Another scandal Dubai Property market – Investors Jebel Ali Palm Dubai shocked – Damac Project Palm Springs cancelled
Posted by 7starsdubai on March 28, 2008
A scandal in Dubai property market.
Some comments from investors: Link for more: http://www.skyscrapercity.com/showthread.php?t=133487&page=3
posted by Turbo
Can confirm that the project has indeed been cancel led. Only two option available to investors:
a) Either transfer to Unit(s) of your choice on another Damac development of your choice at a discounted price 15% below current market
b) or repayment of monies paid by you with 6% interest calculated from the date of each installment payment.
Unethical behaviour of the highest degree if you ask me. In my opinion investors should take legal action against Damac (if that’s possible in UAE).
Damac have decided to pocket YOUR profit rather than honour contracts. Doesn’t say much for business regulation, safety and ethics in Dubai.
posted by househang
Damac has been trying to cancel this project for some time and is in fact using the redesign of PJA as an excuse to cancel this project,but I would like to tell them that they have been ill advised and cannot get away with this as easy as they think.
-Firsty Damac has waived its right underclause 23 of the Agreement to lapse the sales agreement by their letter dated 20.06.2004 when they completed purchase of plot from the master developer[Nakheel]-
-Secondly Damac can use force majeure clause only in cases where Palm Jebel Ali is not completed or the plot is not delivered.it does not cover changes due to a redesign or els.
-Thirdly if Damac is not prepared to perform its obligations we should involve Nakheel as the master developer who are responsible for the PJA project as a whole.
I think any investor should reject the Damac offer and get together to make sure that Damac cannot get away with sily excuses.
Posted by Salty
I absolutely agree Tiny. People bought into this in 2004 and were told it would be completed in 2007. They have tied up considerable amounts of money all that time, and others who then bought on the resale market will have spent even more. Life savings will be involved.
We all have very severe doubts about Damac’s capability of completing any of its projects. Even if they do eventually start building and delivering finished properties, goodness knows when this will happen.
I also think that Damac will have looked at the phenomenal success of the Palm Jumeirah, realised just how valuable the real estate on Palm Jebel-Ali is likely to be soon, and decided to build something much bigger (i.e. much more lucrative) on its plot with starting prices no doubt in the 3,500 – 4,000 AED range.
This leaves it with a problem. “What are we going to do about the fact that investors in Palm Springs actually own that space now? Hmnnn. I know, let’s just get rid of them for a song.”
I should think Damac probably would want to rid itself of Palm Springs buyers completely because there are likely to be many people who bought 4 years ago for AED 800 a square foot who will not have deep enough pockets for whatever Damac may now want to propose for the Palm Jebel Ali.
Whatever the truth, it seems that the Damac ticking time bomb has gone off. The potential loss of confidence in the Emirates property market that could arise from this scandalous behaviour is huge. I have recently been thinking very seriously about buying an apartment in one of the proposed new developments on RAK’s Al Marjan Island. I don’t want to end up like these poor Palm Springs investors though. Upshoot, I’m not going to invest in Al Marjan at least until the build is well underway. But by then the potential profit margins may not be so attractive and I will probably not buy at all. These are uncertain times economically, and I’m getting to the point that I have very little confidence in real estate development companies in Dubai outside of those owned by the government itself.
Nakheel may deliver late, but at least, in the end, you pretty much get what you’re supposed to get (apart from the missing canal on PJ).
My heartfelt sympathies to all of you Palm Springs investors. These must be very worrying times for you. Fight this company Damac. Fight them and win. Cause a HUGE stink. Go to the press. Go to the Master Developer. Do whatever you have to do. The outcome of your fight may help determine whether or not decent, hard working, honest people will want to become involved in the Dubai property market at all in future. Dubai may be left entirely to the gangsters. What a tragedy that would be for a place that we all love.
Posted by Richard Head
Agree 100%, if Damac are allowed to get away with this it will damage the reputation of Dubai significantly. I really can’t see Nakheel and / or the government allowing this to happen, the buyers need to organise themselves and petition anyone and everyone to have this decision turned around, or at least have buyers awarded realistic compensation based on current market values of their imaginary apartments.
