisiting our recruitment policies, and optimising human resources,” a spokesman said.Limitless, which is building a Dh11bn canal that eventually will, be the centre of a city with an estimated 1.5 million people, said it was reviewing the pace of development “on a continuous basis” and would adjust to “reflect market conditions”.

Major Abu Dhabi developers, including Aldar Properties and Sorouh Real Estate, said they were still reviewing the economic situation and had not decided whether to ease payment plans to help buyers.

Adel Lootah, the executive director of the Dubai Property Society, said transparency was the key to restoring confidence during this period.“We need a little bit more communication from the government, the main players and the financial institutions,” he said. “This is a difficult time.”mailto:time.”bhope@thenational.ae

Dubai’s off plan projects ‘on hold’ through lack of financing | Dubai Property

Dubai’s off plan projects ‘on hold’ through lack of financing Dubai Property

original published ameinfo.com

Dubai has been hit by two financial crises in the last six months, which have combined to bring the emirate’s real estate market to a crawl. As well as the current global credit crisis, Dubai has suffered from its own run on liquidity based around the hype surrounding the dropping of the dollar peg. Rumours of a possible revaluation caused a number of global investors to speculate on the pegs, bringing billions of dollars into the UAE and, in turn, creating an influx of liquidity and allowing banks to lend at very attractive rates, Ali Al Shihabi, CEO of Rasmala Investment Holdings told delegates at the monthly Dubai Property Society meeting.

When the central banks put an end to speculation by issuing repeated denials, these speculators pulled capital from the region. By July the market was suffering from a major lack of liquidity, causing tightening in lending criteria, and by August, the emirate was undergoing its own mini credit crisis. The global crisis being felt by countries across the world, has further compounded the problem by causing local markets to plummet and regional investors to question local stock – especially the real estate shares that prop up Dubai’s economy.

Finances available for ongoing projects
The lack of demand currently being felt in the market is a result of these factors; investors now hold back, fearing further drops in prices, and banks are refusing to lend. ‘Properties that have broken ground will continue to be [financially] supported,’ Al Shihabi said. ‘The top priority is meeting existing commitments, and the government has given money to the banks to continue existing projects.
The value of this sector will hold, after a slight drop, and you may see a limited amount of trading, possibly at a discount, by those that are in urgent need of realising their assets.’

‘Developments that are only on paper are still a huge chunk of the city’s projects, and that has died for the time being,’ Al Shihabi warned. ‘Even the big developers, the Emaars and Nakheels, will have huge problems getting financing, and what is offered will be very expensive. A lot of projects are going to be scaled down or stopped.’ Despite this Al Shihabi said that regional investors should not be unduly worried about the state of the property market.

The governments in the GCC have stockpiled cash reserves from oil revenues for the last five years, meaning that the economies are able to absorb any downturn. The problem is that this has not been properly publicised. ‘One of the reasons for investor confusion is because the political, financial and business leaders have not known how to correctly communicate the strength of the economy and the measures that have been taken to protect the market,’ Al Shihabi said.

The silver lining is that the slowdown has had the positive effect of cutting down on the rampant inflation levels, which had accelerated over the past two years.

The market was overheating and being ground down by constant increases in the prices of raw materials, labour and contracting costs. These should now return to stable levels.

Overly-hyped project launchesDubai has also been suffering from an excess of bad marketing decisions leading to overly hyped project launches.

Though the property market has stable foundations the impression being given was one of unrealistic expectations, which ended up damaging the sector’s image abroad. ‘Everything was the biggest, the tallest, the grandest, and people didn’t take the Dubai market seriously,’ said Al Shihabi. ‘

The latest example was at Cityscape: Everyone knew that the world had changed but we came out and said ‘look two entire new cities, a one kilometre tower’, and the rest of the world either thought we were crazy or didn’t know what was going on. ‘You can’t keep coming out and saying that you’re launching a $90bn project because people will look at that and think you’re making it up.

You have to break it down and explain that it will grow to this amount over this number of years and this is the initial investment.’

See also:
Dubai developers feel the effects of price uncertainty

What does the global financial crisis mean for Dubai real estate? Nakheel denies Palm Deira stoppage rumours

Gulfnews: Aspire draws ire of property investors

Gulfnews: Aspire draws ire of property investors

By Suzanne Fenton, Staff ReporterPublished: November 12, 2008, 23:42
Dubai:

Investors are increasingly concerned about their investments in all developments of Aspire Real Estate, including Elements and Jehaan in Jumeirah Village South.

Investors are worried that their money has been used for personal use by the manager of Aspire, as they have been left with no money and no apartments.
The manager was recently sentenced to three years in jail for bounced cheques according to records from Dubai courts.

However, the case has now been taken to the appeal court and the next hearing is due on November 18.

The manager denied he had a case against him when speaking to Gulf News on Tuesday.
“There is one court case, but it is something we filed against High Rise Real Estate as they didn’t pay us what was due (Dh200 million),” the manager said.

Furious investors bought their apartments in Aspire’s Jehaan development in Jumeirah Village South since 2007.
Most of the investors have paid at least a 10 per cent deposit (Dh80,000), with one paying around 33 per cent, despite not having a contract. Investors were told Jehaan would be ready by January 2009 but construction hasn’t even started.
It also transpires that when Aspire was selling the units, they did not legally own the land.
The manager said originally the land was owned by offshore company Noorzak Investments, but one of the directors of Noorzak “went into his set of problems”.
Transfer process

“When we went to transfer the land, we realised that Noorzak had some problems with Nakheel with two other plots which they owned in JVS and hence Nakheel refused to make any transfer until the issue was sorted out,” the manager said in a statement online.

By the time this happened, an extra 25 per cent payment on the land was due and the transfer process was further delayed, the manager added. At this time, Rera and therefore the escrow account law were not yet in place in Dubai.

When investors contacted Dubai’s Real Estate Regulatory Authority (Rera) in April this year, senior legal officer Khowla Madani replied that Rera would look into the matter.
“I was informed that the plot has never been transferred to their name and as I can see from their email, there is too much misleading information.”

“If the same were confirmed, strict legal action shall be taken against Aspire Real Estate and this email shall be forwarded to management of Rera to decide the proper action,” Madani writes.
The manager told Gulf News the project “is definitely going ahead” and when asked if investors would get refunds if requested, he replied, “Yes, 100 per cent.”

Slowing property market leads to disputes – The National Newspaper

Slowing property market leads to disputes – The National Newspaper

Abu Dhabi // Dubai

As developers and buyers feel the financial pinch of the slowing property market and dampened global growth, the two sides are getting into more disputes, lawyers and analysts say.“Whenever you get turmoil, you get disputes,” said Chris Dommet, the chief executive of the Dubai office of mortgage broker John Charcol. “When everything is going well and everyone is making money, everything is fine. But when the market moves the other way, you get disputes all along the way, from developers to banks to clients.”

Most of the fallout is coming from buyers who assumed prices would keep rising rapidly, those having difficulty obtaining financing for their purchases and those who are only now realising their contracts were not what they expected, said Tom O’Grady, a partner at DLA Piper in Dubai. “We are seeing higher levels of inquiries from buyers about their options,” Mr O’Grady said. “It’s coming alongside the sort of quieting of the market.”

Buyers at Hydra Village, a residential community of 2,500 houses near the Abu Dhabi airport, said they recently saw the prices of their homes unexpectedly rise by as much 15 per cent when Hydra Properties announced a redesign of the project with larger homes.

Carolyn Munson, an American who owns two two-bedroom houses in the project, said the decision to increase building sizes should not have been made without the consent of owners.
“They are imposing decisions on our behalf and that’s unfortunate,” she said. “This would have been one thing if we had contracts early on, but at this point we have zero recourse.”While some buyers said they welcomed the expanded floor plans and considered the rate for the extra space reasonable, some complained that they were not given an option about whether to accept a larger home. There were also concerns about raising the financing required to meet the higher prices, especially for those who had bought several units.

Under the plan, the additional cost would be based on the development’s original prices and come due upon completion in 2010.Sulaiman al Fahim, the chief executive of Hydra Properties, said the designs were changed because the original plan included houses that were too small. The overall project did not incorporate enough green space, he said.“We tried to make it a really green development so we changed the whole masterplan to reduce the density, make more green areas and build green buildings,” he said. Many of the villas were “too small for a normal family to live in” and were expanded by 107 to 129 square feet. He said the company had received positive feedback from buyers.

Meanwhile, in Dubai several buyers said they were refusing to pay their next instalment for homes they bought at Emaar’s Warsan Estate project because they were not informed of a sewage plant being built close by.“We were misled and then let down by Emaar,” said Arshad Hussain, one of the buyers refusing to pay.
He said he had been pressured into buying the property in a rush.“Once I realised about the plant, I informed my family and they said they wouldn’t want to live next to a sewage plant” said Adel Momar, an Australian citizen who had bought a villa for his family. “From that time I tried to sell this villa. But no one wants to buy it. Everybody just laughs.
Some buyers have even tried to put theirs on the market Dh30,000 (US$8,166) below the opening price and have not succeeded.”
Emaar officials said the company properly informed customers and behaved appropriately. “Purchasers have been adequately informed, as is the case with any of Emaar’s projects, including Warsan Estate,” a spokesman said.He said Emaar had provided a detailed map showing the location of the development.Similarly, a group of investors said they lost 5 per cent of their investment in just weeks when Damac Properties suddenly cut prices.

Matthew Mueller, a managing partner at Mueller and Namejko in Washington, said he and his partners had bought a full floor of Burjside Terrace as an investment. Because they bought in bulk, they were given a 5 per cent discount, but five weeks after the purchase, Damac dropped prices by 10 per cent, he said.“It would have been pretty good information to receive before we bought,” he said of the price cut. Mr Mueller said the group was eventually able to transfer his investment into some other properties with the company in the hopes that they could salvage their initial investment.
Niall McLoughlin, a spokesman for Damac Properties, said the price cut was part of a Ramadan special offering and the company had acted appropriately.“Like may companies in this part of the world, we have festive promotions around Ramadan, Eid and Dubai Shopping Festival where we offer discounts and value additions,” he said.

The disputes are leading to calls for more regulation.Fadi Antar, the operations manager of Better Homes Abu Dhabi, said confidence in property developers’ ability to deliver projects on time and according to their promises would become essential as the market matured. He said the municipality should regulate areas such as stage payments, completion dates and sales contracts and respond swiftly to the concerns of investors.

“At the moment, the only option for a client with a serious complaint is to sue,” he said.

bhope@thenational.aerditcham@thenational.aengillet@thenational.ae

Dubai Property Wrongs

November 2008

original published Gulf Business
over
http://www.zawya.com/printstory.cfm?storyid=ZAWYA20081007053225&l=053200081007

Real estate investors are crying foul over project delays and cancellations. While developers blame surging inflation, the regulators are rolling out new laws to make the market foolproof. But is enough being done, asks Seban Scaria.

Dubai-resident Manish Kumar was looking forward to moving into his own studio apartment in a plush tower next to the Emirates Road in July this year. After all, he had been diligently making his payments to the Saudi developer behind the project for a full two years.

Delays being the norm, not exception, in Dubai construction, he was disappointed to learn that that date would be missed. But nothing prepared him from the shock of finding out the company hadn’t even started building the tower, and, was instead cancelling investors’ contracts.

Local and international investors had purchased off-plan units in the 20-storey Ivory Towers project by Saudi-based Sokook Investment Group. Launched in 2005, the project was supposed to be completed by 2008, but the development began to show the proverbial cracks last February when Sokook told investors to stop paying their instalments due to a dispute with Tecom, the master developer of the International Media Production Zone.

The scandal has been making its way through the local media, with deadlines being set by the Real Estate Regulatory Agency (Rera) for the company to start construction.

However, with the November 1 deadline for construction to start just round the corner, the 40-strong group set up by investors to safeguard their rights is not satisfied by the answers from either Sokook or Rera.

Sharon Anderson, an Australian investor, had booked two studio apartments in the Ivory Towers project back in 2003 and had paid Dhs218,000 ($59,390), about half of what she owed in total. Sharon, along with her brother and sister who also had invested in the same project, is now demanding answers, and is clinging to the hope that her money isn’t completely lost.

Hers is becoming an alarmingly familiar tale. According to experts work on more than 150 projects across the GCC is currently on hold. Gulf projects valued at $48.4 billion are either on hold or have been cancelled, according to Proleads. They include at least 88 projects in the UAE, 54 in Saudi Arabia and 15 in Kuwait.

Although Dubai real estate regulator Rera has directed the Saudi based Sokook Investments to reinstate contracts, issue a new payment pattern and deliver the building by 2011, Prakash Parmer, one of the several investors in the Ivory Tower project, who had already paid 60 per cent for a one-bedroom apartment, is still not clear whether the company will complete the construction.

Engineering a scam”This is a clear scam.

The developers trying to scare small investors into liquidating contracts for trivial sums, saying they might lose their investments as the project is delayed due to surging raw material prices. This is happening when Rera clearly states that cancellations are illegal,” says Parmer.

