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    • Criminal Complaint filed against Al Fajer Properties Sheikh Maktoum
      Criminal Complaint filed in Germany against Sheikh Maktoum Hasher Maktoum Juma Al Maktoum CEO of Dubai Developer Al Fajer Properties The Dubai Sheikh who mislead and extort a German Couple  Germany – Dubai 2011 A German elderly couple , today 80 + 50 years old who have been Dubai Tourists since a decade, bought in 2005 an apartment at Nakheel´s Dubai Residen […]
    • UAE: Human Rights Blogger, Sorbonne Lecturer Charged With ‘Humiliating' Officials
      source Human Rights Watch www.hrw.org (Beirut) - The United Arab Emirates attorney general should immediately drop all charges against five pro-democracy activists to halt their trial, Human Rights Watch said today. The charges of "humiliating" top officials relate solely to the defendants' peaceful use of speech to criticize the UAE governmen […]
    • Nakheel Dubai Sunland Case
      June 5, 2011After 21 hearings, Chris O'Donnell, the Australian chief executive of Dubai's major developer, Nakheel, came to the defence of his former colleagues Matthew Joyce and Marcus Lee. Mr Joyce and Mr Lee are accused of profiting from the sale of land that had been earmarked for a colossal high-rise development, which was to include the futur […]
    • Dubai Nakheel CEO decided to leave the company
      Dubai June 7, 2011 Nakheel said on Wednesday that its CEO Chris O'Donnell had left the company "after completing his contract terms". O'Donnell, an Australian who joined the developer in 2006, said he had decided to leave Nakheel following five years spent with the company, the statement added. O'Donnell has overseen a traumatic time […]
    • Owner of Dubai Developer Damac Hussain Sajwani files case against Egypt corruption ruling
      Dubai property developer Damac said on Tuesday it had filed an international arbitration case against Egypt over a land dispute and the conviction of its chairman and owner, Hussain Sajwani.A Cairo court last week sentenced Sajwani in his absence to jail and ordered him to pay a $40.5 million fine in connection with his 2006 purchase of land at Egypt's […]
    • Dubai Palm Jumeriah - Investors plan to take legal action
      Investors in Dubai Palm Jumeirah’s Golden Mile complex will this week serve the developer behind the project with a legal ultimatum to hand over their units or issue them with a refund.Up to ten investors in the luxury complex plan to issue Souq Residences with legal notice in a bid to force a resolution to a dispute that has been ongoing for more than a yea […]
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Archive for November, 2008

Posted by 7starsdubai on November 30, 2008


Will The Sun Set On Dubai Party?

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Negative equity, defaults ‘now a Dubai reality’ – Real Estate – ArabianBusiness.com

Posted by 7starsdubai on November 29, 2008


Negative equity, defaults ‘now a Dubai reality’ – Real Estate – ArabianBusiness.com

Negative equity and widespread mortgage default is already happening in Dubai, with repossessions also likely, property experts have said.

Banks ramping up interest rates on home loans coupled with falling real estate prices have hit buyers of off-plan property hard as the market cools in the face of dwindling demand due to the global financial crisis.

“The problems of negative equity and mortgage default are now realities in Dubai,” said Matthew Hooton, head of real estate in the Middle East for law firm Ashurst.

Speculators who bought off plan – property yet to be completed – during Dubai’s six year real estate boom are now faced with spiralling mortgage costs as lenders grow increasingly fearful over customers defaulting on payments.

Official figures from HSBC bank published earlier this month showed that the price of top-end apartments fell by as much as 30 percent in Dubai’s downtown DIFC district during October. Experts believe if growing numbers of homeowners fall into negative equity, there will be a rush to sell real estate.

“Where you get real problems in the mortgage market is when you get the double whammy high interest rates making mortgages unaffordable and dropping house prices,” warned Chris Dommett, CEO of mortgage broker John Charcoal’s Dubai office.“That would be exacerbated here because most of the population are not from here. “The incentive to cut and run is greater.

If somebody can’t afford to repay their mortgage and house is worth less than is owed, it is a double incentive to walk away because that person is not walking away from any equity,” he added.

Negative equity – a term synonymous with Britain’s housing crash in the 1990s – is when the value of the property is worth less than the mortgage. Banks in the region are also under fire from leading industry figures over hiking mortgage rates way above the interbank rate or eibor, currently at 4.31 percent, for three months.

Arabian Business revealed last week that banks including HSBC and the UAE’s largest home loan lender Amlak, have hiked interest rates on new mortgages by up to 2 percent and are now charging customers up to 9.75 percent monthly interest.

Ian Albert, regional director at real estate broker Colliers International in Dubai said:

“I object to banks racking up interest rates. It’s excessive. You’ve got this problem where the banks are almost self-defeating themselves. “If I borrow at 8 percent I need to lease my property at 12 percent, the greater my yield increases, the greater the property value is depressed.” Albert predicted that although repossessions will happen it was unclear how banks in the UAE are set up to deal with such a scenario.

Posted in Dubai | Comments Off on Negative equity, defaults ‘now a Dubai reality’ – Real Estate – ArabianBusiness.com

Direct gov’t action called for to support property market – Real Estate – ArabianBusiness.com

Posted by 7starsdubai on November 26, 2008


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.

Posted in Dubai | Comments Off on Direct gov’t action called for to support property market – Real Estate – ArabianBusiness.com

Property developers reassessing sales strategies

Posted by 7starsdubai on November 26, 2008


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

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Dubai reassures creditors amid crisis – The National Newspaper

Posted by 7starsdubai on November 25, 2008


Dubai reassures creditors amid crisis – The National Newspaper

DUBAI //

As the world enters what appears to be the most formidable downturn since the Great Depression, with tremors being felt in the Gulf, the Dubai Government is reassuring its creditors and introducing measures aimed at supporting the property and financial sectors.
Mohammed Ali Alabbar, a member of the Dubai Executive Council, told an audience at the Dubai International Financial Centre that it was time to address the new economic reality.“We are rationalising our expenditures and consolidating our activities,” he said, adding that the country’s property industry would “see more consolidation, especially with third-party developers, who may be facing some lending difficulties”.