Hopefully the one good thing that will come out of this is that many investors will realise that Damac is a marketing machine gone beserk, with little substance behind it in terms of ability to actually make projects happen. Hard to believe that they can actually think they will get away with this and still persuade investors to hand over their hard-earned for anything they announce in the future. Oh but hang on, if I buy an apartment I can win a continent, so that’s all good
Posted by Turbo
It might be worth writing to the Sheikh to highlight our plight. Below is a suggested draft to help you. The Sheikh can be contacted here:
I invested in an development called Palm Spring in Jebel Ali back in 2003. This development was marketed and being developed by Damac. I have today learnt that Damac has cancelled the project and will not be offering compensation based on the current market value of my unit. I believe that Damac are acting extremely unethically and agiainst Dubai law, and are basically defrausing global investors who invested their money in good faith. I would request that your Highness instruct the appropriate government department to investigate the matter on our behalf and take necessary steps to restore our faith in the high standard Dubai has set in construction, quality, investor security and confidence. I’m sure you would not wish comapnies (especially big players like Damac) tarnishing the reputation of Dubai as the premier place in the world for investors to put their money in. Your early intervention will ensure that the matter does not get out of hand, and investors don’t set up websites highlighting their plight. Looking for an urgent response, kind regards.
Posted From Dubayyy
Does anybody have a full text of the Damac letter?
posted from Turbo
Not sure if this has gone out, or is still a draft, but here is what I have seen from my contact:
10 March, 2008
Re: Palm Jebel Ali – Palm Springs – Unit
We write to advise you regarding your investment in the above project.
As you are aware from previous correspondence, the plot upon which the Palm Springs project was to be built (“the Plot”) was due to be handed over some time ago. You will also be aware of ongoing delay to the handover of the Plot by the Master Developer.
We have now been advised officially by the Master Developer that the Palm Jebel Ali Master Development has been re-designed and that the Plot will not be delivered. As a result of this official confirmation, we now regret to advise you that the Palm Springs project has been cancelled.
We understand that this is a serious and unfortunate situation but we trust that you will understand that it is one which is completely outside of our control. Attached please find a diagram which shows the plots purchased by Damac in the original masterplan and the re-allocated plots on the new masterplan. It is clear from this document that the re-allocated plots are significantly different in location.
In addition, the building forming the Palm Springs development (of which your Unit forms part) cannot be situated on the re-allocated plot which is nearest in distance to the Plot.
Your attention is drawn to the Force Majeure clause of the Sale and Purchase Agreement which specifically deals with this event. While under no contractual liability to do so, and in recognition of the disappointment which this notice will undoubtedly cause, we are willing to make the following offer to you:
1. Transfer to Unit(s) of your choice on another Damac development of your choice at a discounted price 15% below current market.
2. Repayment of monies paid by you with 6% interest calculated from the date of each installment payment.
While we understand the disappointment which will be caused by this notice, we trust that you will recognize that this matter is completely outside our control and that the above offer is made in good faith.
We would appreciate it if you could respond by 30 March 2008. Please confirm which option you would like to avail yourself by completing the attached form.
In the interim period should you require further assistance please do not hesitate to contact the Palm Springs customer service team on email@example.com or Tel +9714-332 20255 and Fax +9714-332 0311, who will be happy to assist you.
Damac Palm Springs Company Limited
Senior Manager – Client Relations
Posted from househang
As an investor in Palm Springs I am overwhelmed with support we are receiving from evryone who has an interest in Dubai projects. It is crystal clear that cancelation has nothing to do with redesign of PJA.Nakheel is delivering the plot to Damac anyway and if redesign is affecting the position of plot that is something between Damac and Nakheel to sort out. Damac could only cancel the project if Nakheel refrained from delivering the plot altogether which is not the case. Besides in clause 13 of the sales contract the purchasers have given their consents to any changes,variations,modifications, and
substitutions to plans of Palm Springs as well as PJA Master plan either by Damac or Nakheel.So changes to the PJA Master plan have been provided for in the contract.
This leaves us with one thing; CANCELATION DUE TO HIGH COST OF CONSTRUCTION!
I heard this from Damac themselves!
Posted by Karolsb
I have contacted Damac in Dubai but unable to answer any questions – just passing emails on – hope to get a bit more news by thursday but not holding my breath – we all need to email Damac and refuse there stupid offer.
The list of Palm Spring owners I have is increasing and I will collate as many owners as possible so we can all fight this one – the more the better. If you know anyone who has a Palm Springs apartment and has not contacted me please get them to PM me or email me at firstname.lastname@example.org
posted by househang
I have received a letter from Damac in London dated 14.03.2008. Here is the text:
We recently wrote to you rgarding your purchase in our Palm Springs developement.
