ArabianBusiness.com Damac threatened with lawsuit after project axed
Posted by 7starsdubai on April 1, 2008
original published: arabianbusiness.com 31.March 2008
http://www.arabianbusiness.com/514985-legal-action-threatened-after-damac-axes-project
Investors in Damac Properties’ Palm Springs project on the Palm Jebel Ali are threatening legal action after the developer cancelled the venture five years after launch.The project was axed due to changes made to the Palm Jebel Ali masterplan, which meant Damac would suffer a significant loss if it continued with the venture, according to UAE daily Gulf News.Investors are unhappy with the compensation offered by Damac, which said it would only offer 6% per annum interest on the sum invested, the newspaper said.
The cost of real estate in Dubai surged up to 15% in 2007, according to Egyptian investment bank EFG-Hermes.Damac has said it will either refund customers’ investment or allow them to transfer their investment to any other project in its portfolio at a discounted price of 15% below current market value.“Due to redevelopment of the plots, the building forming the Palm Springs development cannot be situated on the re-allocated plot and as a result the Palm Springs project has been cancelled,” Hussain Sajwani, chairman of Damac Holding, said in a statement carried by Gulf News.The 25-storey Palm Springs project had originally been planned for completion by late 2007, and buyers were already angry over repeated delays, contractual issues and complaints of poor customer service by Damac. Damac currently has real estate interests worth $30 billion across Dubai, North Africa, Jordan, Lebanon, Qatar and Saudi Arabia. The developer announced in September that it has launched a total of 79 towers across the region over the last five years, all of which are in various stages of construction.
Comments:
Damac Victims are not alone
Posted by Falcon, Munich, Germany on 1 April 2008 at 03:00 UAE time
The victims of Damac are not alone. They bring to daylight what happens day by day in Dubai.We bought 2005 Falcon Tower JLT directly at Nakheel.We paid 45% until June 2006. In August 2006 we got a letter from DMCCA. Falcon will not be built – a decision of Nakheel.But we were told the Falcon Tower would be transfered to AL Fajer Properties, nothing would change for the customers.Today, 2008, we are getting letters from the lawyer of Al Fajer Properties trying to cancel every right to our purchased apartment.We have got our own lawyer – but they have refused to correspondence with him.The case is with RERA – but until today without any response.
damac Plam Springs
Posted by Richard, London, UK on 1 April 2008 at 01:35 UAE time
DAMAC- Palm Springs this was a dream Five years ago and now in 2008 a COMPLETE nightmare.
Damac’s treatment of its clients
Posted by Sanj, London on 31 March 2008 at 20:31 UAE time
I am outraged at the way Damac have treated us. We have accepted delay after delay and been loyal to this project for the past 5 years. Many of the purchasers can no longer afford to get into the Dubai market let alone a comparable apartment on Palm Jebel Ali. It has been rumoured that Damac has canceled this project because they do not stand to make the financial gain because of the increase in construction costs in Dubai. A penalty that we the buyers are having to bear. We hope that Dubai will make an example of Damac and insist that they fulfill their contractual obligations.
Palm Springs
Posted by jo on 31 March 2008 at 18:05 UAE time
We the investors of Palm Springs are disappointed by what appears to be a unilateral cancellation of the Palm Spring project at Palm Jebel Ali. Following the purchase of our apartments in this project in 2004, Damac thanked each of us “for placing your trust in our company and making this investment in Palm Springs,” It is clear that this trust has morally and contractually been misplaced. Damac have abandoned their duty of care towards their loyal investors. Having relied upon your representations, and remained loyal to the project, despite numerous set backs and delays, we have been rewarded by their abandonment of the project. By canceling the entire project, Damac has set a worrying precedent. This will inevitably have a major impact on the commercial credibility and trustworthiness of Damac in delivering on both current and future developments in Dubai.
Ethics?
Posted by Ilyas, London on 31 March 2008 at 15:19 UAE time
Remember that Damac HAVE been give a plot by Nakheel, and they are using this as an excuse to get out of honouring the investors who bought early. Damac will get 3 times the amount from new investors so thats why they want to return the money to the investors. If the investors had put their money into virtually any reputable developer in Dubai they would have seen a nice return. All the time Damac would have presentations and tell people how much money their investors were making, they should now tell people that they cancelled a project so they could sell it for more to new investors!