Mr Alabbar, who is also chairman of the emirate’s largest developer, Emaar Properties, said Dubai would be able to handle its debt.“The government can and will meet all obligations going forward,” he said, adding that the emirate had debts of US$10 billion (Dh36.73bn), plus a further $70bn with Dubai-affiliated companies balanced by Government assets of $90bn and assets belonging to state-backed companies of $260bn.
He added that a special advisory council had been established to look at each sector of the economy, in particular the property market. The committee is making recommendations to the rulers and will manage the “current and future supply of new projects on to the market” in a bid to slow the decline of prices. The moves this week to reassure the markets have come after large declines in the stock exchanges, a softening of prices of new homes and a first round of layoffs at many property developers — all developments that would have been unthinkable just six months ago at the height of the property boom.

The most dramatic development for the property market came earlier this week with the announcement by the Government that it would merge two banks and the country’s two largest home finance providers into a rescue vehicle called Emirates Development Bank. The new bank would receive funds from the federal government and become the largest provider of home loans in the country, Mr Alabbar said. A source close to the new bank said the move was the Government’s most comprehensive attempt yet to fight the crisis.

This is the Government’s message,” the source said.

“We are providing full support to the key businesses.”In the past three months, the Government has pledged Dh120 billion to help banks fill the funding gap created when foreign investors began withdrawing their money from the region this summer. However, bankers have expressed reluctance to re-lend the emergency money to home-loan companies or real estate developers, for fear of exposing themselves further to a rapidly declining property market.
Amlak Finance especially showed signs of strain last week when it announced it would issue no new home loans until it had reviewed its credit policy. Other mortgage lenders have either stopped lending or cut their loan-to-value ratios dramatically, making it difficult for both buyers and speculators — now without any choice but to hold on to their purchases — to get financing. Cash flow at property development companies has all but stopped and distressed buyers have started offering discounts of as much as a third on the resale market.

The impact is already being felt at the biggest companies.

Emaar, whose shares fell 9.5 per cent in trading yesterday, has seen its share price drop by 83.4 per cent since the beginning of the year. Amlak and Tamweel, which have had their shares suspending from trading pending details of the merger, have lost 80.1 and 85.6 per cent since the beginning of the year, respectively.The decision to merge Amlak and Tamweel with Real Estate Bank and Emirates Industrial Bank into Emirates Development Bank is widely seen by analysts as a move to reverse the slide of the property sector by restoring financing for would-be buyers and speculators. However, both the Dubai Financial Market and the Abu Dhabi Index fell yesterday, 5.3 per cent and 3.4 respectively, with the property and finance sectors worst hit, indicating that investors remain sceptical of how effective such measures will be.

The new institution will “really be a strong entity”, Mr Alabbar said. “It means that this country is serious about consolidation during interesting times. This structure will facilitate the lending and move liquidity into sectors needed, especially in real estate.”He added the Government would be “cautious going forward, but will increase flexibility of real estate funding”.This is likely to be just the first in a number of takeovers, with a dramatic restructuring of the market still on the horizon, analysts said.
Sofia el Boury, a banking analyst at Shuaa Capital, said a wave of consolidations was likely in the market.

During downturns, “weak companies become ideal targets for acquisitions by profitable, highly liquid and well-capitalised institutions”, she said.
There is also a growing sense that a push to strengthen the federal union has been sped up in response to the credit crunch. However, Mr Alabbar rejected the suggestion that Abu Dhabi was preparing to bail out Dubai.

“It is not true,” said Mr Alabbar. “Dubai has received no offer either directly or indirectly from Abu Dhabi or any other party on earth,” he said when asked if Dubai’s assets were for sale.*

additional reporting by

Travis Pantinmailto:Pantinbhope@thenational.ae
shamdan@thenational.ae
afoxwell@thenational.ae

Posted in Dubai | Comments Off on Dubai reassures creditors amid crisis – The National Newspaper

Property investors rally to the cause. – The National Newspaper

Posted by 7starsdubai on November 24, 2008


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.”

Posted in Dubai | Comments Off on Property investors rally to the cause. – The National Newspaper

Amlak and Tamweel to sign on the dotted line – The National Newspaper

Posted by 7starsdubai on November 24, 2008


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

Posted in Dubai | Comments Off on Amlak and Tamweel to sign on the dotted line – The National Newspaper

First came a boom, then fireworks, but is Dubai’s property market in trouble? – Times Online

Posted by 7starsdubai on November 23, 2008


First came a boom, then fireworks, but is Dubai’s property market in trouble? – Times Online

For a few hours, the glitz and the glamour, the red carpet and, above all, the astonishing fireworks disguised the reality that is dawning over Dubai – but only for those few hours. Not even the £13.5 million extravaganza that launched the £1 billion Atlantis Resort could hide the fact that Dubai’s property boom, which has fuelled double-digit growth for five years, is showing signs of turning to bust.
“It’s been ten times worse than expected.

The liquidity is absolutely frozen. There’s no money. It’s just gone.

If the Government doesn’t act really quickly, we’ll slip into an Indonesian-style bust,” said one of Dubai’s leading bankers, who did not want to be named. He was echoing a growing consensus in the region. “These last six weeks have changed the face of the Earth,” he said.

Dubai’s property boom was fuelled largely by investors who bought properties off-plan. Most had no intention of ever living in the buildings, intending, instead, to sell them on and collect a tidy profit. Most also used borrowed money to finance their payments, according to analysts, intending to use a cut of their profits to pay back their loans.

But in recent weeks credit has virtually evaporated, with international and local banks tightening credit. International investors have grown nervous as local economists have downgraded Dubai’s economic outlook. And demand for properties has fallen into a slump, with job losses and the cancellations of new developments adding up.

A striking example of Dubai’s old and new realities was apparent last Thursday. As celebrity guests were whisked away by private helicopters from the Atlantis resort, residents on The Palm Jumeirah, the artificial island that is home to the hotel, were left to digest bad news. The value of their properties has fallen as much as 40 per cent since September, according to estate agents, as buyers struggle to secure mortgages. When the development, built by the state-owned Nakheel, went on to the market seven years ago, its luxury villas were snapped up by the likes David Beckham and Michael Schumacher for up to £5 million.
Today Nakheel estimates that British buyers own nearly a quarter of the villas on the Palm.