“Ivory Tower was initially designed to be 12 floors, but now they have redesigned it to have around 20 floors. The developers clearly don’t want to start construction but to make money based on the off-plan selling model,” he says.

Earlier, Rera said action would be taken against master developers and sub-developers if they fail to meet contractual obligations. Rera has dismissed reports that Sokook has cancelled the contracts. According to Rera, it has mediated the issue between Tecom and Sokook.
Investors, however, question Rera’s stance. “If Rera can tell us how much funds remain in the escrow account it will be a clear indication of whether Sokook can complete the project. Also, why is Sokook sending us fresh contracts with no penalty clause when Rera clearly states that cancelling a project is illegal?” asks Parmer.

Gulf Business took up the matter with Rera, but the regulator failed to reply to repeated queries from this magazine on the investors’ woes.

Surprisingly it is not only the low profile builders who are playing the elusive game or delaying projects.

Leading developer, Schön Properties had to stop work on its Dubai Lagoon Project, tossing investors into a pool of pain and dilemma. Twenty-five out of 2,000 investors, whose properties were due for completion in December, have been told they can have their money back. Schön later said that in spite of previous problems, Dubai Lagoon, a residential development near

Dubai World Central, is back on track and would be delivered, albeit with a delay.

According to the developer, the project has engulfed with several problems, including work being delayed because of requirements by Dubai’s Roads and Transport Authority (RTA), issues with contractors and the blocking of a work permit. “The RTA wanted to take 45 metres off our land for the Metro’s Purple Line. So, we had to redesign the whole project,” says the company.

To protect its margin, the company has decided to sell the remaining plots at higher prices and the whole development is due for completion by 2011, as the project’s budget was more than doubled due to the rising construction and raw material cost.

Pumping up confidence

While most of the constructors blame the surging prices and non-availability of raw materials such as cement and steel for project delays, manufacturers insist materials are freely availabile in the market. Besides rising cost of materials, the other reasons usually cited for putting projects on hold are: delays in approving designs, design changes and disputes between contractors and developers.

With complaints from investors soaring, Rera is now under pressure to add a shot of the much-needed confidence to the market. The regulator has issued a new property law, requiring all off-plan units to be registered with Dubai Land Department, which is expected to make Dubai’s real estate market a safer place for people to invest their cash.

Dubai has also moved to calm concerns over the rapidly growing mortgage market, where central bank data shows that mortgage lending in the UAE jumped 55 per cent in the year to March, with Dubai responsible for the lion’s share. A new mortgage law, which comes into effect by the end of the year, stipulates that mortgage contracts be registered with the land department, specifying the size of the loan, the repayment period and the value of the property to which the loan is linked.

Research conducted by Colliers International, in the second quarter, in Dubai and Abu Dhabi highlights that by 2010, almost 160,000 new residential units are expected to be delivered in Dubai, with total office supply in the emirate expected to increase to 4.9 million sq m. Also, the number of hotels and hotel apartments is expected to cross 50,000 units by then.

In Abu Dhabi, an additional 100,000 residential units will be required by 2010 to absorb excess demand and as many as 140,000 additional units are expected between 2011 and 2013, assuming developments are completed on time.

“Dubai is certainly a safer place to invest than it was three years ago. There has been a sustained focus on introducing new laws and developing Land Department procedures with a view to achieving an appropriately regulated and transparent real estate industry. We would expect this trend to continue and, with the introduction of the new property court, a level of confidence to return to the market in due course,” says Will Grinter, Legal Consultant, Clyde & Co.
© Gulf Business 2008

Investors are still wating for a positive sign – Sokook Ivory Tower contracts – The National Newspaper

August 2008 investors of Ivory Tower had the hope of a positive sign. But until today there is still no proper solution.

Hope for Ivory Tower investors – The National Newspaper

Angela GiuffridaLast Updated: August 05. 2008 7:21PM UAE / GMT

Investors in Dubai’s long-delayed Ivory Tower project, who were told earlier this month that their contracts would be cancelled and money returned less a hefty penalty, have been given a glimmer of hope. Sokook Investment Group, the Saudi Arabian developer behind the troubled residential development, told the Dubai Real Estate Regulatory Authority (Rera) that it would reinstate contracts for all the apartments in the building.Earlier this month, Sokook sent a letter to investors saying that their contracts would be cancelled and 20 per cent of the sale price retained.The home buyers were told the decision had been taken because they were in arrears in instalment payments, despite Sokook allegedly informing them a year ago that no further payment was due until construction began.But a legal representative for Sokook told Rera today that all the contracts would be reinstated.“We are waiting for written confirmation of this before we can disclose information to investors,” said the Rera official, who asked not to be named.Sokook also claimed one of its employees had sent the cancellation letter to investors.“They [Sokook] said they didn’t know that one of their employees had sent the letter to investors cancelling their units,” said the Rera official. “But legally, this is not acceptable.”The 20-storey Ivory Tower was launched in 2005 and after it sold out early last year, was supposed to be completed last month. However a dispute over a bank guarantee with Tecom – the master developer of International Media Production Zone, where Ivory Tower is to be located – held up the project.That dispute has now been resolved and at the beginning of July Sokook told Rera construction would begin in November.After the project was delayed, the company gave investors the option of selling the property back with an interest rate of 10 per cent. Originally, the units were sold to investors for up to Dh650 per square foot; at today’s market rates, the company could resell apartments for around Dh1,650 per square foot.The Rera official added that Sokook had expressed concern over whether it could afford to build the tower because of the rising cost of construction.“They say material costs have gone up – but this is not the investors’ problem,” said the official. “If costs had gone down, would they then give investors a refund?”About 20 per cent of people who bought property in Ivory Tower are involved in an investors group, which was set up to deal with complaints about the project.But according to one buyer from the UK, who has paid about Dh240,000 towards his property, investors have so far failed in their efforts to get any official answers from senior management at Sokook.“They are refusing to acknowledge any correspondence from the investors by e-mail, fax or phone,” said the investor, who asked not to be named.The group has threatened legal action if the matter isn’t resolved soon.“We have put on hold meetings with a lawyer until we know whether Sokook is sincere in its commitment to Rera,” said another investor.mailto:investor.agiuffrida@thenational.ae

Sokook ends Ivory Tower contracts – The National Newspaper

Last Updated: July 28. 2008 11:27PM UAE / GMT

DUBAI // Hundreds of investors in the long-delayed Ivory Tower residential project in Dubai have been told by the developer, Sokook Investment Group, that their contracts will be cancelled and 20 per cent of the sales price kept.Investors were told the move was made because they were in arrears in instalment payments, despite Sokook allegedly informing them a year ago that no further payment was due until construction began.

“Since you were not able to pay within the due date and we did remind you of your payment schedule, please accept our apology that your contract has been cancelled automatically,” Sokook said to investors in a letter seen yesterday by The National.It added that Sokook would retain 20 per cent of the sales price as a cancellation fee.Earlier this month, Sokook pledged to the Dubai Real Estate Regulatory Authority (Rera) that construction would begin on Nov 1 after a dispute over a bank guarantee with Tecom – the master developer of the International Media Production Zone, where Ivory Tower is to be located – was resolved.

Rera sent a statement to investors confirming that the issue had been resolved and that construction was likely to begin, albeit three years after the project was launched.The latest move has provoked more fury among those investors who bought units off-plan. “Sokook has said that the reason for cancelling our contracts was due to not receiving instalment payments from us on time, even though we were told in writing from Sokook [about a year ago] that our next payment instalment was put on hold until construction began,” said an investor from the UK, who spoke on condition of anonymity.

Investors claim the contract cancellation is an attempt by Sokook to buy back as many apartments as possible before construction begins.In the past week, several investors have allegedly threatened legal action against the Saudi Arabian company.“Other investors who sent evidence back to Sokook showing them that they were never in breach of their contracts have been called and told that Sokook would be able to buy back their apartments [with an interest rate of 10 per cent],” said the UK ­investor.

Units in the property that were worth up to Dh650 per square foot back in 2005 are now worth about Dh1,400 per square foot.“Investors are stuck between a rock and a hard place,” said the ­investor.Another investor, who also asked not to be named, has cancelled his unit in the project after Sokook rebuffed several attempts to pay the second instalment – which was due on July 2 – without explanation.

The investor also claimed he never received the complete contract for the apartment, despite signing it in February.Managers at Sokook’s Dubai office were unavailable for comment when contacted yesterday, although a sales agent at the company said: “At the moment, we still don’t have an exact date from higher management for when construction will start.”When contacted earlier this month, Khawla Madani, a senior legal officer at Rera, said that beyond helping to resolve the issues between Tecom and Sokook, there was little more the authority could do.

“Some of the complaints are actually the job of the Dubai Court to handle,” she said. “We are not the court or judges. We try our best as a mediator.”About 770 investors are believed to have bought property in Ivory Tower, 100 of whom were from the UK.mailto:UK.agiuffrida@thenational.ae

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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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

 

Dubai, Abu Dhabi property sales at near standstill – Real Estate – ArabianBusiness.com

Dubai, Abu Dhabi property sales at near standstill – Real Estate – ArabianBusiness.com:

Property sales in Dubai and Abu Dhabi have ground to a near standstill and resale prices have dropped for the first time due to the global financial crisis, agents have said. Off-plan sales have been the hardest hit as speculators struggle to sell on their properties because potential buyers are finding it more difficult to secure financing, UAE daily The National reported on Sunday.

Speculators then face problems meeting instalments plans, forcing them to lower prices in an effort to make a quick sale, the newspaper said.

“It has been going on for a week now. I have seen prices going down about 10 percent everywhere, even in Dubai Marina and Downtown Burj Dubai,” Khaled Elqassim, the sales manager at Dubai-based property broker AAA, was quoted as saying.“Pretty much all the secondary market is trading at less than it was before the financial crisis,” Karen Lay, the marketing manager at LLJ Properties in Abu Dhabi, was quoted as saying

READERS’ COMMENTS
View all comments (9)

Have your say
REAL ESTATE PRICES
Posted by Padmanabhan, Dubai, United Arab Emirates on Sunday 26 October 2008 at 17:05 UAE time

Honestly, a sigh of relief! The Real Estate SEctor was giving a hard time to the residents of the UAE using monopolistics and hoarding practices. You will find advertisements coming in the paper claiming that 90% SOLD!!! That is how they maintained these hype pricing so far. Now that the world financial support system is crembling a highly geared state like Dubai can not do much. A country who is putting an national budget of 60 Bn but announcing projects with trillions does not make sense… there was something wrong somewhere and this testing times will get it all fixed… The time of living on credit cards and borrowed money seems to be coming to an end..good bye speculators and gamblers!!!. At least honest people can lead a calm life after this potential turmoil, I hope!

Inevitable
Posted by Rahul, Dubai, UAE on Sunday 26 October 2008 at 16:13 UAE time
This was bound to happen.In my case, I was denied the loan even though the combined amount of me and my brother was in the amount of AED 20,000.UAE has a sound domestic demand for housing.However, the banks look at the age and the income of the individual when it should be looking at the credit rating.To add salt to the wound the speculators raise the prices to almost 45% of the actual price and expect people to buy.With America already going down,it will be a matter of time that the speculators will start to suffer once this vicious circle of greed completes itself. Personally I think it is time for market regulations to be put in shape and sound laws implemented.The speculators are getting what they have sown all this time.

Property Prices
Posted by Maxim, Dubai, UAE on Sunday 26 October 2008 at 15:43 UAE time

This is the beginning of your end dear speculators/real estate agents. You guys deserve that, you guys earned exorbitant amount by squeezing end users. Just imagine, till recently an end user could not buy a apartment/villa directly from a well known developer such as Emaar/Nakheel. Every unit from these developers had been gobbled up by so called speculators with in hours. (I would say greedy fly by night business men). When a real buyer/end user wants to buy Prices of flat/villa shoots up in few hours after the sale.

Real Estate prices Dubai
Posted by Investor, Dubai, United Arab Emirates on Sunday 26 October 2008 at 15:37 UAE timeI fully agree with the article, the issue as i see it is that Banks and Financial institutions have dropped their financing percentage to 60% and 65% , not only they are giving an indication to the market that the expected correction in the real estate sector could be in the range of 40% to 45% but also they are making it really difficult to buy a house in Dubai, which will lead to an inevitable correctionI don’t understand the contradicting position between Government officials and banks, either that UAE has a strong real estate sector as per the Government officials or it does not as per the Banks financing position. If banks do not have the financing ability then they should not push away investors by putting unreasonable financing conditions.

Property Prices Down

Posted by Robert Parker, Dubai, UAE on Sunday 26 October 2008 at 15:32 UAE timeThe inevitability of prices coming down in Dubai (and Abu Dhabi) has long been foretold it was never IF it was always WHEN. The question now is how much – the report of 10% drops is insignificant with the rises seen even this year in the UAE – my belief is that we are about to see significantly higher drops as the word gets out and speculators try to offload.
In some areas 50% drops are possible but I would suggest 30%-35% will be the norm.
OK if you bought a couple or more years ago – tough if you bought in the last few months!

