The interview mysteriously disappeared from Arabian Business December 13 2008
Posted by 7starsdubai on December 20, 2008
found in a comment:
Interwiew can be read here:
Taking over Niki Lauda
by Jamie Stewart
Saturday, 13 December 2008
The Niki Lauda Twin Towers project in Business Bay has run into problems that have resulted in claims and counter-claims from developers
ACI Real Estate and Define Properties, The Real Estate Regulatory Agency (RERA), and anxious investors. With Define Properties unavailable for
response despite repeated attempts to get in touch, ACI projects director Joerg Grunwald talks about the future of the project to Jamie Stewart in an exclusive interview.
Can you make clear the roles of ACI and Define Properties with regard to the Niki Lauda project?It’s a development from Define Properties. ACI had bought the entire project – the land – and sold it. The responsibility for construction lied on Define. But we saw that Define was struggling in the process of doing the construction and the site had been idle for more than two months. This is what concerned us and our investors. They wanted to know the situation. Until now we have had to refer back to Define as they were the developers but now we have been forced to involve ourselves more.
There’s a completely new reorganisation taking place as we speak. Define will be in combination with ACI together. ACI will be the vendor, and will be involved in the construction and the development itself.
What was the nature of the problems that Define ran into?
Financial problems. They could no longer afford to pay contractors.
When did you realise Define was in trouble?
It became clear two weeks ago. That’s when we decided to take action.
So what is the current construction status of the project?
In the previous plans the foundation used a traditional piling system which has now been changed to a raft foundation. Define has produced a third party survey as is obligatory for the approvals for a raft foundation. That has been done and the results were positive so a raft foundation will take place in due course.
ACI has identified the construction company for the same (to be named in mid-December) which will also do not only the construction but also the raft. The contracts will be signed in due course. Mid-December will be very exciting for us and also for our investors.
International Foundation Group (IFG) says it is owed US $680,000 (AED2.5 million). Will ACI or Define be paying this?
That and all open invoices that have been accrued over the last month will be settled either through Define or ACI or a newly formed company which I cannot disclose details of as yet.
Will this new company be a joint venture between yourselves and Define?
Most probably yes.
Investors have expressed concern about the whereabouts of monies paid to date. Is the money being held in an ESCROW account in line with RERA Law 8 2007 (concerning guarantee accounts of real estate developments in Dubai)?
100% of it?
One hundred percent of our obligations for the entire building of Nikki Lauda is. That is clearly in our existing contract with Define Properties with the approvals from RERA with the certain conditions of this contract also fully approved by RERA. So the investor’s money is safe in the ESCROW accounts.
To reiterate, 100% of it?
I cannot comment on how many funds have fully gone to the ESCROW accounts. I believe some percentages were taken out for advertisement, for admin and as such but all that goes along with the regulations of RERA law no 8.
RERA Law 8 says that the money has to be used to pay the construction costs, such as the money owed to IFG. So if the money is there, why can’t IFG be paid out of that account?
This is a subject that we must clear up. Why have they not been paid? Money has been paid into the ESCROW account from our side. This is clearly recoverable. Why they have not been paid so far is under investigation but nevertheless, whatever it takes, all debts to third parties within the field of the construction will be paid off in full.
A lawyer representing the investors has said there is a clause in the contract between ACI and Define that says ACI is entitled to 40% of all investor’s money and that Define retains the other 60%, and that ACI have a letter from RERA which confirms and allows this agreement, and allows it to withdraw its premium at any time. Is that accurate?
Yes that is correct. Whatever contractual terms we agreed on with Define have all been approved by RERA.
Is this agreement in violation of RERA Law 8 2007?
RERA’s Law 8 has been changed various times over the last month. With amendments, new clauses and so forth. We just took advantage of the possibilities of a contract that we entered with Define Properties which are in line with the regulations.
Have the regulations changed since you signed the contract?
In various aspects yes. With the retention of monies; with the amount of monies to be withdrawn from the ESCROW account for certain purposes; and others with the termination clauses and so forth. Many times. But we are always in line with those.
But whatever it takes and whatever clauses are to be obeyed and followed we saw that the construction stalled and this is not acceptable for us because it is our reputation. Our name and our brand stands behind it. We take it seriously and that is the reason why we have now initiated this transition of Define Properties in combination with ACI to continue the construction immediately.
Did ACI and Define approach RERA to have this share clause put into the contract?
Frankly speaking the percentages of what has been withdrawn or was legally allowed to be withdrawn I cannot comment on. I am not in the finance department – I am director of projects and my concern is to keep things going.
Will ACI cancel any projects?
Have you taken over all of Define’s projects, such as Define Essence?
That will be revealed in a press release in mid-December.
Can you estimate the new construction timetable for Niki Lauda Twin Towers?
As a rough calculation, raft foundations will commence very soon and take about four months, then basements and super construction will take around 15 months. So 19 months in total. Detailed figures will be given once we have signed the contracts with the new company.
Do you have a message for those who have invested in the Niki Lauda Twin Towers?
We are doing our best to raise the trust and confidence of our investors despite these difficult times. We see massive lay offs from other developers, other mergers, and so forth. We are propagating confidence and we will show that we fulfill and deliver what we promise.
We have not been able to get in touch with Define Properties. Have all the staff been told to go home until this has cleared up?
Yes that is true. Rest assured that things will commence in a professional way now. We will do our best to safeguard the interests of other Define clients as well. From those Define projects which are proceeding and where sales have already commenced and clients are to be honoured with their contracts we will also honour that. Later this month – the picture will be clear
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