Last week Amlak, the country’s largest lender, said that it would suspend new loans completely because of a lack of funds, a move unprecedented in this market. Yesterday the Government merged Amlak and Tamweel, the country’s other top lender, into the federally owned Real Estate Bank in an effort to loosen lending by pooling resources.

“People have really begun to fear a crash in the market,” Chris Dommett, chief executive of John Charcol Dubai, a mortgage advisory firm, said. “Banks aren’t suspending loans because of a lack of demand, they’re doing it because they don’t have any liquidity. Transactions have just stopped and everybody is holding their breath, waiting to see what will happen.”

According to new data from HSBC, property prices fell last month by 4 per cent in Dubai and 5 per cent in neigh-bouring Abu Dhabi. The credit squeeze is having a devastating effect on existing buyers, who no longer are able to meet payments on their existing investment properties. “Anybody who’s bought into this market to flip property and make a quick profit – they’re all getting crucified,” another banker said, adding that several of his clients were trying to “wriggle out” of their contracts with developers for properties that they had bought off-plan.

Brokers are reporting a sharp increase in panic-selling. Last week the Dubai-based Elysian Real Estate sent a text message to up to 40,000 mobile phones advertising distressed property sales. The text offered a luxury six-bedroom, six-bathroom villa in Dubailand, a multibillion-dollar luxury theme park on the outskirts of the city-state, at an advertised cost of about £3.86 million – about half its original price. Robert Macnair, Elysian’s sales director, told The Times: “We have had a sharp increase in clients who are looking to sell because the market has done what it’s done. There is a new urgency to these sales.

“The market has slowed dramatically.

On a number of occasions, these investors or speculators actually can’t afford to make the next payment.”

Developers are also feeling the pressure. Damac, one of Dubai’s leading developers, cut 200 jobs last week. Nakheel has also said that it will scale back construction plans for its next man-made island, the Palm Deira.

Dubai is considering stronger measures to restore lending, but analysts say the market lacks the maturity to embrace them. Banks, for example, have been unwilling so far to tap into billions of dollars of emergency funding made available by the Government in recent months as the international economy heads for global recession.
Economists say that the Government needs to take a tougher stance. If credit does loosen, some predict a quick rebound.

Simon Williams, HSBC’s Middle East economist, said: “Real estate markets anywhere in the world are volatile . . . but they tend to work themselves out as the real economy tends to perform well, as it does in the Gulf.

“I still see very low vacancy rates across the UAE and rents are high. Those two key variables suggest that the property market will endure.”

Posted in Dubai | Comments Off on First came a boom, then fireworks, but is Dubai’s property market in trouble? – Times Online

Ratings agency puts ETA Group on credit watch – Real Estate – ArabianBusiness.com

Posted by 7starsdubai on November 22, 2008


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)

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Party like it’s 1999 – Media & Marketing – ArabianBusiness.com

Posted by 7starsdubai on November 22, 2008


original published ArabianBusiness
http://www.arabianbusiness.com/539041-party-like-its-1999

It may seem incongruous or even insensitive to host a $20 million party in the current economic climate but, once again, Dubai has shown strength and vision that will improve its long term prospects.I watched the opening party of Atlantis the Palm on the television in the UK.

The country’s most popular breakfast television show, GMTV, was broadcasting live twice per hour from one of Palm Island’s fronds.The coverage included red carpet interviews with Hollywood Oscar winners, multi-million album selling singers, business billionaires, and even some minor European royals.

Breakfast TV viewers feasted on footage of the most spectacular firework display since the Beijing Olympics; lapped up the glamour of the world’s most beautiful women; and envied at the presenter reporting in his shirt sleeves from beneath clear blue Dubai skies.

The talk over Friday brunch in Dubai will be about how unfair it is that the world’s glitterati had favoured access to the Atlantis celebrations, while those living in the city were not even allowed to set foot on Palm Island for two days prior to the event.This though would be missing the point.

The cost of the world’s most lavish hotel opening party was not just an ego trip for the resort’s owners, or even a marketing stunt to push up its revenue per average room.
It was a Dubai government-backed initiative to show the world that the city remains one of the most spectacular tourist destinations in the world, and that it will serve as an oasis of delight in a global desert of gloom.

The world is entering a downturn in tourism and business travel that will last into 2010.

But while every destination will be affected, including Dubai, some will suffer more than others.

The positive coverage gained from Atlantis’s $20 million party will prove to be a masterstroke of marketing that will ensure Dubai has the best possible chance to weather the coming storm.

By the end of what is going to be a global recession, expect the emirate to emerge even more dominant against its competitors than it is today.

Posted in Dubai | Comments Off on Party like it’s 1999 – Media & Marketing – ArabianBusiness.com

Property Scandal -Dubai developer demands up to 88% increase on price to pay construction costs | Dubai Property

Posted by 7starsdubai on November 22, 2008


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.’

Posted in Dubai | Comments Off on Property Scandal -Dubai developer demands up to 88% increase on price to pay construction costs | Dubai Property

Dubai developers are in denial

Posted by 7starsdubai on November 22, 2008


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

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Dubai Property Court – Most disputes involve payment defaults

Posted by 7starsdubai on November 19, 2008


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.

Posted in Dubai | Comments Off on Dubai Property Court – Most disputes involve payment defaults

Half of Dubai agents sold no homes in last month – Real Estate – ArabianBusiness.com

Posted by 7starsdubai on November 18, 2008


Half of Dubai agents sold no homes in last month – Real Estate – ArabianBusiness.com

Half of all real estate agents that responded to a survey have not sold a single property in the last month,

TheEstateAgentsDubai.com revealed on Monday. The website, a forum for agents in the emirate, said agents blamed a lack of lending from banks and “self-perpetuating panic” as the main reasons behind the current drop in demand.

Many banks in the region have tightened their lending criteria due to the global credit crunch, a move that has left customers unable to secure a loan to buy a property.

Local lenders have slashed home financing from 90 percent to as little as 50 percent in recent months.Paul Allen, TheEstateAgentsDubai.com webmaster, said in a statement that agents felt the tightening lending conditions had “caused a seizure in the market”.

Agents also blamed a lack of regulation by Dubai’s newly-formed Real Estate Regulatory Agency (RERA) and unclear information regarding new laws and procedures from Dubai’s Land Department, according to the survey, which polled more than 170 agents.