Palm Springs Cancellation
Posted by Terry, UK, UK on 31 March 2008 at 15:17 UAE time
I am shocked and disappointed by Damac cancelling Palm Springs Project. I believe that Damac acted illegally and breached the contract with their investors.I feel angry and hurt together with my family because our dream of having our apartment in Palm Springs has been shattered by Damac after nearly five years of waiting, where the prices in Dubai since have more than tripled and we cannot afford to buy any comparable apartment at the current market price.Damac must honour their commitment to their investors without giving us unacceptable excuses. Damac has several plots in Palm Jebel Ali you can build Palm Springs or redesign it.
Damac Palm Springs
Posted by Robert Miller, Newport, UK on 31 March 2008 at 14:57 UAE time
Having bought in to Palm Springs in 2003, the amount Damac are offering will mean that I cannot afford to purchase another property. Put simply, Damac could not build at a profit so will not build at all. Come on Mr Riddoch, do the lawfully and morally correct thing and return to us our investment and the growth we had earned by supporting you in your infancy. Last November I should have received a luxury apartment, instead I am going to receive less than I gave you and a similar apartment will now cost more than three times the price.Just how many apartments have Damac actually built, review the amount they have sold and the amount they have actually built. They are a problem waiting to happen.
Palm Springs
Posted by Palm Spring Investors Group, United Kingdom on 31 March 2008 at 12:37 UAE time
Just a small matter of all those who bought on resale, they have lost anything up to £150,000…Damac will not look at this issue and not refund the premiums. Why should Damac cancel the project when they still own the plot. It has only being relocated and they can redesign the Palm Springs…They will wait a year or two and resell units built at the site for overinflated prices and make a large profit instead of a large loss.
Damac cancels Palm building
Posted by Bob on 31 March 2008 at 09:44 UAE time
They have been using the investors money over the past 5 years to build and build and now we are offered 6% ROI?? DAMAC “Live the Luxury” Yeah right!
Damac
Posted by Heba, Dubai, Egypt on 31 March 2008 at 08:41 UAE time
I am not sure why people are angry, Damac is giving them two options, (1) get back your money with interest or (2) get another property for a discounted price.Damac has not taken the money and fled away. It is a company trying to do the right thing for its customers. I can imagine how customers are angry becuase they thought they can make a profit out of the property, but this in itself shows that the customers motivation for anger is also greed..In fact, the more people get angry and follow the herd, they stand to lose more ..
Showing True Colours!
Posted by Louie Tedesco, Dubai on 31 March 2008 at 08:28 UAE time
Thank you Damac for showing the world your real character – which is not the friendly, caring, persona that you try to typify on your glossy brochures and advertising. Your actions, after five years of sitting on customer down payments, by refusing to honour a huge contract with an international consortium of investors has added one more argument to not buying property or investing in Dubai. In this modern era, people do talk, they send emails around the world and the internet is too open for such a breach of contract to remain hidden from the public. The right thing to do is to step forward, fulfil contractual obligations made five years back, suck up the loss now and move on to reap future profits that lay ahead. Until then, my money stays in my (foreign offshore) bank.
Management has no understanding of reputation
Posted by Dubai Warrior on 31 March 2008 at 06:26 UAE time
It seems that the incredible greed of Damac is strong enough to obscure its management from the potential incredible losses it can incur thanks to a tarnished reputation.How many investors do they think will now be willing to put their money in their next project after the company forced the situation to become this public.The real estate market is shaky and without restoring confidence it can implode like a bubble as many have already said. The fact that it takes time for the effect to happen does not mean it doesn’t happen, or haven’t we learned from the stock market crash two years ago?
Damac threatened with lawsuit after project axed
Posted by H L Nagpal, London, United Kingdom on 30 March 2008 at 21:32 UAE time
It is foolish for a company like Damac to back out from a project just because it is going to make a loss. If Damac does not care about its goodwill, the UAE Government should make it honour its obligations as otherwise its effect will be far reaching. Investors in the West are investing heavily in the upcoming real estate of UAE on the understanding there is rule of law. Damac have launched projects at heavily inflated prices which are going to bring bumper profits to the Company. If the company is going to walk away from its contractual obligations, its effect on other projects by other developers will be enormous. One bit of bad news can ruin the whole market. The writer has no interest in the project and is concerned on a matter of principle.
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