Secondary market is cheaper now
Posted by Vision, Dubai on Sunday 26 October 2008 at 14:59 UAE timeThe secondary market for Downtown Burj is 20- 30 % less than what Emaar is offering directly to its buyers. It looks like there is an opportunity for interested investors if they look at Burj Downtown.

Property prices
Posted by angelo, Dubai, UAE on Sunday 26 October 2008 at 14:35 UAE time
It was commented by more learned persons than I over a year ago that the speculative buying of properties would implode on itself – this was also when the leaders of the comunity started to implement controls hopeing that real estate compnies would start self regulation. Maybe this will bring properties to their real value

Its Finally Arrived
Posted by Uzair waheed on Sunday 26 October 2008 at 14:12 UAE time
Its finally arrived – the much anticipated dip in Dubai property prices. If prices have been slashed by 10% in a week, what can we expect in the next six months.?
prices headed down

Posted by Mermer, dubai, uae on Sunday 26 October 2008 at 10:46 UAE time
As long as dollar gains value. Property prices is going down further. Just think if you have house purchased for 600k(~70k GBP gpb/usd=2.05) dirham 1 year ago. and if it cost now 1M dirham (~175 GBP gbp/usd=1.6) . now compare it 70k GBP to 175k GPB. :) Wouldn’t you like to sell the house here and buy one in London where prices already headed down.

Now E-Complaint System RERA Dubai

E Complaint System via RERA Dubai Wesite

Link:

http://www.rpdubai.com/rpdubai/home.jsp?lang=0

From the Official Dubai Real Estate (RERA) WEbpage – Property Buyer of Dubai be carefull

original published RERA Dubai:
Link:
http://www.rpdubai.com/rpdubai/jsp/template.jsp?pageID=40004&&lang=0

Two very simple and powerful words for Buyers who want to buy privately?? Buyers Beware!
Never pass money to anyone if you do not have absolute proof of their ownership, authority to do the transaction and if you have any doubts. When you get a “sick” feeling in your stomach when handing monies over, this is usually to forewarn you of danger in what your doing. This is your intuition speaking to you, so listen to it please.

Do not deal with an unregistered broker or agent, always ask for their Brokers Registration card. When speaking with a Seller, ask for the documents to prove that they own the property. Ask for a copy of their passport and match the signatures. If the property is in two or more names, all of these parties must sign the sale agreement in full.

Buyers should use a Buyer’s Agent. Please refer to this section in the Brokers web pages, these are a list of the Registered Brokers. DO have your finance fully “pre-approved: before you commence looking for a property.

When buying “off-the-plan” only pay into a RERA approved trust account.

The cheque and receipt must read in the name of the project. If you pay your monies into the developer, agent, or any other account, the person or company you are dealing with is breaking the law.
Approved projects are listed on this website.

Do protect yourself and use a lawyer before you sign anything.
It is not as easy as you think.

Dubai SchonProperties announces final schedule for Lagoon project

Gulfnews: Schon announces final schedule for Lagoon project

original published Guld News October 19, 2008

http://archive.gulfnews.com/business/Development/10252897.html

Off-plan market frenzy likely to cool off – The National Newspaper

Off-plan market frenzy likely to cool off – The National Newspaper: “Off-plan market frenzy likely to cool off”

original published TheNational October 13, 2008

Nathalie Gillet

Last Updated: October 13. 2008 4:07PM UAE / GMT The global financial crisis will likely cool off some of the market frenzy that has driven speculators to buy off-plan properties in their droves in recent years, Chris Dommett, the chief executive of mortgage adviser John Charcol Dubai said today.

As foreign and local investors are displaying more caution than usual, the off-plan market, which has been known to drive up property prices due to speculative buyers and seller, is expected to slow down, said Mr Dommett.

Investors who buy property and quickly resell for a profit, otherwise known as ‘flipping’, have not only been discouraged by the recent global economic uncertainty, but also by recent Government and regulatory action taken to limit the practice.

End users are already less likely to buy off-plan as they typically need a place to live or to generate rental income to support mortgage payments, and are often wary of the return of their investment, the company found.

“End users are realising there is very little price differential between off-plan and completed properties, and they would prefer to buy something that is ready to move into,” said Mr Dommett. “Financing is also generally more difficult for off-plan buyers as the banks are increasingly reluctant to lend against a property that has yet to be built.”

ngillet@thenational.ae

Dubai property on red alert

Dubai property on red alert: “Dubai property on red alert”

The Dubai government likes to use the annual Cityscape real estate exhibition to build confidence in the emirate and build interest in its property market. Massive schemes are announced and ever-more ambitious plans are hatched.

But this year’s exhibition has come amid falling local stock markets – Saudi Arabia fell 10 per cent on Monday – and growing concerns that the international financial crisis will bring about a correction to what is widely viewed as a frothy market.

True to form, NakheelNakheel, which is owned by the government of Dubai, at the weekend launched a Dh140bn ($38bn) project to build the world’s tallest tower and inland harbour. On Monday another government company, Meraas Development, said it would redevelop a swath of the city over 12 years in a Dh350bn project to be called Jumeira Gardens. The intention is that this scheme too should include another of the world’s tallest towers and reclaimed islands off the coast.

“Dubai has always reinvented itself and maintained growth,” Sina al Kazim, chief executive of Meraas, said.

Whereas in years gone by retail investors have tried to gain access to what is supposed to be a business to business event, this year the organisers had no trouble in keeping the public out.

One locally-based real estate broker admitted that there was “a good deal of nervousness” among exhibitors as to whether Dubai’s growth story of the past six years was coming to an end.

Dubai is the most exposed of the local economies because its local real estate market is supported by foreign investment and because, as an emirate, it has little in the way of natural resources. A home-grown credit squeeze caused by excess lending and insufficient deposit taking has added to the disquiet.

On Monday, as the real estate announcements came, property stocks led falls in the UAE’s two main stock markets. EmaarEmaar, Dubai’s main developer, fell 10.7 per cent, while TamweelTamweel, a mortgage lender that is to be merged with AmlakAmlak, was down 10.5 per cent. In Abu Dhabi, AldarAldar, the emirate’s leading developer, fell more than 9 per cent.

One banker described the situation as “belated panic”.

Credit default spreads on Dubai debt, especially real estate linked borrowing, have ballooned as institutions bet that the pace of growth in the property market will not be maintained.

But Dubai developers sought to assuage concerns.

Mr Kazim said he had a positive reaction in initial talks with local institutions about funding his development, which has caused controversy as it is forcing out local families and expatriate labourers from villas in Satwa and Jumeirah, some of the most established parts of the fast changing city.

Dubai Properties, a developer owned by Sheikh Mohammed bin Rashid Al Maktoum, the Dubai ruler, also said publicly that its credit lines were secure. Jade al Khalil, marketing manager, said he believed confidence in the Dubai market could be sustained.

TamweelTamweel, the troubled Islamic mortgage lender that has been at the centre of corruption investigations, which have done so much to harm Dubai’s reputation, said that it was joining other lenders in raising the deposit that investors must put down in order to secure financing.

Analysts said that the government linked property developers are fundamentally sound and will be backed by state funds if they get into trouble. They added that UAE authorities could intervene if they felt the market was in danger of crashing.

Some economists predicted a controlled slowing down rather than a sharp correction, which would be healthy given the steep increase in prices this year, as well as speculative trading.

“I don’t think it’s going to jeopardise or derail the economy,” Marios Maratheftis, head of research at Standard Chartered, said.

“I think we could have a couple of years of slow growth, a couple of years of underperforming markets as well, but I don’t think it will derail what will happen here in the future,” he said. “Having a mild correction will probably be beneficial for the economy and if the market is going to price in some risk in the decision making, especially in real estate, that will be beneficial.”

Others, however, were anticipating a sharper correction and greater consolidation in the real estatesector.

“I think that some kind of sharp correction has to happen because of the way prices have gone up and the fact that global credit conditions are very tight. The big issue is how fast the recovery comes,” said another banker, who asked not to be named. “The stock markets are a barometer of the real estate market – it’s telling you investors are very concerned right now.”

He said that there would have to be consolidation because “some of the more aggressive developers don’t have the cash flow to build what they have sold”.

Another banker said real estate companies in the UAE have been seeking advice from banks about potential merger and acquisitions.

By Simeon Kerr in Dubai and Andrew England in Abu Dhabi

© Copyright The Financial Times Ltd 2008. Privacy policy.

UAE warned over banks’ real estate exposure – Banking & Finance – ArabianBusiness.com

original published Arabian Business Octobe 08. 2008

http://www.arabianbusiness.com/533552-uae-warned-over-banks-real-estate-exposure

Morgan Stanley on Wednesday cautioned UAE lenders over their exposure to the real estate sector and said the central bank may have to reconsider allowing lenders to set up real estate subsidiaries.

As the real estate market in the UAE matures over the next two years “it may be necessary to evaluate the extent of the banks’ exposure to this sector”, the US bank said in a report on the UAE economy.

“The supervisory authorities may need to rethink the current rules governing the exposure of banks to the real estate sector,” it also said.

Morgan Stanley said the central bank may have to reconsider “the merits of the March 2007 Central Bank resolution that allowed UAE banks to establish real estate subsidiaries”, and establish “clear guidelines for the classification of loans exposed to the real estate sector”.

Morgan Stanley said this might be necessary because of the difficulty in assessing banks’ claims on quasi-public companies that are heavily involved in the real estate market “given the lack of transparency on the magnitude of this exposure”.

However, it stressed the potential risks to banks from a mild correction in the real estate sector should not be overstated.

Morgan Stanley said much of the concern in the market about the affect of a correction in the real estate sector could be put to rest “through the provision of more timely, consistent and comprehensive data on the monetary and banking sector”.

“…the need for greater market transparency on the part of market participants and regulators cannot be overemphasised at a time of considerable uncertainty in global financial markets,” it said.

UAE liquidity squeeze driven by real estate fears – Banking & Finance – ArabianBusiness.com

UAE liquidity squeeze driven by real estate fears – Banking & Finance – ArabianBusiness.com: “UAE liquidity squeeze driven by real estate fears”

The UAE’s liquidity squeeze is being driven by fears over the real estate sector rather than the global financial crisis, Standard & Poor’s (S&P) said on Wednesday.

The ratings agency said in report tightening liquidity was “only slightly related” to the global credit crunch and was mainly driven by country-specific factors including speculative investor activity surrounding the dirham’s peg to the US dollar, concerns over the real estate sector and rapid domestic growth.

S&P said economic growth could be hit by developers struggling to find funding for future projects.

However, a slowdown in growth was “not necessarily a bad thing” as it would alleviate infrastructure and resource pressures, while preventing a real estate oversupply, the ratings agency said.

S&P said that while financing conditions were becoming more challenging, it did not expect the credit-worthiness of rated domestic entities to be affected.

“Refinancing risks will be contained, and the willingness and ability of the government to provide implicit or explicit support in the event of serious financial distress remains strong,” the ratings agency said.

Emaar may take over Lagoons project – Real Estate – ArabianBusiness.com

Emaar may take over Lagoons project – Real Estate – ArabianBusiness.com

Emaar Properties may take over Sama Dubai’s $17.7 billion Lagoons development in the wake of delays to the project and the arrest of several senior Sama Dubai executives.

Sama Dubai, part of state-owned conglomerate Dubai Holding, is currently in talks with Emaar over “transferring some of the development responsibilities” for its flagship development,

UAE daily The National reported on Wednesday, citing three sources familiar with the talks.The Lagoons consists of seven manmade islands in Dubai Creek.

Four senior executives of Sama Dubai, including CEO of the Lagoons project Abdulsalam Almarri, were arrested in August over allegations of bribery and mistrust, newswire Zawya Dow Jones reported, the latest in a string of executives caught up in the Dubai government’s crackdown on corporate corruption

70% ‘are being priced out of Dubai property market’

70% ‘are being priced out of Dubai property market’

by Soren Billing Tuesday, 30 September 2008

A correction in Dubai’s real estate market could be exacerbated by a mismatch between demand and supply, with the bulk of demand being for more affordable properties than the ones that are coming on stream.

“Currently the supply is geared more towards the high end segment in an environment where prices have appreciated rapidly, so it’s like a double whammy,” Shuaa Capital real estate analyst Roy Cherry said.“

Seventy percent of Dubai’s population has been priced out and there are very few products that do target the low and mid income segment, which is effectively where the bulk of demand is.”

The city will continue to offer opportunities for developers who are able to target those income brackets.“
Not everyone in Dubai can afford a four million dirham property,” he said.Shuaa Capital is forecasting a correction in Dubai property prices, beginning in 2009 and continuing into 2010.Cherry distinguishes between the Dubai and Abu Dhabi market, with the former being “more complicated” due to the mismatch in supply and demand and project delays that have helped inflate prices.Abu Dhabi is currently a more predictable play: demand is soaring and is likely to outstrip supply over the next three to four years, although negative sentiment in Dubai could have a contagion effect.