Despite the current climate, the survey found agents were optimistic about the medium- to long-term outlook for the market, with three-quarters of respondents stating the market would pick up within three to six months.

HSBC said last week property prices in Dubai fell four percent between September and October, with the price of villas tumbling 19 percent due to slowing demand and tighter lending conditions.

Posted in Dubai | Comments Off on Half of Dubai agents sold no homes in last month – Real Estate – ArabianBusiness.com

Limitless to delay selling Arabian Canal plots – The National Newspaper

Posted by 7starsdubai on November 18, 2008


Limitless to delay selling Arabian Canal plots – The National Newspaper

Limitless, a developer owned by Dubai World, will hold back on selling plots of land surrounding its Arabian Canal project to sub-developers until market conditions improve.The company had originally intended to start selling land for development in June this year.

“Everything is ready to sell, we’re just judging the best time to start selling,” said Ian Raine, the project’s director on the sidelines of Meed’s coastal development conference today.

“We haven’t set a definite date yet, but obviously we need to take into account what’s going on. But there’s been a lot of interest from developers in the project.”Mr Raine added that the company had not changed its targets for completing the project, which will cost Dh40.4 billion (US$11bn) to build.“We haven’t made any changes but we do have to take into account market conditions, and if those conditions mean we have to react, then we will.”

The earthworks on the project are now underway after Tristar Transport and Contracting, an Abu Dhabi company, was awarded the job in September.Ten contractors have been invited to bid for the second phase.mailto:phase.aguiffrida@thenational.ae

Posted in Dubai | Comments Off on Limitless to delay selling Arabian Canal plots – The National Newspaper

Dubai Land Department registers 80,000 units in online scheme

Posted by 7starsdubai on November 17, 2008


Land Department registers 80,000 units in online scheme

More than 80,000 units have already been registered through Dubai Land Department’s new online application system.Called Oqood, the new system will enable effective implementation of Law No 13 of 2008 for regulating the interim real estate register in Dubai. According to the department, details of residential apartments, villas, offices and retail shops for 230 developers have been entered during the preliminary phase of the programme.

Mohammed Sultan Thani, Assistant Director General, Excellence and Organisation Governance, Dubai Land Department, said: “Dubai has witnessed the issuance of specific real estate laws that prioritise the interests of the country and all stakeholders.
The laws also seek to establish trust in the market, attract foreign investment and sustain the sector’s growth.

The latest among them is the law that focuses on the interim real estate register.”Interim registration is essential for the real estate market and is considered a pioneering step covering even off-plan sales transactions. The law protects the interest of all parties through closely monitoring sales transactions. The launch of the online application will significantly facilitate the entire process.

“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.Ahmad Al Qaizi, Chief Executive Officer, Emirates Real Estate Solutions, said: “The launch of online application Oqood will help ensure the availability of detailed data on private proprietorship of all projects that have been sold off-plan in Dubai. It will also protect customers’ rights through safeguarding against any manipulation.The department will also offer additional training courses to all real estate developers to introduce them to the mechanisms of the Oqood programme. The dates of these courses will be announced soon.

Following the issuance of Law No 13 of 2008, developers now have to register all their units prior to launch of the project and only then can they proceed with their sales.Law No 13, which regulates initial property registration in Dubai, aims to create further consumer ease and protection within the Dubai real estate market by introducing a mandatory system of pre-registration at the Land Department for off-plan sales contracts for property units.

Under the new law, any off-plan sales that are not registered will be invalid.

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Construction on Palm Jebel Ali to slow – The National Newspaper

Posted by 7starsdubai on November 17, 2008


Construction on Palm Jebel Ali to slow – The National Newspaper

Infrastructure work on parts of Nakheel’s Palm Jebel Ali may be slowed in light of current economic conditions, according to Ali Mansour, the project’s director.

A number of bridges are already under construction on the man-made island, and infrastructure work on the lower and left quadrants, along with the spine and lower fronds, is progressing. But construction contracts that were scheduled to be awarded in the latter part of next year and early 2010 will most likely be put back.“

We might slow down the launching of contracts for infrastructure work on the components of the island that are not scheduled to be populated until after 2011 or 2012,” said Mr Mansour on the sidelines of Meed’s coastal development conference today.“It’s very reasonable to do so.
The island’s quite big, so for those districts that are far from being occupied in the near future, we might slow down infrastructure work.”

Palm Jebel Ali is the second island in the Palm trilogy, located in Waterfront. It will feature luxury hotels and homes built on stilts over the water, which together spell a poem written by His Highness Sheikh Mohammed bin Rashid al Maktoum.

Mr Mansour added that the areas which could be affected are the upper right and left quadrants of the development
mailto:development.aguiffrida@thenational.ae

Posted in Dubai | Comments Off on Construction on Palm Jebel Ali to slow – The National Newspaper

Buyers shun off-plan units at property show – The National Newspaper

Posted by 7starsdubai on November 17, 2008


Buyers shun off-plan units at property show – The National Newspaper

The property market is now dominated by sellers trying to offload their mostly yet-to-be-built apartments, but the few buyers there are only interested in completed units, brokers at a property show said.Industry executives attending the Property Shopper show in Dubai over the weekend said few buyers were to be seen.

The show was intended to bring estate agents and buyers together; instead, brokers were inundated with requests from sellers to help sell off-plan units they had bought in projects that had yet to break ground or were not yet completed.

“Most of the people who came were looking to resell their properties and very few were interested in buying off-plan,” Kameel Jabbour, the managing director of Dubai-based New Market Real Estate said. “(Buyers) were concerned about which projects would continue or not, and would only inquire about distinguished properties. Usually during a show we would conclude deals, and in some cases we would also receive payments. But not this time.”

Inquiries mainly concerned studios and one-bedroom apartments with a price of between Dh750,000 and Dh1.5m, brokers said. Demand for rental properties, however, remained high.

Posted in Dubai | Comments Off on Buyers shun off-plan units at property show – The National Newspaper

RERA Dubai – Trust account a must for Real Estate Brokers in Dubai

Posted by 7starsdubai on November 16, 2008


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.

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From flippers to floppers – Banking & Finance – ArabianBusiness.com

Posted by 7starsdubai on November 14, 2008


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.

