Investors seeking legal route to recover down payments on stalled Ajman projects

A legal battle is under way for thousands of real estate investors in Ajman’s stalled $15 billion Emirates City projects who want refunds on their down payments.

The Ajman Real Estate Regulatory Authority has confirmed that more than a dozen projects in the Emirates City and Emirates Lake Towers developments are on hold.

But property investors are struggling to get their money back because the off plan projects pre-date Ajman’s tightened real estate laws. Developers that launched sales before 2008 were not obliged to secure funds in an escrow account, meaning ARRA has no means of helping buyers get their missing funds.

‘The most we can do is have them file a complaint and then we can try to get the developer to make the best offer possible,’ said Nael Al Amir, spokesperson for ARRA. Investors will have to seek legal action against developers to secure a refund, he added.

Hundreds, possibly thousands of investors have been affected. They paid between AED 110,000 and AED150,000 in down payments to developments. One investor said she had paid hundreds of thousands of dirhams to Dubai based Sapphire Properties for an apartment in the Sapphire Lake View project, but was unable to find out what had happened to her money.

‘Basically, they didn’t actually inform us that the development was stalled. They weren’t answering any phones, anything basically. I had to keep calling and trying to find a way to see what was going on. There was nobody answering their phones,’ she told Arabian Business.

Buyers in Boulevard Ajman, another stalled project in the emirate, have been offered the chance to switch their uncompleted units for unfinished properties in Dubai and Ajman, Al Amir said.
Investors who hold out for the delivery of their original properties in Emirates City may find there are significant changes to the master plan, warned Matthew Green, head of research and analysis at CB Richard Ellis.

‘From my knowledge, there were substantial revisions to the master plan and obviously that was going to be an issue for potential investors,’ he said.

‘I think it might have included the removal of some of the lake areas and such. I think the main issues we’re hearing about are relating to the residential elements that have been sold off to investors. There are obviously a number of residential towers there which are either not moving ahead or got to certain stages of construction and are now looking to hold,’ he added.