Both markets have seen a lot of speculative activity in recent years, but with less supply coming on stream, the impact of a correction will be smaller in the capital.The emirate is also making significant investments in affordable housing.

The Abu Dhabi government has recently granted Aldar over 10 million square metres of land for low income housing projects.“I think overall the Abu Dhabi market is a healthy market…and I think Abu Dhabi companies will continue to do well. Not only because of the excess demand, but also because companies like Aldar Properties are already initiating work on low income housing projects with government encouragement,” Cherry said.

What is a contract ?

http://www.zawya.com/printstory.cfm?storyid=ZAWYA20080612103455&l=060642080616

Contracts are promises that the law will enforce.

Recently, the Dubai property market has witnessed an increasing spate of developers falling behind schedule on their construction milestones. In addition, some developers have even tried to abort entire property developments after off-plan sales, seeking instead to buy back unfinished properties from their investors. In this special report, PROPERTYworks investigates to find out more…

While local property investors get edgy about construction delays and compromises on quality, lawyers are experiencing a renaissance as disgruntled customers engage the legal system here to get back at certain developers.

But a court case is by no means a quick fix. It would be expensive and very difficult to rely on the courts when a developer gets behind schedule. Instead, making oneself aware of the basic elements of a contract and speaking up for one’s rights are the most effective ways to ensure that property developers deliver exactly what they promise and on time.
Currently, most real estate investors in Dubai purchase their properties ‘off-plan’, which means they wait for the construction to commence and for their homes to be completed. In all fairness, almost every property developer in the UAE, big or small, is very keen to promote the UAE as a good place to buy and a great place to live.

Most developers enter into their contracts with investors in good faith and with the full intention of meeting their deadlines. In fact, they themselves probably enter into similar back-to-back contracts with contractors for matching deadlines.
There are, however, a host of factors outside of the control of the developers, especially now, when there is so much strain on construction resources.

Rising construction costs in the UAE are putting extreme pressure on most property developers. The cost of construction has risen significantly in the past few years, with steel prices rising by 38 per cent in 2007 and cement prices by 30 per cent in the same period, according to figures from the construction consultancy EC Harris.

An EFG Hermes report said construction cost inflation is being driven higher by rising costs of building materials, as well as the rising cost of labour. A serious shortage of labour and raw materials and strong demand, as well as the mandatory adoption of green building codes and health and life insurance, are likely to increase construction costs in the UAE even further this year. A tonne of steel reinforcement bar (rebar) now costs about US$1,150 (AED4,223), up from US$980 in March. The wholesale price of cement was this month capped by the ministry of economy at AED340 per tonne, up from AED295.

Price increases have meant that building firms risk huge financial losses, or even bankruptcy, if they sign deals that do not make provisions for price escalation. In some cases, the pressures have resulted in concern that the quality of construction is being compromised.
News of the cancellation of Damac Properties’ Palm Springs development was the first to break into the media. Homes in the project were sold more than five years ago, but construction until today has yet to start.

Opprobrium for Damac’s announcement came from 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. Damac offered to buy back the ownership rights to the properties at a premium of six per cent per annum for every year since investors bought it. An investment of US$1 million when the project was launched five years ago previously would only be bought back for US$1.33 million – hardly the return that the rest of the Dubai property boom was delivering over the same 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 reside. Nakheel denied any responsibility. Following discussions between Nakheel, Damac and the industry watchdog, the Dubai Real Estate Regulatory Authority (RERA), Damac agreed to complete the project. Officials of the RERA said the major concern was to protect the interests of investors and the reputation of the real estate sector in Dubai.

The Damac case was a rather high profile project and a high profile development. Obviously, from the time of entering into contracts with initial buyers to the stage at which the development should have been delivered, prices in the market have increased significantly as well.

If investors had gone ahead with a court case to recover just their initial stake, not only would they have lost any further potential capital that they had invested and any interest on any loans that they had taken out, but also the capital growth in the market that they could have invested elsewhere.

According to Jane Dalton, a property lawyer with the law firm Trowers & Hamlins in Abu Dhabi: “At the moment, there is very little scope for individual investors to negotiate termination and compensation provisions with developers. It really is a take-it-or-leave-it attitude. And I think going forward, it would be helpful if developers were more open to negotiation of those original sales terms at an earlier stage.”

“Usually a purchase contract has certain provisions specified for delays, and usually depending on the reason for that delay, whether it is directly attributable to the developer, or a matter that is outside of their control, those provisions will dictate at which stage a buyer can actually withdraw from the contract and what is payable in terms of compensation,” she continued. “There do tend to be periods built into the contracts by which both parties accept that the developer may overrun for specific reasons.”

Of course, the consequence of withdrawing from a contract is that the only thing that is reimbursable to the buyer is his initial stake in the property. By the time or termination of the contract due to delays, the property value might have gone up many times. And obviously, if one has bought in the secondary or tertiary market, then one would only be entitled to the price put down by the original buyer.

“And so there could be quite a disparity between what you could actually reclaim by withdrawing from the contract and what one could potentially recoup by waiting and hanging on for the delays to finish,” added Dalton.

During the construction phase, a property investor has no ownership right to his property, and so his only security is found in the sale and purchase agreement that he signed with the property developer. Quite simply, the only option one has in case the developer gets behind schedule or doesn’t live up to promises before the construction has been completed and the property handed over, is to sue the developer in a UAE court – an option that could take years for a final decision.

“It very much boils down to the contract between the purchaser and the developer,” said Mohammed Kamal, associate at Al Tamimi & Company Advocates and Legal Consultants. “Now, usually the contracts allow flexibility to the developer. A developer will usually indicate at least a target date for estimated delivery and then allow room for going beyond that – typically, it can be up to 13 months.

That is quite acceptable in the market right now, both in Dubai and Abu Dhabi.”
“There really isn’t anything else in the laws and regulations, and I think it would really rest on the terms of the contract, and if there was a clear breach of the contract on the part of the developer, then the purchaser would be entitled to take action in the courts or any other alternative form of dispute resolution, if stipulated in the contract,” he added.

Particular attention should be paid by investors to clauses in the contract dealing with any delivery dates and under what circumstances these dates may be pushed back by the developer.
Contracts are promises that the law will enforce. The law provides remedies if such a promise is violated, and recognises the performance of that promise as a duty. Contracts arise when a duty does or may come into existence, because of a promise made by one of the parties.
In order to be a legally binding contract, a promise must be exchanged for adequate ‘consideration’. Adequate consideration is a benefit or detriment a party receives, which reasonably and fairly induces them to make the promise.

An example of this would be purchasing an off-plan apartment from a property developer. The developer and the buyer come together to discuss the terms of the exchange (in all likelihood, the purchase is outlined in a written agreement). Thus, they have fulfilled the first requirement of consideration. To meet the second requirement, there must be a mutual exchange. In this case, the property developer (if one of the main developers in Dubai) provides ownership if the apartment is in a freehold area of Dubai, while the buyer provides payment. Third, the bargain terms must be of value. The apartment is worth what the buyer hands over. Therefore, this contract has met its consideration requirement, because it fits all elements of consideration.
T

he UAE is essentially a Civil Law jurisdiction heavily influenced by French, Egyptian, Roman and Islamic law. The increasing presence of international commercial contracts has resulted in the application of English common law practices, further influencing the UAE legal system.

The law relating to contracts in common law specifies that the agreement must consist of an offer and acceptance, and also consideration for a contract to exist. It is important that buyers learn to recognise these elements in contracts they plan to sign.

An offer is an indication by one person to another of their willingness to contract on certain terms without further negotiations.

A contract is then formed if there is express or implied agreement. A contract is said to come into existence when acceptance of an offer has been communicated to the one making the offer.

Another important element to understand is misrepresentation. Misrepresentation is a false statement of fact made by one party to another party and has the effect of inducing that party into the contract.

For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality or nature of the product that the seller has may constitute misrepresentation.

In the UK, a finding of misrepresentation by a court of law allows for a remedy of rescission (termination of the contract), and sometimes damages depending on the type of misrepresentation found to have taken place. However, common law principles are not explicitly recognised under UAE law.
Despite the differences between legal systems, lawyers like Carol Alderson in Dubai, who has been practicing in the UK and the UAE for the last 25 years, vows to bring about more robust protection for property investors.

“The way sales agreements are drafted in Dubai is very one-sided in favour of developers, and unless customers are aware of their legal rights, they will not know how to protect themselves from becoming unfairly disadvantaged,” said Alderson, who is a senior partner at Samial Al Midfa Advocacy and Legal Consultants in Dubai.

“If we get a precedent ruling in a Dubai court against a developer for construction delays, then it will deter future developers from making promises that they cannot keep and will change the way sales and purchase agreements are drafted here,” she explained.

Adopting previous court judgment is another principle of a common law practice that is not recognised in the UAE. However, such precedents may in Dubai be presented to the court for persuasion purposes.

“Precedents do deter people,” Alderson pointed out.

Dalton further added:

“Within the region, the terms and conditions of contracts that I’ve seen are fairly standard, and I don’t think you could distinguish between one project and one developer from another. It is just the state of the market here, and it is very much a developing market.”
Most lawyers are in agreement that developers are not being brought to task for their demands that customers sign contracts “as is”, regardless of whether the developers are actually able and willing to perform the obligations specified therein.

Developers are obviously going to want to protect their interests as best they can, and it is supply and demand that determines whether a developer will be able to adopt a “take it or leave it” approach with regard to the contracts they produce. The level of demand for property in the past has put developers in a strong position with regard to the contracts they produce, and if a particular buyer wasn’t prepared to accept the developer’s standard form of contract, then there were usually ten others that would have.

It remains to be seen whether there will be a slowdown in the UAE market that may result in buyers being placed in a stronger bargaining position than previously.

Some developers have given buyers the option of a full refund if there are delays beyond the 12 months, while others provide no recourse and buyers just have to sit and wait for them to complete the work.

“Penalties have been paid as well as interest to disgruntled purchasers by certain developers, but it is certainly not the norm. The developers have considerable flexibility,” said Kamal.
Consumer protection in DubaiIn Dubai, new consumer protection laws will protect the purchaser in the case of non-delivery or late delivery. There is also the regulatory watchdog, the RERA. So, a developer is now subject to further controls in terms of its construction progress and ultimate delivery to the buyer.

Specifically, the Trust (Escrow) Account Law has established the setting up of escrow accounts for property development to protect purchasers of off-plan properties by ensuring that the payments made to a developer in advance of handover of a completed unit are protected in a separate ‘escrow’ account until certain construction milestones are met.
The law is applicable to all property developers in Dubai, and they are required to set up trust accounts to deposit all monies received from customers for off-plan property sales.

The funds collected from buyers are to be held in escrow accounts that will be offered at banks that are licensed to offer such facilities by the Dubai RERA.

Funds will only be released to the developer (for the purpose of funding the project) once certain stages of construction are completed. An independent surveyor will assess the stages of completion of construction.
In addition, the Dubai Land Department will hold 10 per cent of the value of the development in the escrow account for one year after handover to act as a warranty for any defects in the construction or finishing of the property.

“I think the risk of non-delivery is somewhat less now for developments in Dubai. Developers are doing the proper budget allocations required so that they can make good on their promises. We don’t just have the contract now, but there are regulatory measures to protect the purchaser in Dubai,” said Kamal.

“The Trust Account Law applies retrospectively. In some cases, if a project is fairly advanced and is close to delivery, we have seen cases of the Escrow Law requirements being waived.”
He added: “I would say that anything that is 70 per cent or above completed is likely to be exempted from the Trust Account Law, subject to approval by the RERA, because the risk of non-delivery is less.”

Another thing off-plan property investors in Dubai should be on guard for is shoddy workmanship.

All sales agreements should specify a written schedule about the finishing and fittings included in the property. Brand names should be mentioned if applicable to the quality promised. If this is not done, a buyer should be prepared to accept whatever he gets, and will have no recourse to get this rectified later.

One cannot anticipate structural defects that may crop up, but in Dubai, buyers have the Joint Ownership of Property Law (the Strata Law), which assures that all property developers will remain liable for 10 years from the date of completion of a building to repair and rectify any defects in the structural elements of a property. This includes the main supports, roofs, foundations, walls, ceilings hallways, stairwells, etc.
I

n addition, according to the Dubai Strata Law, all developers also remain liable for one year from the date of completion to repair or replace defective installations in the common property, including mechanical and electrical works, sanitary and plumbing installations, etc. Thereafter, these liabilities devolve to the owners.

There have been a number of complaints about the quality going into the finishing of certain property developments in Dubai. Once again, the advice to buyers is to purchase a property from a developer that has already built properties that are completed, so they can have a look at them inside and out to assess the quality of the finish.

Is it a crime?

But do unfulfilled promises or delays in construction by developers add up to the crime of misrepresentation or fraud, as some lawyers allege they do?