Posted in Dubai | Comments Off on From flippers to floppers – Banking & Finance – ArabianBusiness.com

Dubai Developers say they will scale back activity – The National Newspaper

Posted by 7starsdubai on November 14, 2008


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

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UAE prepares steps to boost confidence

Posted by 7starsdubai on November 12, 2008


UAE prepares steps to boost confidence

11 November 2008Dubai:

Greater transparency and better financial regulations will help overcome the current lack of confidence hurting investor sentiment in the UAE, the government said.

His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, urged a group of international business leaders and financial experts at the World Economic Forum to employ their expertise and fight malpractices of some financial and banking corporations and come up with a common approach to contain the current financial crunch and protect the world financial order and interests of the public.

“I am completely conscious of what is happening in the Middle East [as a result of] conflicts and rows which weigh negatively on the future of sustainable development,” he told the officials. Sultan Bin Saeed Al Mansouri, Minister of Economy, said in Abu Dhabi a new law on banking credit will soon be introduced in the UAE, and the government has finalised a new draft of the company law, which he expected to be introduced by next year.

He said 2009 is going to be a “testing year” for the UAE as far as the economy is concerned, just as it will be for some of the major world econ-omies, referring to the impact of the global credit crunch.
“I’ll not make any forecasts on the GDP until the end of 2008. We have to evaluate all the different economic sectors we have,” Al Mansouri said.

On the global credit crunch, Al Mansouri said there are lessons to be learnt from it. However, he added that the economies of the GCC, including that of the UAE, are still strong and protected.
Sultan Bin Nasser Al Suwaidi, Governor of the UAE Central Bank , said at a meeting in Fujairah: “The slowdown will be imposed on us … in everything we will see contractions. But I think we will still be growing in all directions in a very comfortable way.”

His comments echoed those of Mohammad Ali Al Abbar, chairman of Emaar Properties, who said the growth in the emirate’s real estate sector could slow to 9 per cent from 13 per cent due to the global downturn.

He said the government would “revisit their development pipeline to ensure that demand remains robust”.
The comments came on the same day as Eisa Mohammad Al Suwaidi, chairman of Abu Dhabi Commercial Bank , moved to assure customers the financial institution has not been affected by the global crisis.

“The bank benefited from the liquidity pumped by the Ministry of Finance [MoF] and the Central Bank to provide necessary cash to enhance credit and finance loans to government and private sectors and individuals,” Al Suwaidi said in a statement to WAM.

The developments come at the backdrop of a continued market slump. Dubai Financial Market index declined by 4 per cent while Abu Dhabi Exchange lost 1.9 per cent on panic selling.

By Gaurav Ghose, Financial Features Editor, and Himendra Mohan Kumar, Staff Reporter
© Gulf News 2008

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Speculators take $57 billion in hot money out of UAE

Posted by 7starsdubai on November 12, 2008


Speculators take $57 billion in hot money out of UAE

Global currency speculators withdrew nearly $57 billion (Dh209bn) in hot money from the UAE banks at the end of summer, but such funds have been offset by massive government cash injections, a key Saudi bank said yesterday.

Besides cash facilities by the Central BankCentral Bank and federal authorities, soaring government deposits with local banks would allow them to maintain a relatively strong lending ability, the Saudi American Bank (Samba) said.Samba in its recent economic bulletin said: “The blanket support to banks from the government should bolster confidence in the UAE financial sector, and there are signs of an easing in liquidity conditions.

These government actions will help alleviate banks’ constraints and support domestic credit growth, albeit at a substantially slower rate than the 40 per cent year on year recorded through June.”In particular, the placement of large government deposits with national banks would help offset the recent withdrawal of large amounts of hot money which had flowed in betting on a revaluation of the exchange rate… no official statistics are available on such flows, but foreigners are estimated to have held $57bn in deposits in June,” it said.”Government deposits with banks would also help them manage in the case of difficulties in securing funds from wholesale credit markets.”

Central BankCentral Bank Governor Sultan bin Nasser Al Suwaidi, confirmed recently that most of the “hot money” had exited the country as speculation about an appreciation of the dirham against the US dollar largely abated.Speculation had mounted in previous months that the UAE and its GCC partners would revalue their currencies following a sharp decline in dollar’s value.Such expectations had led to a sharp increase in foreign cash flow into GCC banks.

By Nadim Kawach
© Emirates Business 24/7 2008

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Investors complain about being ‘misguided’ over price and location of Emaar Emaar’s exclusive residential project

Posted by 7starsdubai on November 12, 2008


Warsan kicks up dust

Investors in the Warsan Estate project, one of the latest projects announced by leading property developer Emaar, are up in arms against the company for being ‘misinformed’ about the project.

Several investors who approached The Business Weekly said they were taken for granted on several counts. “Firstly, we were told that the project was coming up in the Mushrif Park area, but now we have learnt that the project was originally planned in proximity to the sewage treatment plant.
“Who wants to throw away hard-earned money on a project such as this,” fumed Arshad Hussain, business development director, RCI Middle East, who has already booked a unit in the project.

Though TBW tried to get the Emaar office to respond to investors’ complaints, no comment has been forthcoming. We are still awaiting their response to an e-mail sent both to the company offices as well as to its public relations agency.

Hussain said he has already approached company officials who acknowledged the fact that several investors were genuinely peeved with the project’s features.
Investors are furious that the price of about Dh2,600 per square foot quoted for the project is far higher than that of any other comparable project.

“There are properties available in much better locations at less than half the price charged on Warsan Estate by Emaar , which has built a reputation for itself through years of good work. It is painful to see a company with such a high international standing resorting to ways that do not bring about any goodwill,” said James Varghese, another investor who claims to have invested five per cent for the booking advance.

Emaar launched Warsan Estate in June or July this year. “

Investors, me included, were misled by Emaar‘s propaganda and false marketing. Investors were told that Warsan would be a top-class and up-market development and that townhouses would be built to the highest standards. Up to the time of the launch, they did not once mention the price,” Hussain added.