In order to make process as smooth as possible, please be aware that any queries or concerns you may have relating to this matter can be dealt with by the UK CRM Team.
The UK CRM Team can be contacted on 0207 719 6028/29/30/31.
Alternatively by E mail at email@example.com or by fax on 0207 719 6001
Client Relation Manager
posted by househang
I understand they have come up with a silly offer like this to test the water and have given us till 30.03 to respond hoping this short grace will make some investors to make a hasty decision as to accepting the offer rather than grouping against it. They did not tell us what would happen after 30/30because they are not that sure about the outcome of the first stage of the show. If you look carefully at the accompanying FORM you will clearly see that this form has nothing to do with the content of the cancelation offer.It is merley a REQUEST FORM meaning that you are asking for cancelation of your purchase and refund without being forced or even being asked to do so.As far as I understand by filling this FORM you are initiating and requesting the cancelation of your purchase. They are trying to get as many investors as possible to opt out at each stage,like they did when they offerd 10 percent to investors in 2006 to cancel their purchase and some accepted that.
Posted by nasim50
This is an absolute disgrace.
I hope you guys take these bastards to court and get your deserved profit margins.
It will give the Dubai property market a good kick in the balls, completely corrupt system at the moment.
And if you don’t win, one of you investors should go into Damac’s offices and shoot the hell out of all their sales consultants and senior people, scum bags all of them.
There will be more projects like this where high construction costs has caused the development not to be built (and not just Damac).
Just watch and see how many projects are put into the “Never Built” section here. There will be hundreds.
This is just the tip of the iceberg, things have to change big time and i think you guys will be the ones to change it in the dubai courts.
Get a good Lawyer
Get massive publicity
I wish you luck.
Posted by Hanna
Damac and there Government contacts
I have written a lot about Damac in the Ocean Heights blog over the years
and my feeling’s are like most of the bloggers,to my mind they are a shady
company from top to bottom that have big contacts in the Government.
I raised the alarm when I had inside info about them joining the RERA list and how all past past projects from 28.12.07 where excempt which was defeating the purpose this was set up for,the Government gave them an exemption why, because they have no funds and going from new release deposit’s to new release deposit’s.They have built two buildings over the last 4-5 years out of loads of new releases masterminded by the slick Scotsman Peter Riddoch.
I will be very surprised to see Ocean Heights completed after 4 years of delays,the cost to build this project must have went through the roof and we could be next to see a letter drop the door. I rue the day I took anything to do with Damac and there shoody business practices.
There Dubai CRM has moved on since last month coincidence or what. I don’t think so he has timed it right
because he didn’t want tainted when the S–T hit’s the fan
I have found that the law is geared towards the locals and can be very difficult and costly to win a case in Dubai escpecialy with Government backing.I have said many times the property law system is in its infancy and does tend to look corrupt.
I agree you have to do something the trouble is how to you get the list of all the people that bought in Palm Springs. Damac love that everyone is divided and will find it hard to join up and fight them.One way is to try and get a big UK newspaper add but that doesn’t capture all the other nationalities that have bought into the project there could be 10-20 different countries involved.
The contract looks simple and easy to define but they have been smart enough to cover most of there bases.I know because I have already been to a English Lawyer in Dubai and they were not to keen on giving assurances on winning a case in Dubai.
Forget about the newspapers in Dubai the Government control them all the last paper was taken over by them 2 years ago it was called the khaleejtimes and they were hot on Damac that hot the Goverment took them over,So what I am saying that are in cohoots with Damac at the highest level.
Posted by Househang
Nakheel has distant themselves from controversy created by Damac for Palm Jebel Ali by strongly reaffirming today that not only the Palm Jebel Ali is well on track but they will be offering premium villas to investors which will be
ready in 2010.
This is very reassuring from the Master Developer.
posted by Turbo
It might be worthwhile for every investor to contact the following (list taken from http://damaconcovered.wordpress.com/write/ ):
Dubai Ministry of Finance & Industry
Tel: 04 3939000
Fax: 04 3939738
Minister of State for this department is H.E. Dr. Mohammed Khalfan bin Kharbash
Dubai Government’s Department of Tourism & Commerce Marketing
11th Floor, National Bank of Dubai Building
UK & Ireland Office
25 Pall Mall
SW1Y 5EATel : 0044 207 839 0580.