Alderson said: “If written communication is made about what you intend to receive from the developer, and if you don’t receive that, then those written confirmations are misrepresentations by the developer.

If the first stage of construction (the ground breaking) has not even started by the end of the date stipulated in the sales contract, then it is a clear case of breach of contract, and it means the developer is guilty of fraud and had no intention of honoring the performance of its obligations.”

Kamal agrees: “It could be considered misrepresentation, yes. If a date for delivery has been stated somewhere in the marketing literature, the contract or some kind of assurance has been made to the purchaser that they would deliver the property by a certain date, and the purchaser could prove that it would not be realistically possible, then I think that a purchaser would be entitled to make such a claim.”

In order for the concept of misrepresentation in the UAE Civil Code to apply in a case, it would require that the party claiming misrepresentation shows that there was an element of “trickery” on the part of the party accused of misrepresentation.

The Dubai courts tend to require a direct link to be shown between any breach of contract and damages suffered, meaning that an investor, at best, is only likely to get his or her money back in the event of a successful court action (and possibly a minimal costs and interest award). Indirect, consequential or penal damages are very difficult to obtain.

Shahram Safai, partner at Afridi & Angell Legal Consultants, said it is theoretically possible to frame an action based on misrepresentation. However, it is much more difficult to prove in court.

“It should be noted that courts will want to see proof that the developer deceived the buyer by means of trickery to induce the buyer to sign the sale and purchase agreement, for example by stating that the completion date would be much earlier even though the developer knew that this was not the case. It may be difficult for buyers to assemble and to provide such proof to the court as evidence,” he explained.

“In my opinion, an action can be successfully maintained by a buyer on the basis of [what is in the written contract], assuming all material facts support his or her claim. In such an event, a court should order a refund of the payments made by the buyer, as well as interest and any penalties,” added Safai.

As stated before, most sale and purchase agreements in the UAE cover the consequences of delay of completion. These consequences are generally: (1) Interest or a penalty is paid and (2) If delay extends beyond a predetermined date, the buyer can terminate the agreement and receive back his payments along with applicable interest or penalties.

Property investors should make sure that such remedies are included in all contracts they sign to purchase off-plan, and that the terms are clear and explicit.
Kamal said: “Very few cases of this nature go to court. We have seen various investors raising the issue of delays, negotiating and settling with the developer by way of compensation or some other concession to account for the delays in delivery. But I have not seen cases going to court, because it is just not seen as worthwhile from the investor’s standpoint to pay the money to run a court case.”
If penalty clauses for construction delays were made compulsory as a mandatory part of all off-plan sales agreements, this may deter developers and act as a further incentive to ensure that properties are delivered on time.

The most important message that should get across to property investors is simply that they should read their contracts very carefully and ask questions about any provisions that they are unsure about.

Investors should not be afraid to ask for changes or clarifications to be made to the contract before they sign, and a developer’s response to any such reasonable request may give an indication of the respectability of the developer.

Flats’ rents likely to rise as sharing of villas vetoed – The National Newspaper

Flats’ rents likely to rise as sharing of villas vetoed – The National Newspaper

The cost of renting flats in Dubai and its neighbouring emirates is expected to rise following the decision to evict families sharing villas, estate agents predicted yesterday.Thousands of affluent families living in shared villas in Jumeirah, Umm Suqeim, Al Rashidiya and Abu Hail are now looking to move to flats after the Dubai Municipality announced that only one family could live in each villa.

The authority announced a 30-day deadline, ending next month, for the extra families to move out.“The rental prices of apartments are rising day by day, but the news from the municipality will definitely push them up [further],” said Wassim Tarik Malik, an agent working with Wateredge Real Estate in Dubai.

“Pushing the rental price up will also push the property value up, and this can be seen from the last couple of months.”Agents said that two months ago, a one-bedroom flat in the Dubai Marina area was renting for an average of Dh120,000 (US$32,600) a year.

Today, it is nearly impossible to find one for less than Dh140,000. “These prices will keep increasing on a daily basis now,” Mr Malik said.Bassam Abu Diwan, an estate agent with Al Masah, confirmed that a large number of clients he had seen in the past few weeks looking to rent flats were being forced to leave their villas.

“A lot of residents from The Springs and Mirdiff areas are asking specifically because of this reason,” he said. “Moving to a villa is no longer an option.”Farhan Zia, an agent with Exelet Real Estate, said: “The situation is shocking because the prices are going up by the day.”According to Mr Zia, the rise in rental prices coupled with the exodus from shared villas is having the knock-on effect of making life very hard for single people in Dubai. Estate agents are forbidden to rent villas to single people, he said, which means they can live only in flats.

“What is also difficult is that apartment landlords are asking for yearly cheques in advance, but people are now being forced to comply because there is no other alternative,” he said. “This is definitely a landlord’s market.”People living in villas in The Springs, Meadows, Arabian Ranches and Al Barsha are also being forced to move to pricier neighbourhoods such as Dubai Marina and Jumeirah Beach Residence.
“It is now impossible to find a two-bed apartment in JBR for less than Dh200,000 a year,” said Mr Zia.The municipality launched the villa eviction campaign in July, slapping notices on villas in Al Rashidiya area.

This week, a 30-day final deadline was announced for all villas in Dubai. “No more notices would be issued to villas. Even those families who are sharing villas but have not received notices must move out within the deadline,” a spokesman for the municipality said. He added that once the deadline expired, violators would have their water and electricity supplies cut off, and landlords would face heavy fines – up to Dh50,000.

Charles Thornton, who shares a villa in Umm Suqeim, is unsure of what to do. “I am really scared. I do not want to move to Jumeirah Beach Residence or Dubai Marina because it’s just too expensive,” he said. “
We have started looking but it is all out of our price range, and the prices seem to be increasing too rapidly. Our villa is nice and spacious, and a lot of the apartments are much smaller and you will be paying so much more.“

What happens if they turn around and decide to throw people out of apartments for sharing?” he said.

The municipality confirmed the new rules apply only to villas, and not to people sharing flats.

Some families have already had their electricity supplies cut off. “We lived in darkness for weeks but have not managed to find another home,” said a resident of a villa in Abu Hail. He said he shared the large traditional villa with nine other families until inspectors served them notice last month. “Many have moved out but families with children have stayed because they have to think about the school transport.
Unable to bear the heat, we have moved to a hotel room,” he said.

Families are now appealing for more time to move out of their villas, and also asking for alternative accommodation. Some families living in villas also claim that they have paid several months rent in advance to their landlords, who are refusing to return the money.
However, the municipality has insisted there will be no further extensions of the deadline.

It said what people do to find alternative accommodation is not its concern.

A spokesman for the municipality added: “Families who have formal contracts with landlords can approach the rent committee and make a complaint.

However, nothing can be done for those without contracts.”

nsamaha@thenational.ae
mailto:nsamaha@thenational.aepmenon@thenational.ae

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

Gulfnews: No more frustration over project delays

Gulfnews: No more frustration over project delays:

By Suzanne Fenton, Staff ReporterPublished: September 24, 2008, 23:39
Dubai:

Investors in Dubai’s property sector will no longer have to bear with frustrating project delays, thanks to new laws that hold developers accountable.

The introduction of Law 13 and Law 14 aims to increase transparency and honesty in Dubai’s property sector, according to senior officials at Dubai’s Land department.
“After registration and approval, all the property information is entered into the system. We will know all details about the projects. There is no reason for delays,” said Mohammad Sultan Thani, Assistant Director-General of the Land Department, during a media roundtable yesterday.

Law 13 requires all developers to pre-register off-plan properties with the land department to create a full database of property transactions.

Law 14, or the mortgage law, makes it easier for banks to secure proof of land titles.

Both laws came into effect last week.

“Law 13 is very good for the market,” said Marwan Bin Galita, CEO of the Real Estate Regulatory Authority (Rera).

The main objective of Law 13 is to ensure developers register all projects before they launch sales.
“No one can release a project unless all the approvals are in place,” Bin Galita said. Under this law, approval must be sought from about five specified government bodies, including the RTA, Dewa, Dubai Municipality, Rera and the Land Department.

Sultan Butti Bin Mejrin, Director-General of the Land Department, said action will be taken against developers violating the law.

Currently, some developers demand a deposit on the unit before a sales and purchase agreement is given. Law 13 states that as soon as the deposit is paid, the sales and purchase agreement should be given immediately.

The new law also stipulates an acceptable increase in the floorplan of a unit. On completion, if the floorplan is smaller than originally agreed, the buyer is entitled to compensation.

Under Law 8, developers have six months from registration to start construction on a project. And developers are not allowed to cancel a project without first informing the Land department.
In line with efforts to increase transparency, the property court is set to begin operations in the first week of October.

Bin Mejrin estimated that 96 cases have been solved with mediation in the Land Department so far.
“The biggest challenge is collecting the data. The other challenge is the behaviour of the investor,” Bin Galita said, referring to those investors who still do transactions with unregistered developers.
Bin Galita also said that the new rent cap will be completed and announced by the end of October.
All three officials said the global financial credit crunch, negative market reports or the recent wave of investigations in Dubai will not damage the market in any way.

“I still have confidence in this market,” Bin Galita said.

Around Dh200 billion worth of transactions have been registered so far within the Land department.
Real estate

Black and white

Registered developers 826
Registered projects 1,624
Registered brokers 4,154
Certified brokers 1,300
Registered broker offices 1,772
Authorised banks 34
Registered contracts 2,176

How to buy

1) Decide what property to buy

.2) Check it is a registered developer, with an approved project

.3) Check trust account is in place.

4) If you want an agent, check that the agent is registered.

Gulfnews: No more frustration over project delays

Gulfnews: No more frustration over project delays:

By Suzanne Fenton, Staff ReporterPublished: September 24, 2008, 23:39
Dubai:

Investors in Dubai’s property sector will no longer have to bear with frustrating project delays, thanks to new laws that hold developers accountable.

The introduction of Law 13 and Law 14 aims to increase transparency and honesty in Dubai’s property sector, according to senior officials at Dubai’s Land department.
“After registration and approval, all the property information is entered into the system. We will know all details about the projects. There is no reason for delays,” said Mohammad Sultan Thani, Assistant Director-General of the Land Department, during a media roundtable yesterday.

Law 13 requires all developers to pre-register off-plan properties with the land department to create a full database of property transactions.

Law 14, or the mortgage law, makes it easier for banks to secure proof of land titles.

Both laws came into effect last week.

“Law 13 is very good for the market,” said Marwan Bin Galita, CEO of the Real Estate Regulatory Authority (Rera).

The main objective of Law 13 is to ensure developers register all projects before they launch sales.
“No one can release a project unless all the approvals are in place,” Bin Galita said. Under this law, approval must be sought from about five specified government bodies, including the RTA, Dewa, Dubai Municipality, Rera and the Land Department.

Sultan Butti Bin Mejrin, Director-General of the Land Department, said action will be taken against developers violating the law.

Currently, some developers demand a deposit on the unit before a sales and purchase agreement is given. Law 13 states that as soon as the deposit is paid, the sales and purchase agreement should be given immediately.

The new law also stipulates an acceptable increase in the floorplan of a unit. On completion, if the floorplan is smaller than originally agreed, the buyer is entitled to compensation.

Under Law 8, developers have six months from registration to start construction on a project. And developers are not allowed to cancel a project without first informing the Land department.
In line with efforts to increase transparency, the property court is set to begin operations in the first week of October.

Bin Mejrin estimated that 96 cases have been solved with mediation in the Land Department so far.
“The biggest challenge is collecting the data. The other challenge is the behaviour of the investor,” Bin Galita said, referring to those investors who still do transactions with unregistered developers.
Bin Galita also said that the new rent cap will be completed and announced by the end of October.
All three officials said the global financial credit crunch, negative market reports or the recent wave of investigations in Dubai will not damage the market in any way.

“I still have confidence in this market,” Bin Galita said.

Around Dh200 billion worth of transactions have been registered so far within the Land department.
Real estate

Black and white

Registered developers 826
Registered projects 1,624
Registered brokers 4,154
Certified brokers 1,300
Registered broker offices 1,772
Authorised banks 34
Registered contracts 2,176

How to buy

1) Decide what property to buy

.2) Check it is a registered developer, with an approved project

.3) Check trust account is in place.

4) If you want an agent, check that the agent is registered.

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/

Kippreport » Cover Story Real Estate The Work » Dubai Boomtown no more?

Kippreport » Cover Story Real Estate The Work » Boomtown no more?

September 24 , 2008

Yet another company has come forth and said the Gulf building boom is threatened by rising construction costs. ESI International, a project management and training company, says soaring salaries for technical professionals is threatening projects in the Gulf region worth $2.4trn.
Previously, most of the hand-wringing about the sustainability of the region’s building boom has resulted from the rising cost of raw materials, in particular steel and cement, or from concerns that prices would undergo a correction as an oversupply comes onto the market.
Yet cost pressure on the steel and cement front seems to have eased since the start of this year. Gulf

News reported today that the price of steel in the UAE, after rising from Dh3,000 ($817) per tonne early this year to Dh 6,000 ($1635) over the summer, had dropped again back to a more moderate Dh3,500 ($954).