When pointed out that the responsibility of enquiring about the location and price remains with the investors, one of them explained that they had very little time in which to make a decision. “We were given only a few minutes before being told to put up the money and seal the deal,” he added.
There were rumours too that the tokens issued online for the off-plan booking of the project were downloaded and sold at a handsome price as there were ample takers for the project at the time of launch. The bookings were received at the EmaarEmaar sales office and at the office of Hamptons UAE, the official sales agent for the project.

Warsan Estate is a project of townhouses for which the average price could work out to Dh5 million and above. “This is massively overpriced compared with International City which is located just opposite this project,” James added.

Hussain said hundreds of emails were pouring into EmaarEmaar‘s office, asking for an extension of the deadline for payment of the second installment, which is fast approaching. Most of those writing in are however demanding that the company scrap the project itself. “None of the investors want to pay the second instalment of 15 per cent, which is due in January 2009,” Hussain told TBW.

However, he is optimistic that EmaarEmaar will take an appropriate decision on the contentious issue and resolve the concerns of hundreds of investors.

Emaar PropertiesEmaar Properties launched Warsan Estate in Dubai as an exclusive residential community on Al Awir Road. The development claims to offer 500 single family town-homes that would appeal to residents who value the privacy of living in a villa in an immaculately laid-out residential community.

By CL Jose

© The Business Weekly 2008

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Dubai’s off plan projects ‘on hold’ through lack of financing | Dubai Property

Posted by 7starsdubai on November 12, 2008


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

Posted in Dubai | Comments Off on Dubai’s off plan projects ‘on hold’ through lack of financing | Dubai Property

Gulfnews: Aspire draws ire of property investors

Posted by 7starsdubai on November 12, 2008


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.”

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UAE prepares steps to boost confidence

Posted by 7starsdubai on November 12, 2008


UAE prepares steps to boost confidence

11 November 2008Dubai:

Greater transparency and better financial regulations will help overcome the current lack of confidence hurting investor sentiment in the UAE, the government said.

His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, urged a group of international business leaders and financial experts at the World Economic Forum to employ their expertise and fight malpractices of some financial and banking corporations and come up with a common approach to contain the current financial crunch and protect the world financial order and interests of the public.

“I am completely conscious of what is happening in the Middle East [as a result of] conflicts and rows which weigh negatively on the future of sustainable development,” he told the officials. Sultan Bin Saeed Al Mansouri, Minister of Economy, said in Abu Dhabi a new law on banking credit will soon be introduced in the UAE, and the government has finalised a new draft of the company law, which he expected to be introduced by next year.

He said 2009 is going to be a “testing year” for the UAE as far as the economy is concerned, just as it will be for some of the major world econ-omies, referring to the impact of the global credit crunch.
“I’ll not make any forecasts on the GDP until the end of 2008. We have to evaluate all the different economic sectors we have,” Al Mansouri said.

On the global credit crunch, Al Mansouri said there are lessons to be learnt from it. However, he added that the economies of the GCC, including that of the UAE, are still strong and protected.
Sultan Bin Nasser Al Suwaidi, Governor of the UAE Central Bank , said at a meeting in Fujairah: “The slowdown will be imposed on us … in everything we will see contractions. But I think we will still be growing in all directions in a very comfortable way.”

His comments echoed those of Mohammad Ali Al Abbar, chairman of Emaar Properties, who said the growth in the emirate’s real estate sector could slow to 9 per cent from 13 per cent due to the global downturn.

He said the government would “revisit their development pipeline to ensure that demand remains robust”.
The comments came on the same day as Eisa Mohammad Al Suwaidi, chairman of Abu Dhabi Commercial Bank , moved to assure customers the financial institution has not been affected by the global crisis.

“The bank benefited from the liquidity pumped by the Ministry of Finance [MoF] and the Central Bank to provide necessary cash to enhance credit and finance loans to government and private sectors and individuals,” Al Suwaidi said in a statement to WAM.

The developments come at the backdrop of a continued market slump. Dubai Financial Market index declined by 4 per cent while Abu Dhabi Exchange lost 1.9 per cent on panic selling.

By Gaurav Ghose, Financial Features Editor, and Himendra Mohan Kumar, Staff Reporter
© Gulf News 2008

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Speculators take $57 billion in hot money out of UAE

Posted by 7starsdubai on November 12, 2008


Speculators take $57 billion in hot money out of UAE

Global currency speculators withdrew nearly $57 billion (Dh209bn) in hot money from the UAE banks at the end of summer, but such funds have been offset by massive government cash injections, a key Saudi bank said yesterday.

Besides cash facilities by the Central BankCentral Bank and federal authorities, soaring government deposits with local banks would allow them to maintain a relatively strong lending ability, the Saudi American Bank (Samba) said.Samba in its recent economic bulletin said: “The blanket support to banks from the government should bolster confidence in the UAE financial sector, and there are signs of an easing in liquidity conditions.

These government actions will help alleviate banks’ constraints and support domestic credit growth, albeit at a substantially slower rate than the 40 per cent year on year recorded through June.”In particular, the placement of large government deposits with national banks would help offset the recent withdrawal of large amounts of hot money which had flowed in betting on a revaluation of the exchange rate… no official statistics are available on such flows, but foreigners are estimated to have held $57bn in deposits in June,” it said.”Government deposits with banks would also help them manage in the case of difficulties in securing funds from wholesale credit markets.”

Central BankCentral Bank Governor Sultan bin Nasser Al Suwaidi, confirmed recently that most of the “hot money” had exited the country as speculation about an appreciation of the dirham against the US dollar largely abated.Speculation had mounted in previous months that the UAE and its GCC partners would revalue their currencies following a sharp decline in dollar’s value.Such expectations had led to a sharp increase in foreign cash flow into GCC banks.

By Nadim Kawach
© Emirates Business 24/7 2008

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British bank stops issuing mortgages for UAE flats – The National Newspaper

Posted by 7starsdubai on November 11, 2008


British bank stops issuing mortgages for UAE flats – The National Newspaper

Bradley Hope
Last Updated: November 10. 2008 6:11PM UAE / November 10. 2008 2:11PM GMT
ABU DHABI //

In a sign of worsening lending conditions, a British bank announced today it had stopped granting mortgages for UAE apartments and is now requiring a 50 per cent down payment for villas, a spokesman said.“Due to exceptional global market conditions, Lloyds TSB Middle East has altered some aspects of its mortgage product offering,” the spokesman said, adding that the bank “is not currently lending to customers who wish to purchase apartments”.