Fax : 0044 207 839 0582
Government of Dubai Real Estate Department
U.A.E.Tel. : 04-3986666
Fax : 04-3988111 Dubai Quality Group
UAETel : (971-4) 343 1950
Fax : (971-4) 343 1970
E-mail : firstname.lastname@example.org
Government of Dubai Land Department
Posted by Hanna
This was from an article I read today the word is getting around slowly :
Dog Corneramac’s attempt to ‘buy-back’ its Palm Springs project (Palm Jebel Ali) , 5 years after its launch, will surely go down as one of DUBAI’s greatest disgraces. While Damac is not owned by the Dubai government, it presents itself around the world as ‘Dubai’. What has happened here is that Damac sold out the project 5 years ago, and cannot now build it without incurring a significant loss. It is attempting to buy out all of its customers and offering to pay them 6% per annum on the sum invested. There are other Developers who find themselves in the same position, but are not resorting to these DISGRACEFUL tactics. These people don’t deserve your money. A real case of ‘I will only play this game if it suits me’ and ‘expect me to go home if I am not winning’. Surely Damac are bigger than that ?
Sadly, no. And to make all you poor Damac clients feel even more irritated, Damac have either sold the land they were going to build Palm Springs on, at a very enormous profit or they will launch a new project – when things are ‘quieter’. Yes, this is how Damac are. Just not to be trusted. You are not valued by them. You are just an easy profit target, who can be abandoned when they have your money. You are just potential victims of their equally disgraceful pricing strategies. This is one incident that needs to hit the international newspapers. I am not sure Sheikh Mohammad knows what is going on here. And he would NOT be happy with the damage the decision will have the hard earned, and deserved, respectable reputation of Dubai. It is time Damac.
Posted by Tictaco
Not long after I bought the apartment, I asked Damac what the nationality breakdown was for purchasers at Palm Springs for my own interest and with a view to who the future market might be, and was concerned to be told that it was 98% British.
I have also since read articles that say the majority of buyers in Duabi are British. The reason that I was concerned was because I could see the future Dubai property market being interminably linked to the UK property market – much like Spain is today – hence all the property bubbles and corrections that happen in the UK are likely to be mirrored in Dubai – not good for an investor looking for a diverse portfolio!
I am 100% behind everything that has been said on here about Damac; it’s corrupt, despicable behviour and if you have the appetite for a fight then go for it. All I am saying is that for me, as a small time investor, it was a gamble that hasn’t paid off and I can’t afford to have my money tied up any longer. I also think that this is the beginning of the end for the Dubai market, and you only have to look at what’s happened in Leeds and other UK cities to see what over-supply does to a market. I think there’s money to be made in Dubai if you can ride it out for the next 10-15 yrs but I personally can’t wait that long.
This will be my last post on this forum, since I am obviously upseting people which was not the intention
Posted by DiamondGreezer
I am glad to hear that my fellow investors and our supporters are generally of the same opinion ie that we will fight it out. My inderstanding of Palm Springs when buying was approximately 50 to 60 % were british buyers. The UK is the most important market for Dubai and I dont think even Damac are going to be eventually allowed to get away with this robbery – as long as WE follow this through to the end. The courts are obviously just one option that we are going through. I also know of some journalists who will just love to put some attention on Damac and what they have done.
So what it comes down to is that do you think in the end with all the money involved for the developers in Dubai, are they going to risk one rogue developer to get away with thiss? And how are Damac going to feel if in every property show they do and when they launch any new projects we have people distributing leaflets just telling them how we got conned with Palm Springs?
Im quite convinced that with the investors group we have in place, and the sterling work they are putting in we are going to get something very positive. Anyone who wishes to run away luckily seems to be in a very small minority!
Posted by Hanna
I wish you all the luck with this case.
I have been writing sometime now about Damac and there shady practices, there were a lot of quite investors out that never gave me a reply,maybe they were under the impression that it can’t happen to me well suddenly they now know it can, and I am sure there will be many more projects binned,this is the reason that the ‘LAUGHABLE RERA’ gave them an exemption on the the escrow accounts,they must have had a look at there books and said my God you ‘asses’ are burst what have you done to the reputaion of Dubai if this info get’s out.Then comes the cover up within high places in GOVERNMENT AGAIN because this has been going on for a few years.
There is realy no excuse’s the investors including myself can give, all we had to do was Google Damac and see what sites it throw up then you would have got a feel for what this company is about.
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