The ESI report is part of a string of warnings about the sustainability of the region’s building boom. In January, Saudi-owned developer Rakaa Properties grabbed headlines with a report that some 40 per cent of the current Dh1.5 trillion ($400 billion) worth of real-estate projects in Dubai had been “temporarily suspended” because contractors and developers could not afford to pay for raw materials, the cost of which had shot up in preceding months.
While steel and cement have come down, concern about costs obviously remains.

ESI is now saying that it’s not just the cost of raw materials that is threatening the boom, but the rising salaries of professionals such as engineers and project managers. Perhaps the statement can be taken with a grain of salt, as it appears to be part of a prepared statement by the company – in other words, a press release.

Business Intelligence Middle East carries the press release in its entirety, noting that ESI International is “the leading provider of project management training and business analysis” and Haddad is “an expert on the attraction and retention of key personnel.”

Still, the fact that companies feel emboldened enough to promote themselves by warning of a slowdown in Dubai’s much-vaunted boom speaks of the obvious strain on resources, both material and human, that is being exacted by growth pressure and rising costs.
If projects’ completion is truly threatened, it complicates efforts to forecast future movements of the property market. Dubai in particular is increasingly talked about as a potential real estate bubble, with regional investment bank EFG-Hermes recently predicting a 20 percent fall in housing prices by 2011 after a peak in the first half of 2009.

Morgan Stanley has mentioned a Singapore-style meltdown, following the model of the Southeast Asian statelet in the 1990s, as a possible worst-case scenario for Dubai.
Yet it’s difficult to imagine that happening if development stalls and builders can’t afford to build fast enough to keep up with rising demand, be it due to rising salaries or soaring raw materials costs.

Secret Life of Hussain Ali Habib Sajwani Owner of DAMAC | by Kippreport

Secret Life of Hussain Ali Habib Sajwani Kippreport:

While building Sajwani’s profile, the Kipp Report invited comments from readers. A majority of those who responded claimed to be angry and disappointed employees of the company.
One wrote, “I have been a Damac employee for four years now. … This company is mismanaged and needs to be restructured. There is a surplus of manpower, with no proper job allocations.”
Another said, “I was promised a senior position [with Damac], but when I joined work, I found myself sitting in a stupid corridor, doing a very junior job in a very unhealthy work environment full of problems.”

Sajwani responds: “It takes time for an organization to be perfect and seek 100 percent satisfaction. I can assure you that the HR practices at Damac are evolving on a daily basis and we certainly aim to offer the best to our employees. Job allocations and responsibilities are two of the basic steps in running a business, and I do not think we would have reached where we are today if we were not implementing simple things like this.”

Another respondent commented that the company has seen high turnover of senior staff, with three vice-presidents resigning without completing a year. Though asked, Sajwani did not respond to this allegation.

Meanwhile, in accordance with Sajwani’s free-wheeling style, the company continues to dodge authorities’ efforts to regulate its activity. In Dubai, for instance, the government has been cracking down on fly-by-night freelance agents by requiring that all companies and individuals selling property be registered with the emirate’s Real Estate Regulation Authority (RERA).

Yet when a reporter for a local investigative magazine contacted a Damac property consultant posing as an investor’s cousin, he was offered an agent’s cut worth 3 percent to 5 percent – AED 150,000 ($41,000) to AED 375,000 ($102,000) – depending on the millions roped in. The consultant also emailed a single page “individual agent application form” to complete formalities.
When asked about the legality of such an arrangement, the agent replied: “We will register you at Damac Sharjah to avoid RERA regulation.”

“I have done well in achieving what I have,” Sajwani tells Kipp. “I always had the opportunity – the opportunity for good education, the opportunity to exposure – to take initiatives and do things I believe in. I made mistakes, learned from them and carried on.”
Sajwani remains a public figure that is both respected and despised. One might consider, though, that there is no such thing as bad publicity. There is only publicity.

original published: Kippreport

http://www.kippreport.com/kipp/2008/09/22/secret-life-of-hussain-ali-habib-sajwani/3/

Dubai property defies global trends – The National Newspaper

Dubai property defies global trends – The National Newspaper:

Last Updated: September 20. 2008 9:11PM UAE / September 20. 2008 5:11PM GMT

Property prices in Dubai have withstood the pressures of a tumultuous year in the industry worldwide, surging on the back of solid economic growth and a rise in construction costs, according to a survey conducted by The National.

The survey found that the prices of villas increased faster than those of offices and apartments, posting a 76 per cent jump in the year to last month, while office prices rose 74 per cent and apartments 63 per cent. Office prices have increased faster than apartments over the past year, with record highs in Downtown Burj Dubai and Tecom.

Analysts said the increase in prices could be attributed to the country’s solid economic growth, an influx of expatriates seeking new job opportunities, rising construction costs sparked by steady inflation in raw materials and a labour shortage. Analysts said they anticipated further price increases in the sector. “You’d expect to see prices grow in Dubai and in the UAE in general, but at what rate we are not quite sure yet,” said Vincent Easton, the head of sales at Sherwoods, a property agency.The survey looked at developments in 16 major investment zones in Dubai which spanned a range of price levels. The intention of the survey was to follow up prices of residential and commercial properties on a monthly basis.The survey was compiled in association with the National Bank of Abu Dhabi, Al Mal Capital, Colliers International, Better Homes, Hamptons International and Sherwoods, all of which provided property sales data. The National also intends to track the sale prices of some residential and commercial properties in Abu Dhabi on a monthly basis, although the capital’s secondary market is still in its infancy.mailto:infancy.ngillet@thenational.ae

Mumbai News – Mumbai Mirror Online – Dynasty Zarooni to float a city on water in Dubai, BUSINESS, Mumbai News, Mumbai newspaper,Current Affairs,Latest news,Mumbai Directory,City Portal,Mumbai,city,Bombay,destination,Web,Internet

Mumbai News – Mumbai Mirror Online – Dynasty Zarooni to float a city on water in Dubai, BUSINESS, Mumbai News, Mumbai newspaper,Current Affairs,Latest news,Mumbai Directory,City Portal,Mumbai,city,Bombay,destination,Web,Internet: “Dynasty Zarooni to float a city on water in Dubai”

Mumbai Mirrow September 17, 2008

On August 23, Mumbai Mirror had carried a story about the alleged investigations being carried out by a government agency in Dubai into complaints against real-estate firm Dynasty Zarooni.

On further investigations, we found that the allegations were not true. Kabir Mulchandani, the 35-year-old chairman of Dynasty Zarooni explains why he is in the eye of controversy:

• Mumbai Mirror: What made you shift your base from India to Dubai, and how difficult was it, business-wise, to relocate to Dubai and start from scratch?

Kabir Mulchandani: On a trip to Dubai in July 2004, I witnessed the beginnings of the process of creating one of the finest master-planned cities of our time. I immediately felt a desire to be a part of such a unique phenomenon. So in October 2004, I moved to Dubai and set up my company, Dynasty Enterprises Inc.

The total transparency and speed of transactions in a tax-free environment provided Dynasty Enterprises the opportunity to grow its profits by over 20,800 per cent in three years.

Then, in September 2007, we merged with the real estate group of Mr Hilal Al Zarooni.

Mr Zarooni was owner of a construction and development company, which had over 30 years of experience in developing projects and the retail of luxury goods in the UAE. The merged entity, Dynasty Zarooni Group, created the largest privately-owned investment company in the UAE.

The value of projects of Dynasty Zarooni group, which have been developed; are under development; and have been successfully invested and disposed off are over Rs 26,000 crores and in the process, investors of Dynasty Zarooni Group have made returns of over Rs 7,500 crores.

• MM: This paper recently carried a story about allegations made against your company which later turned out to be false. Do you see any plan by your adversaries in this campaign?

KM: Success has no friends. During the merger there were certain senior executive(s) in the company who felt insecure about their position in the merged entity.

Once the merger was effected, the covert operations of these executives came to light, along with details of other fraudulent activities being carried out by them.

These elements have constantly been working against the interests of ‘Dynasty Zarooni Group’ and have spared no efforts to create fraudulent and fabricated documents, which have found their way into the Indian media.

All allegations that have been given some credence by the fraudulent documents are, therefore, false and baseless. In fact, the Dynasty Zarooni Group has been given a clean chit by the The Real Estate Regulatory Agency (RERA), a body under Land Department, Government of Dubai.

• MM: Who are your competitors? What prospects do you see for your real-estate firm there?

KM: Our unique business model has helped us in fulfilling a niche requirement in the UAE market.

As such, we do not have direct competitors in the market. We already have strategic alliances with Al Fajer Properties LLC, managed by His Highness Sheikh Maktoum Hasher Al Maktoum, a member of the ruling Maktoum family; Business Bay LLC; Dubai Properties; Green Emirates Properties; Hydra Properties LLC; Mazaya Real Estate LLC and many more. All of the above are government, quasi government or listed entities and we are their preferred distribution partners.

The outlook for our company in the UAE real estate market continues to be bullish and we are now embarking on a Rs 30,000 crores project comprising over 6 million square feet in creating a prime new city on the water.

What is a contract ?

Contracts are promises that the law will enforce. The law provides remedies if such a promise is violated, and recognises the performance of that promise as a duty. Contracts arise when a duty does or may come into existence, because of a promise made by one of the parties.

In order to be a legally binding contract, a promise must be exchanged for adequate ‘consideration’. Adequate consideration is a benefit or detriment a party receives, which reasonably and fairly induces them to make the promise.

An example of this would be purchasing an off-plan apartment from a property developer. The developer and the buyer come together to discuss the terms of the exchange (in all likelihood, the purchase is outlined in a written agreement). Thus, they have fulfilled the first requirement of consideration. To meet the second requirement, there must be a mutual exchange. In this case, the property developer (if one of the main developers in Dubai) provides ownership if the apartment is in a freehold area of Dubai, while the buyer provides payment. Third, the bargain terms must be of value. The apartment is worth what the buyer hands over. Therefore, this contract has met its consideration requirement, because it fits all elements of consideration.

The UAE is essentially a Civil Law jurisdiction heavily influenced by French, Egyptian, Roman and Islamic law. The increasing presence of international commercial contracts has resulted in the application of English common law practices, further influencing the UAE legal system.

The law relating to contracts in common law specifies that the agreement must consist of an offer and acceptance, and also consideration for a contract to exist. It is important that buyers learn to recognise these elements in contracts they plan to sign.

An offer is an indication by one person to another of their willingness to contract on certain terms without further negotiations.

A contract is then formed if there is express or implied agreement. A contract is said to come into existence when acceptance of an offer has been communicated to the one making the offer.

Another important element to understand is misrepresentation. Misrepresentation is a false statement of fact made by one party to another party and has the effect of inducing that party into the contract.

For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality or nature of the product that the seller has may constitute misrepresentation.

In the UK, a finding of misrepresentation by a court of law allows for a remedy of rescission (termination of the contract), and sometimes damages depending on the type of misrepresentation found to have taken place. However, common law principles are not explicitly recognised under UAE law.

Despite the differences between legal systems, lawyers like Carol Alderson in Dubai, who has been practicing in the UK and the UAE for the last 25 years, vows to bring about more robust protection for property investors.

“The way sales agreements are drafted in Dubai is very one-sided in favour of developers, and unless customers are aware of their legal rights, they will not know how to protect themselves from becoming unfairly disadvantaged,” said Alderson, who is a senior partner at Samial Al Midfa Advocacy and Legal Consultants in Dubai.

“If we get a precedent ruling in a Dubai court against a developer for construction delays, then it will deter future developers from making promises that they cannot keep and will change the way sales and purchase agreements are drafted here,” she explained.

Adopting previous court judgment is another principle of a common law practice that is not recognised in the UAE. However, such precedents may in Dubai be presented to the court for persuasion purposes.

.

Kippreport » Cover Story Real Estate The Work » Property market speculation: good or bad?

Kippreport » Cover Story Real Estate The Work » Property market speculation: good or bad?

September 15 , 2008

As Dubai continues to revel in its property boom, developers have begun to impose several restrictions on the resale of properties, which some believe could prove counter-productive.

Some developers restrict resale by insisting that a certain percentage of payment has to be made towards the property price before one can resell a property to a third party. This percentage varies from developer to developer and can be as high as 40 percent.

Others have introduced a minimum holding period before investors can resell the property. For example, in its recent report on the UAE property market, Merrill Lynch mentions that Trump Towers requires buyers to hold the property for at least one year before they can sell it to another buyer.

Talking to The Business Weekly, Marwan Bin Ghalaita, CEO of the Real Estate Regulatory Agency (RERA), says that there is no harm in adding this restrictive clause in the contract between the developer and investor, as it will curb unnecessary speculation in the market.

“But this should not extend to all properties. Developments in far-off locations may need support from even speculators and this may, to a good extent, support the property market growth in such areas,” he says. “One should remember that speculation is always good for a market, especially in its initial stage and hence, restrictions need to be applied discriminately.”