Lloyds will lend to customers buying a villa, but at a new rate of 50 per cent.

The bank’s lending standards are now among the most strict in the UAE and along with a general wariness among property buyers, it will further contribute to the slowing sale of apartments in the market.Other banks across the country have raised their home finance offerings to 20 and 25 per cent in recent weeks as the world financial markets entered turmoil and global banks restricted lending to each other. During the early part of the summer, buyers could easily get 10 and 15 per cent deals.
Lloyd’s decision was first reported by Arabian Business today.

mailto:today.bhope@thenational.ae

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Slowing property market leads to disputes – The National Newspaper

Posted by 7starsdubai on November 10, 2008


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

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More than Dh22 billion was wiped out on the day.

Posted by 7starsdubai on November 10, 2008


read more:
Gulfnews: Banks and real estate drag Dubai’s index to its lowest close in 45 months:

Posted in Dubai | Comments Off on More than Dh22 billion was wiped out on the day.

U’AE – Regional markets sell-off continues – The National Newspaper

Posted by 7starsdubai on November 10, 2008


Regional markets sell-off continues – The National Newspaper

Andrew Foxwell
Last Updated: November 09. 2008 8:03PM
UAE / November 9. 2008 4:03PM GMT

Regional stock market indexes fell yesterday as the deteriorating global economy and fears of an international recession took their toll. There were even calls for the Government to move to halt the domestic declines.

The Dubai Financial Market (DFM) lost 5.94 per cent of its value, falling to levels not seen for more than three years.
Hardest hit stocks included the developer, Emaar, which was down 9.94 per cent, leaving it near a four-year low.

Emirates NBD lost 7.07 per cent of its value, leaving the bank’s stock at its lowest level since Dec 2004.

The real estate indexes of the DFM and the Abu Dhabi exchange dropped by 9.55 per cent and 7.85 per cent respectively.“UAE real estate stocks are taking the biggest hit in the region amid the current global financial downturn,” Ayman el Saheb, the director of operations at Darahem Financial Brokerage, told Zawya Dow Jones. “
The real estate market is buzzing with unconfirmed talks of projects being delayed or cancelled and a fall in property prices, and this is further hurting sentiment.”


Abu Dhabi’s index was also hit heavily, closing down 3.95 per cent, while Kuwait’s crisis-hit market lost 2.79 per cent of its value. Doha was down 5.19 per cent, Muscat lost 2.6 per cent and Bahrain shed 1.66 per cent.The Saudi Tadawul was the only Gulf market to post a rise, with the index closing up 1.82 per cent.Robert McMillen, the chairman of Mac Capital Advisors based in Dubai, said people were “at a loss” to understand the collapse.
He said some stocks were trading below issue price, which investors saw as “horrendous”, but that it was not heavy selling that was pushing the prices down.“

The volumes are not staggering. I don’t believe you’ll see significant selling any more. We will be heading in this direction at least for the rest of the month.”He dismissed the belief that falling oil prices were having a major impact on stock prices.Vyas Jayabhanu, the head of the broker Al Dhafra in Abu Dhabi, said investors had been disappointed that the Government had provided liquidity to the banking sector, but not to stocks.He called on the Government to take stakes in listed firms and hold them for several years to boost markets and liquidity and provide stability.“

The markets are disappointed the Government has taken no steps to support the market, because they were expecting it after it provided help to the banks,” he said. “Speculators and investors wanted something to coax them into buying.”

A head of an Abu Dhabi-based asset management house said at the moment it was “wait and see” time for the markets as investors tried to gauge the effect of the global interest rate cuts. Last week, the British and European central banks slashed lending rates to stimulate debt markets, while the week before the US Federal Reserve lowered interest rates by 50 basis points. The Central Bank has yet to follow suit, even though the dirham is pegged to the dollar.

mailto:dollar.afoxwell@thenational.ae

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Property cloud nine now looks stormy – The National Newspaper

Posted by 7starsdubai on November 10, 2008


Property cloud nine now looks stormy – The National Newspaper

If you’ve bought property in the UAE these past few years, you have enjoyed a thrilling ride. While no official data on prices exist, reports suggest they have skyrocketed since at least 2006, notching high double-digit returns and beating even some of the world’s best performing assets.And according to a recent HSBC report, the sector may still be booming. Prices in Dubai jumped 17 per cent in September alone, it said, after registering gains of 2 per cent and 3 per cent during the summer.

In recent weeks, however, the argument for buying property has become less convincing. One report last month suggested that prices were rising at a slower pace. Meanwhile, some developers have tried to curb speculation, banning investors who were buying apartments off-plan and then selling them in a matter of weeks, sometimes at more than double the price. And in the past few weeks, stories have emerged of cash-strapped buyers unable to meet their monthly payments and builders having trouble selling their units. Deposits on mortgages have gone up, too, because banks and mortgage lenders are finding it harder to borrow money as the global credit crunch stretches into the Middle East.

While discouraging speculation is doubtless a prudent measure in the long run, none of this news bodes well for property buyers. Perhaps even more troubling, though, is the havoc the financial crisis could wreak on property in the Middle East. Most of the demand for property comes from people living outside the UAE – in places such as India, Pakistan and the UK. According to a recent Citibank report, only 24 per cent of those who bought properties from Emaar, the region’s largest developer, are UAE citizens. Most come from Asia and Europe.

These investors have seen the value of their global stock portfolios decline dramatically in the wake of the financial crisis. Already, foreign investors on the Dubai Financial Market have been net sellers of local stocks, helping to wipe billions off the value of listed companies. When global markets go belly-up, international investors have less money to throw around on property. At best, that translates into slower sales in booming markets like ours. At worst, it could lead to declines.

So, is the UAE still a good place in which to buy?

The answer depends largely on your circumstances – if you are looking for a quick profit by speculating on off-plan property, it’s a resounding no. As the Government works to bring a measure of sanity into what had looked like the beginnings of a bubble market – one in which off-plan properties were selling at the same prices as those already completed – speculators will doubtless feel the pinch. A drying up of demand in off-plan units resulting from the Government’s actions has already left many speculators stuck with properties they never intended to keep.

