Property investors get refund deal on stalled Dubai project
|Monday, 30 January 2012|
Property investors in Dubai have managed to negotiate a deal for payments on a stalled project to be refunded without resorting to court action.
Investors in Dubai’s Palm Springs project said that property developer Damac has started refunds on payments made for their uncompleted properties.
Buyers on the Palm Jebel Ali project, who have waited eight years for construction to begin, were previously offered a 70% refund of their deposits, or 25% immediately followed by a further 25% annually for the next three years.
Of the 48 investors involved, 21 have received payment, and a further 27 are expected to receive their cheques in the next two weeks.
‘We received cheques for almost half of the investors. The cheques for the other half are in the process of being arranged,’ said Fareya Azfar, partner and head of arbitration at The Legal Group, who advised the investors.
‘The group of investors believed that a partial refund was not a fair compensation, so they wanted us to negotiate with Damac in the hopes of reaching a more acceptable settlement,’ he explained.
Investors had initially hoped to receive compensation for their lost investment, but settled out of court with the developer in a bid to avoid a lengthy legal battle.
Announced during Dubai’s real estate boom, Palm Springs was designed to be a 25 storey beachfront development located on Nakheel’s Palm Jebel Ali island, but stalled in the wake of the emirate’s real estate crash.
Damac had attempted to cancel the project in 2008, but the move was fought by investors in the Middle East and the UK. Damac later agreed to reinstate the development, and wrote to investors last year to say it was in discussions with Nakheel, and a decision on Palm Springs would be made in December.
In a statement Niall McLoughlin, senior vice president of corporate communications at Damac, said the company had been committed to solving the dispute and was happy to have reached an agreement.
Meanwhile, investors in Dubai’s Remraam Community have petitioned the emirate’s ruler to intervene in a dispute with the project’s developer, after they were told they risked fines if they failed to accept the handover of properties in the unfinished complex.
The development was scheduled to be completed in June 2010, complete with pools, malls, landscaping and retail features but owners said in a petition to the Ruler’s Court that they were being forced to accept properties without water and electricity connections.
Buyers have also asked for compensation for losses incurred during the delay of the handover, such as interest on mortgage payments.
‘We are being forced to take possession of half baked apartments and communities in Remraam, which is in the middle of the desert with no amenities and no DEWA. The electricity is provided through generators,’ said a spokesperson for the action group.
Developers DPG said the basic infrastructure for the project was in place, and denied charging home owners service fees before their units had been transferred.
It added that it has tried to help buyers who are struggling to meet payments.‘We have offered a series of initiatives to help our customers that include price reductions, unit upgrades, late payment fee waivers, family consolidations, deferred payment plans etc,’ the statement said.
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