But thanks to increasing speculation, many investors book property units by paying just five percent of the asking price, and later sell the units for a large margin. “This margin sometimes works out to a three-digit rate of return as the investor is able to leverage his investment enormously. This sort of flipping will certainly damage the reputation of the property market in the UAE which is still in its emerging stage,” says a property developer who has developments in Dubai and Ajman.
Many also blame the excessive ‘flipping’ on the lack of a solid regulatory framework, although the Merrill Lynch report says that authorities in the region have become more proactive in their approach to the real estate market.

In August, for example, a new law was introduced in Dubai requiring all mortgage contracts (including off-plan) to be registered with the Land Department, a move which should help to introduce more transparency to the market.

First seen on The Business Weekly.

Gulfnews: Dubailand Plantation investors will get compensation – Rera Dubai

Gulf News Report Published: September 12, 2008, 22:59

Dubai: Dubai’s Real Estate Regulatory Authority (Rera) has said that people who have invested in the Plantation Equestrian and Polo Club, the troubled development in Dubailand, will be compensated after land for the project was repossessed by Dubai Islamic Bank (DIB) over payment default by the project’s developer. Marwan Bin Ghalita, CEO of Rera, has asked investors to approach DIB with documents proving their ownership. DIB said in a statement on Thursday that it had “assumed ownership of the land which is the site for a premium property development project known as Plantation project.” The Plantation was the collateral for a loan provided by the bank. “The rights of all investors are 100 per cent guaranteed,” a local Arabic daily quoted Bin Ghalita as saying. Bin Ghalita said a dispute had broken out between DIB and Plantation’s developer over the plot’s development shortly after they had reached a deal and sold some units. According to reports, Plantation owner Arthur Fitzwilliam is among several people in police custody in connection with a corruption investigation. Others being held include Omair Mooraj, the Middle East head of Islamic banking at JPMorgan Chase and a former employee of DIB and Charles Ridley, a Bahrain-based British banker. When launched in 2004, the $3.5-billion Plantation Equestrian and Polo Club promised air-conditioned stables for 800 horses. Read more: ArabianBusiness http://www.arabianbusiness.com/530806-investors-in-repossessed-dubai-project-safe—report

Headline Gulf News – Corporate corruption probe widens

Dubai:

Housing mortgage company Tamweel on Tuesday found itself facing more scrutiny as it acknowledged that deputy group chief executive Abdullah Nasser Abdullah has been arrested by Dubai police in a corruption investigation.

Abdullah, who is also chief executive officer of Tamweel Properties & Investments LLC, a fully-owned Tamweel PJSC subsidiary focused on real estate investment and brokerage services, becomes the third official with Tamweel connections whose case has become public.
Last month police arrested Adel Al Shirawi, Tamweel’s former chief executive, and the company’s former head of investments, Feras Kalthoum, over financial embezzlement. Tamweel told the Dubai Financial market, where its shares are traded, that Abdullah “has been detained for questioning by Dubai government authorities in connection with an ongoing investigation.”

Tamweel did not provide information of the investigation saying it could “jeopardise” the ongoing case. Abdullah was arrested nearly a week ago over alleged swindling of money, Dubai Public Prosecution sources told Gulf News. “He has been detained since last week and is being questioned over alleged financial irregularities. He is facing alleged charges of embezzlement, swindling of money and of conning people,” said the source.

Sources close to the investigation said that one of the suspects who was arrested earlier in the same case reportedly accused Abdullah of being involved in the financial irregularities. It is alleged that his case involves between Dh40 million and Dh140 million. However, this information could not be confirmed by the Public Prosecution or police.

The news of arrest on Tuesday sent Tamweel’s shares lower. The stock closed 4.06 per cent down at Dh5.20.
The latest arrest highlights widening investigations into corporate corruption in Dubai’s booming real estate and financial sectors.

The Dubai government reiterated recently that it has zero tolerance towards corruption in the public and private sectors.

Dubai Property court to hear 500 cases

original published: EmiratesBusiness

09. September 2008

http://www.business247.ae//Articles/2008/9/Pages/09092008_795dd549666e44cb894a16c87346dd5a.aspx

Property cases that were originally submitted to the Real Estate Regulatory Agency (Rera) and Dubai Courts are to be passed on to the Property Court when it starts sitting in the first week of October.

Around 500 pending cases will be considered by the new specialist court, Dubai Courts’ Chief Judge told Emirates Business in an exclusive interview.

The new court was set up under the First Instance Court to deal exclusively with property-related cases.

It will initially have 10 judges, and more could be appointed depending on the workload.Consulting judges, who must have worked in Dubai Courts for more than 20 years, have been appointed and are currently undergoing training with Rera about the real estate market in Dubai.”

The Property Court will follow the civil law and hence will only try cases pertaining to commercial issues such as cheque and loan defaults,” said Chief Judge Mohammed Yousuf A Sulaiman, who is Deputy Director of Dubai Courts and the Cassation Court’s Senior Judge.”The real law for the Property Court will be the agreement binding two parties in a civil case. The Property Court will rule in favour of the party that has not breached the agreement.”

There will be no punishments under the Property Court since it operates under the civil code law, only compensation to be paid by the defaulter.

Punishments are handed down only by the Criminal Court.

In the case of a dispute between two parties who are bound by an agreement, the ruling will favour the party obeying the agreement.“

People in the realty market have to be sure of what they sign and what an agreement entails. We do not let off people who say they don’t understand the law.”

Judge Sulaiman said the cases involving the arrests of individuals with links to leading property companies in Dubai were still being investigated by prosecutors in the Public Prosecution Court.

Any trials arising from the arrests would be heard in the Criminal Court and not the Property Court.

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.

Gulf property market: a never ending boom? – The National Newspaper – Sent Using Google Toolbar

Gulf property market: a never ending boom? – The National Newspaper

The sub-prime mortgage market crash was the first salvo in a global jitter concerning the health of the property market. Economies that had registered record property price rises are now reporting successive monthly falls, adding to general unease and uncertainty.

In the UK, where more prudent mortgage lending practices were supposed to be in operation, the news on the property front is grim. Over the past six months, UK house prices have dropped at an annual rate of 11.4 per cent, and over the past three months at an alarming 16.1 per cent. The spectre of the crash in the early 1990s looms and even Alistair Darling, the chancellor of the exchequer, has forecast a 30 per cent fall in house prices before things get better.

What has gone wrong? Are markets in different geographic locations and going through different economic cycles, immune from real estate price tremors in other parts of the world? The key is a perception on whether a particular real estate market has reached a critical asset price “bubble”. Bubbles burst at some stage, but it is the exact point of the impact that is uncertain, as well as the consequent speed of a fall in prices.

In the Gulf, there is no sign yet that real estate prices have fallen, but there are also signs that the massive infrastructure and housing construction boom is beginning to face supply bottlenecks. With steel and cement prices rocketing, some projects are being quietly delayed, while others in the drawing stage are being shelved. While each of the Gulf countries has its own real estate market cycle, a reversal in the fortune of one Gulf market might have a knock-on effect on others.

There is some merit for a pause in any upward march in real estate prices. In the western economies, a gentle collapse in the housing market bubble can be socially beneficial. When prices were rising sharply, it was the younger and generally poorer people in society who were left out of the property ownership ladder, while older and richer people, who already owned houses, became better off. In the Gulf, a similar phenomenon was beginning to emerge but, unlike the West, it was based on resource allocation to different real estate projects.

Younger Gulf nationals wishing to buy their first homes were suddenly being outbid by rising prices, as construction resources were channelled to more lucrative penthouses, second homes or cost-plus government infrastructure projects.

In the West, the housing market began to feel some strain when the ratio of earnings to house prices deteriorated. In the final analysis, it is the share of a household’s income that is taken up paying off the mortgages – even at low interest rates – and the ability of young first-time buyers to get such mortgages, that determines purchasing-power ability. When house prices are rising more than 30 per cent a year, this makes buying a home out of reach to many. What saves some markets is the infusion of liquidity from external sources. London property, for example, was boosted by different waves of buying from Americans, Arabs, Asians and east Europeans.

Similarly in the Gulf, one cannot talk about a homogeneous market. For whom are the different real estate projects being built? Construction in some Gulf states is trying to attract buyers from other Gulf states which have either more purchasing power or a shortage of supply. As such, if economic circumstances change in these countries, or their own construction sector starts to generate enough supply, then these states will be left with a massive over capacity and the beginning of a price-bubble burst.

Demographics is a key factor regarding which Gulf property market will flourish and which will ease off. For countries such as Saudi Arabia and Oman, with larger and a younger growing population, there is a genuine need for affordable first-time homes, rather than luxury second homes or penthouses. For such countries, natural demand exists and it is up to imaginative and cost-conscious construction companies to meet this viable long-term demand. Other Gulf countries with smaller population bases seem to construct real estate projects and then create demand after the fact through slick marketing and an appeal to different “lifestyles”.

There is a limit to this type of demand creation, though. At some stage supply will outpace demand and prices will ease unless a new round of external investors and “new” demand is generated to take up the slack of “older” demand.

Again, for some Gulf countries, the marketing of a lifestyle, with free sunshine all year round thrown in, has tapped non-Gulf expatriates, ranging from movie stars to football players, but the supply of these VIPs is limited, unlike the less glamorous but larger home-grown population demand of other Gulf countries. Should expatriates also begin to feel the chill of economic recession back home, and declining property values, then prospects of a second home in the Gulf becomes less attractive.

Economic globalisation has a price.

The Gulf is helped by government-led infrastructure projects, with Saudi Arabia taking the lion’s share in the form of various economic mega cities. Such initiatives will take up the slack from private sector projects, and reduce the effects of a slowdown.

In the long run, even such mega projects are at the mercy of oil price fortunes and government budget surpluses. Should such factors coalesce – foreign purchases slowing, high commodity prices, high inflation and a higher cost of borrowing – then the Gulf property boom will start to ease back.

Dr. Mohamed Ramady is a former banker and Visiting Associate Professor, Finance and Economics Dept. at King Fahd University of Petroleum and Minerals, Saudi Arabia.

Sold short by the developers of Dubai – The National Newspaper – Sent Using Google Toolbar

Sold short by the developers – The National Newspaper

It sounded like the kind of home most people dream about. With a private beach on the doorstep, perfectly landscaped courtyards and a choice of seven gyms, Jumeirah Beach Residences (JBR) was set to become the epitome of lavish beachside living.

Set along the north shore of Dubai Marina, and with the Palm Jumeirah close by, the 36-tower project was going to offer “a year-round beach resort lifestyle” to its anticipated population of 25,000, according to the sales pitch used to attract investors to the Dubai Properties development.

Buyers began moving in to their new homes last year and looked forward to the day when their dream would be made complete with access to their own private beach park and gym complexes. But that day never came. In June, they were horrified to learn that a significant part of that beach would be used as a car park, while only two of the seven community gyms would be built.

“This is a massive part of the lifestyle that was sold to us,” said Wassim Islam, who bought a three-bedroom apartment at JBR. “It’s changed my perception of a development from something that was desirable to something that is just a residential estate. While the value of my property has gone up, I would not be able to afford the lifestyle sold to me now.”

This is just one of countless stories that have prompted a change in the way Dubai’s property market is regulated, aimed at making sure investors get what they paid for.

Residents of JBR can at least take comfort in the fact that their homes were built and are now worth about three times the purchase price.

The same cannot be said for those who have ploughed thousands of dirhams into projects that have either been delayed or cancelled. These people were not necessarily pining for the high life. All they wanted was a home they could afford, and in a location that was likely to increase in value.

In early 2006, Lorenza Gazzola, a Dubai resident, bought an off-the-plan apartment in Dubai Lagoon, a development by Schön Properties, a Pakistani company. Attracted by the project’s location away from the hustle and bustle of central Dubai, and even more so by the price of Dh600 (US$163) per square foot, Ms Gazzola thought it would be the perfect investment. An attractive payment plan also alleviated the need for a mortgage, which few banks were offering at the time.

“When I first saw the Dubai Lagoon project, I was impressed by the number of buildings, the lagoons and the greenery. It felt like a perfect family community, with a friendly and quiet environment,” she said. “It wasn’t marketed as a luxury development, but I was happy that finally someone with a limited income like me could purchase something affordable, and without having to pay high interest rates to the bank.”

Two years on, Ms Gazzola has nothing to show for her investment. After a series of delays over the project’s design, construction finally began at the end of last year. But progress stalled in May, when the contractor ran into difficulties because of the surge in construction costs.

Pressure from angry investors and the Dubai Real Estate Regulatory Authority (Rera) has forced Schön to resume construction on the first two zones of the seven-zone project, while an additional contractor has been appointed to build zones three and six. Another contractor is expected to be appointed for the remaining zones and the project has now been marked for completion in 2011.

“My dream of buying a home has turned into a nightmare,” Ms Gazzola said. “I was looking forward to moving in this year. I have so far spent the majority of my savings on a modest property that hasn’t yet materialised.”