“The speculative off-plan end is going quiet, and people who put down 5 per cent deposits and expected to get out quickly are now left with properties they can’t sell and can’t finance and don’t have the cash to make payments on,” says Chris Dommett, the chief executive of the property consultancy John Charcol Dubai. “There’s going to be a huge oversupply of property in the off-plan market for the next few months. Developers are going to find a lot of product returned to them.”

However, Mr Dommett says it makes sense if you are buying because you need a place to live, especially a completed villa or apartment. There is a downside, though: Because of the recent financial turmoil, a lot of banks are asking for a much bigger down payment. Amlak and Tamweel, the UAE’s two big mortgage providers, recently raised their minimum down payments to about 25 per cent, and many banks have followed suit. These days, the least you will be able to put down on an apartment or villa is about 15 per cent.

In the end, that is a good thing, because it forces you to start off with enough equity to cushion a possible downturn in property prices. For buyers who are just coming to the country, though, coming up with the necessary cash may be a big issue.If a down payment is what is preventing you from buying, don’t worry. Conditions in the lending markets are likely to improve in the next year or so as global credit conditions slowly improve and banks become less hesitant to lend to each other.

Despite the problems that have arisen in the past few weeks, the demographics of the UAE support the argument that you won’t lose if you buy property and keep it for a decade or so.
The population is steadily ballooning as foreign workers stream in, and those people need a place to live. If anything, the financial crisis may mean more migration because of dimmer job prospects elsewhere.“If you look at the fundamentals and ignore the off-plan speculation, the population is increasing as people arrive here and there’s still a shortage of finished product,” Mr Dommett says.

“The alternative is renting, and rents are not coming down. Although things are quiet at the moment and people will be taking a wait-and-see attitude for the next couple of months, demand for properties to live in is going to be strong, which implies prices will firm up again. The market will have some of the heat taken out of it because you won’t see the same amount of speculation as before. But it will still be a good investment.”
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At least 100 jobs go at property giant Damac – Real Estate – ArabianBusiness.com

Posted by 7starsdubai on November 9, 2008


At least 100 jobs go at property giant Damac – Real Estate – ArabianBusiness.com

At least 100 jobs are thought to have been lost at Dubai-based real estate developer Damac Properties as the global financial crisis continues to hit the region.Arabian Business was contacted by people close to staff at the company saying the jobs had been cut during the past two weeks.

Company chiefs refused to comment on specific numbers but it is understood that dozens of employees from across several departments were let go.

In a statement, Damac Properties CEO Peter Riddoch said: “The continuing global slowdown will inevitably lead companies to review their staffing levels and recruitment requirements. “Damac Properties will continue to review its own position in line with the market and aim to ensure that it right sizes/maintains its staffing levels accordingly.”

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http://www.arabianbusiness.com/537423-at-least-100-jobs-go-at-property-giant-damac

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Property prices on Palm Jebel Ali fall by up to 40% – Real Estate – ArabianBusiness.com

Posted by 7starsdubai on November 9, 2008


Property prices on Palm Jebel Ali fall by up to 40% – Real Estate – ArabianBusiness.com

House prices on the Palm Jebel Ali, second largest of Nakheel’s palm-shaped islands, have fallen by as much as 40 percent in the last two months as the global financial crisis sees foreign investors move to liquidate assets in Dubai, according to three Dubai-based real estate agents.

“I never expected [prices on the Palm Jebel Ali] would have come back so quickly and by so much,” said Jeroen Van Der Geer, partner at AA Properties in Dubai. “

We are back to a level of one and a half to two years ago.”The global financial crisis has hit demand from foreign investors, which make up a large percentage of property buyers in Dubai, while tightening liquidity has made home financing more difficult, agents said.

Local mortgage providers have slashed home financing from 90 percent to as little as 60 percent in recent weeks.The price of five and six bedroom signature villas, the most expensive properties on Palm Jebel Ali, have dropped from around 16 million dirhams ($4.35 million) to 9 million dirhams since the beginning of September, according to figures from AA Properties.

But that still represents a premium of between 70 percent to 80 percent on the original launch prices.A four-bed garden home has fallen from around 7.4 million dirhams to 4.1 million dirhams, according to the figures, with the premium dropping from around 160 percent to 45 percent.The figures show a three-bed water home, the cheaper of the Palm Jebel Ali properties, is now selling for around 3.8 million dirhams, when at the beginning of September it was selling for 6.2 million dirhams, with the premium falling from about 210 percent to 90 percent.Jodie Smith, managing director of Elysian Real Estate, said garden homes were currently selling at around 4.5 million dirhams, compared to 8.6 million at the beginning of September, while water homes had come down to around 4 million dirhams from 6.5 million dirhams.
David Rowland, sales consultant at Dubai’s Smith & Ken Real Estate, said he had seen premiums on signature villas drop from 200-210 percent in July/August to 75-80 percent currently.Rowland said he had also seen garden homes selling at a 35-40 percent premium, compared to 130-160 percent in July/August.
He described the drop as “quite alarming”.
Rowland said sales had not completely dried up on the Palm Jebel Ali, but investors were having to accept premiums of around 35-40 percent to make a sale.Rowland said premiums could go as low as 20 percent before property prices rebound.“I think we will see a rebound.

Palm Jebel Ali may go down to as low as 20 percent [premium]. When it does we will see people start to come back to the market, maybe in December,” he said.
Van Der Geer said he expected demand for properties on Palm Jebel Ali return before Christmas as global financial markets stabilise and investor confidence begins to return.“It is a good opportunity for investors now and I believe the [long-term] picture is good. Prices will go back up,” he said.

Smith said she had already seen sales pick up this week, with investors taking advantage of bargain prices to snap up properties that just a few months ago were out of their price range.Nakheel said in a statement that it welcomed “all proposals and discussions by all industry-related partners aimed at maintaining a healthy market movement under the current circumstances”.“

Nakheel realises that it does not work in isolation and has a great number of partners and third parties whose interests are intertwined with its own. This approach is a very responsible approach in line with current global economic conditions,” the developer said.

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Dubai Property Wrongs

Posted by 7starsdubai on November 9, 2008


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

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Investors are still wating for a positive sign – Sokook Ivory Tower contracts – The National Newspaper

Posted by 7starsdubai on November 8, 2008


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

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