Dubai is not the only emirate to have felt the brunt of property scandals.

Earlier this year Tameer Holding, a company based in Sharjah, decided to put its Dh30 billion AlSalaam City development on hold because of problems with power and water supplies.

Those who had made payments towards their property in the past three years have since been left in limbo while awaiting the development’s fate.

Although Tameer has offered them a refund with interest, or the chance to transfer their investment to another project, many are reluctant to accept.

Martin Nield, an investor from the UK, bought 10 townhouses in the project at Dh600 per sq ft. He has so far paid Dh2 million. “I don’t think it’s acceptable just to be offered your money back. Some people have been making investments for the last three years and have paid around 70 per cent,” he said. “But how long can it continue to be on hold for? The land was graded two years ago, but all that’s been built are eight show houses.”

The common thread between all of these projects is that they were launched between 2004 and 2005, a time when big project announcements were all the rage, but legal protection was limited. Risks were taken on the premise that huge returns on investment could be reaped. For some, the gamble paid off.

“Many have made huge profits on property here,” said Niall O’Toole, a partner at the law firm Clyde & Co. “But others have been naive and haven’t accurately calculated their risk.”

Dubai’s legal structure, although improving, has had to play catch-up with the market. The arrival of Rera last year came as a relief to many. All developers now have to be approved by the authority and have an escrow account, into which all money paid by investors goes and is used solely for the development’s construction.

But while Rera has instilled some confidence in the market, many of the problems faced by investors today stem from projects launched before it was set up, at a time when there was no protection via escrow accounts.

“Contractually, these investors are not without rights, but how effective are they? If the developer is broke and the contractor is broke, what can they do?” said Mr O’Toole.

But better legal remedies are on the way. Foreign investors in Dubai will now be able to take their grievances to the Property Court, which begins this month and is expected to speed up the process of hearings.

“A crucial part of the evolution of Dubai is the appreciation that property and construction breed disputes, and so there must be appropriate ways to resolve or determine those disputes,” said Nick Carnell, a partner at the law firm Kennedys.

“But it’s also fundamental that the court gets off to a good start.

Without an effective means to deal with such disputes, confidence will be eroded very quickly.”

Also in the pipeline is a consumer protection law, which will better protect off-the-plan buyers from misleading marketing by developers and will make it more difficult for developers not to honour their promises.

“These changes, if introduced, will impact how developers market their projects and will hopefully assist in preventing some of the problems that have occurred recently,” said Stephen Kelly, an associate with Clyde & Co.

Still, these changes will go a long way towards avoiding the kind of problems experienced by some investors. Abu Dhabi is still a little behind Dubai in terms of getting its property law in place, although plans are in the pipeline to adopt a similar strategy to Dubai’s. “I believe the Abu Dhabi Government has hired an Australian consulting firm to help devise a Strata Law in Abu Dhabi,” said Mr O’Toole. “There is currently more protection in Dubai than the Abu Dhabi. For example, Dubai has the escrow account in place.”

Mr O’Toole said the best remedy was doing your homework before buying.

“Be careful, do your research and look at the strength of the developers. The big ones have huge asset banks, while the smaller ones are more exposed to risk. Human nature is such that we talk about learning from other people’s mistakes, but we very rarely do. This is a crazy market and I don’t think people will learn their lessons until there are major failures.“

agiuffrida@thenational.ae

Gulf property market: a never ending boom? – The National Newspaper – Sent Using Google Toolbar

Gulf property market: a never ending boom? – The National Newspaper

The sub-prime mortgage market crash was the first salvo in a global jitter concerning the health of the property market. Economies that had registered record property price rises are now reporting successive monthly falls, adding to general unease and uncertainty.

In the UK, where more prudent mortgage lending practices were supposed to be in operation, the news on the property front is grim. Over the past six months, UK house prices have dropped at an annual rate of 11.4 per cent, and over the past three months at an alarming 16.1 per cent. The spectre of the crash in the early 1990s looms and even Alistair Darling, the chancellor of the exchequer, has forecast a 30 per cent fall in house prices before things get better.

What has gone wrong? Are markets in different geographic locations and going through different economic cycles, immune from real estate price tremors in other parts of the world? The key is a perception on whether a particular real estate market has reached a critical asset price “bubble”. Bubbles burst at some stage, but it is the exact point of the impact that is uncertain, as well as the consequent speed of a fall in prices.

In the Gulf, there is no sign yet that real estate prices have fallen, but there are also signs that the massive infrastructure and housing construction boom is beginning to face supply bottlenecks. With steel and cement prices rocketing, some projects are being quietly delayed, while others in the drawing stage are being shelved. While each of the Gulf countries has its own real estate market cycle, a reversal in the fortune of one Gulf market might have a knock-on effect on others.

There is some merit for a pause in any upward march in real estate prices. In the western economies, a gentle collapse in the housing market bubble can be socially beneficial. When prices were rising sharply, it was the younger and generally poorer people in society who were left out of the property ownership ladder, while older and richer people, who already owned houses, became better off. In the Gulf, a similar phenomenon was beginning to emerge but, unlike the West, it was based on resource allocation to different real estate projects.

Younger Gulf nationals wishing to buy their first homes were suddenly being outbid by rising prices, as construction resources were channelled to more lucrative penthouses, second homes or cost-plus government infrastructure projects.

In the West, the housing market began to feel some strain when the ratio of earnings to house prices deteriorated. In the final analysis, it is the share of a household’s income that is taken up paying off the mortgages – even at low interest rates – and the ability of young first-time buyers to get such mortgages, that determines purchasing-power ability. When house prices are rising more than 30 per cent a year, this makes buying a home out of reach to many. What saves some markets is the infusion of liquidity from external sources. London property, for example, was boosted by different waves of buying from Americans, Arabs, Asians and east Europeans.

Similarly in the Gulf, one cannot talk about a homogeneous market. For whom are the different real estate projects being built? Construction in some Gulf states is trying to attract buyers from other Gulf states which have either more purchasing power or a shortage of supply. As such, if economic circumstances change in these countries, or their own construction sector starts to generate enough supply, then these states will be left with a massive over capacity and the beginning of a price-bubble burst.

Demographics is a key factor regarding which Gulf property market will flourish and which will ease off. For countries such as Saudi Arabia and Oman, with larger and a younger growing population, there is a genuine need for affordable first-time homes, rather than luxury second homes or penthouses. For such countries, natural demand exists and it is up to imaginative and cost-conscious construction companies to meet this viable long-term demand. Other Gulf countries with smaller population bases seem to construct real estate projects and then create demand after the fact through slick marketing and an appeal to different “lifestyles”.

There is a limit to this type of demand creation, though. At some stage supply will outpace demand and prices will ease unless a new round of external investors and “new” demand is generated to take up the slack of “older” demand.

Again, for some Gulf countries, the marketing of a lifestyle, with free sunshine all year round thrown in, has tapped non-Gulf expatriates, ranging from movie stars to football players, but the supply of these VIPs is limited, unlike the less glamorous but larger home-grown population demand of other Gulf countries. Should expatriates also begin to feel the chill of economic recession back home, and declining property values, then prospects of a second home in the Gulf becomes less attractive.

Economic globalisation has a price.

The Gulf is helped by government-led infrastructure projects, with Saudi Arabia taking the lion’s share in the form of various economic mega cities. Such initiatives will take up the slack from private sector projects, and reduce the effects of a slowdown.

In the long run, even such mega projects are at the mercy of oil price fortunes and government budget surpluses. Should such factors coalesce – foreign purchases slowing, high commodity prices, high inflation and a higher cost of borrowing – then the Gulf property boom will start to ease back.

Dr. Mohamed Ramady is a former banker and Visiting Associate Professor, Finance and Economics Dept. at King Fahd University of Petroleum and Minerals, Saudi Arabia.

Western realty investors turning away from Gulf – Sent Using Google Toolbar

Western realty investors turning away from Gulf

Western investors have cooled on Gulf property markets, leaving the scene for local billionaires at least until global credit conditions ease – or markets in the region become more open and predictable.

In Dubai, Abu Dhabi and Kuwait, it is domestic investors who are again calling the shots in real estate, now that debt-starved British and United States property buyers have refocused on other areas they see as cheaper and more competitive.

“Given current economic conditions, US and British institutions are taking a lot of convincing to splash out in the Gulf,” said Fadi Moussalli, a director in Jones Lang LaSalle’s Dubai-based International Capital Group.

“There is less enthusiasm for Gulf property because foreigners are busy dealing with crises elsewhere,” Moussalli said.

Before the credit crunch, Western property buyers were making good progress in opening up fledgling Gulf property markets. But the balance of power has shifted back to local businessmen and their wealth.

Citing data from emerging markets researcher Reidin, Jones Lang LaSalle said less than a fifth of real estate purchases in Dubai in 2008 so far were made by European or US investors.

“A lot of people are [still] looking in the Middle East but it tends to be dominated by local capital,” said Charles Graham, a principal at property fund manager Europa Capital. “There is a lot of it [local investment cash] and the return requirements are for the most part less demanding than our own,” Graham said, adding he was not tempted yet to break away from Europa’s core markets to gain a foothold in the Gulf.

Capital constraints and worries at home are not the only issues driving western investors away from the Gulf. Some believe prices in hotspots like Dubai are close to peaking after years of sky-high growth, while others feel precious capital can earn higher yields closer to home.

House prices in Dubai, which have surged almost 80 per cent since the start of 2007, were likely to fall 15 per cent after a 2009 peak as massive increase in supply overwhelms demand, a Reuters poll showed.

Others are concerned that a clutch of measures to combat property price inflation, such as rental caps, trading restrictions and proposals for a property capital gains tax have made Gulf property investment risky.

New Property law number 13 of 2008 comes into effect this week

Dubai 04.September 2008

Law number 13 of 2008, governing off plan property sales in Dubai is set to come into effect this week.

The law will introduce a mandatory system of pre-registration for sales contracts at the emirate’s Land Department.

Any off plan sales regarding real estate units in the city that are not registered will be legally invalid.

The registration system is the next stage in the government of Dubai’s efforts to increase the levels of transparency in the local real estate market, along with the introduction of a specific arbitration agency, the Real Estate Regulatory Authority (Rera), and legislative measures such as the escrow law.

These initiatives come at a time when investor confidence in both upcoming and existing projects has been shaken following a series of scandals in the local industry.

Although the system will initially be undertaken by the Land Department, the duty will eventually pass to master developers, who will be obliged to register all purchases by sub-developers.

According to an explanatory report authored by Chloe English and Alexis Waller from legal firm Clyde & Co’s Real Estate department, the registration system is already up and running and will work in tandem with the current project registration system in place at Rera following the introduction of Law number 8, the escrow law. Law number 8 declared that all developers had to be approved by Rera and have an escrow account, which all monies from investors would be paid into and would be used solely for the construction of the development.

The system also paves the way for easing in the emirate’s Law number 14 of 2008, regarding mortgages, allowing investors to register against off plan projects.

Contract and purchase fees Developers will still be obliged to pay a fee of Dhs370 per off plan unit contract when registering their site plan.

The developer will not need to have taken possession of the land before registering off plan sales, registration of the concluded purchase agreement at the Land Department will be enough. There will also be an additional 2% registration fee, payable at the split of 1% by the seller and 1% by the buyer, on all third party sales prior to the beginning of construction.

The good news for buyers is that developers will no longer be able to charge transfer fees on off plan sales. Administrative charges will still be payable but the exact amount is currently being determined by the department. The Clyde & Co report estimates the figure at Dhs5,000 for off plan transfers and Dhs500 for completed properties.

Breach of contract ( attention buyers !!!!!!!!!)

Under the new law, if buyers default on a sales contract it becomes the developer’s responsibility to report the breach to the Land Department.
They will then issue a notice granting the buyer 30 days grace to comply with contractual obligations.
If the issue is not resolved within the period the developer can cancel the contract and return all money paid, minus 30%, which they are allowed to keep.
The new law means that the 30% is now a value of money paid by the buyer, rather than 30% of the value of the project.

In a further boost to buyers, developers will also no longer be able to claim additional money if a project is larger once completed than set out in the original contract.

If the project is smaller than specified, however, the buyer must be compensated (the size difference has yet to be specified but the report anticipates a threshold of 5% and over from the advertised area).

Restrictions on property ‘flipping’

The new law is also part of the government’s efforts to help curb the market speculation that has seen prices rise at fever pitch levels, and ensure that all transactions are monitored by the government rather than by individual companies.

Unfortunately, for many of the investors currently undergoing problematic handovers, the law will not retroactively govern projects that are already underway or completed – although all developments still in the off plan stage only have 60 days to register sale contracts with the Land Department.

Although some of Dubai’s major developers, including powerhouses Nakheel and Emaar have set their own restrictions on the resale of off plan units, placing a hold on sales until either a set period of time has elapsed or a percentage of the contractual value has been paid, the new law does not make these restrictions mandatory across the board.