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Property delivery dilemma: to pay or not to pay
…that is the question on property investors’ minds as they consider their paltry investments in Dubai
June 14, 2011 4:19 by Eva Fernandes
Kipp just read, to put it lightly, a heartbreaking piece about investors who would rather flee the country than risk time in jail in this morning’s copy of The National.
The article touches on a question that is on the mind of every investor of the troubled Dubai property market. Should we wait it out or just leave everything and run?
So why is Kipp taking a sympathetic stand towards a group of people, who are essentially, criminals? Because, as the article points out, the property that was purchased has dropped in value, sometimes almost 40 to 50 percent less than what investors initially signed up for. In addition to that, developers have had the privilege of hiding behind the excuse of “force majure” to avoid owning up to legal obligations to deliver projects on time—while still demanding investors meet their monthly installments towards their payments. Hardly seems justice.
Failure to meet a payment puts an investor in breach of contract. And in the event of an investor’s cheque bounces when the developer cashes it in, said investor becomes liable for criminal prosecution under UAE law.
RERA’s Marwan bin Ghalaita may have told Arabian Business, “If my construction is delayed, and it is beyond my delivery date, what should I do?…You can go to a court and ask for that, for compensation. Because this is a breach of the contract…Because the delivery date is there….And people should seek proper legal advice from lawyers. It was a buying market, then a selling market, then an agents’ market, then I tell people there is a period in Dubai where it is a lawyers’ market, where lawyers make a lot of money”
The fact remains, however, that navigating through Dubai’s legal system is both expensive and time consuming.
But investors, keep your chin up! It isn’t all doom and gloom for investors y’know.
Take for instance, the news that Nakheel will be receiving funding from Dubai government for completion of Jumeirah Golf Estates (JGE) development. Nakheel’s spokesman told the papers “The Government of Dubai has committed to providing significant financial support to Jumeirah Golf Estates, home of the Dubai World Championship. In turn, we are committed to managing and delivering this key project for Dubai. Our contractors have recommenced work at the development.”
The property landscape remains littered with harrowing stories of investor nightmares, near-misses and the occasional victory. And let’s be honest, it looks to remain that way indefinitely.
And what about all of the others who have invested in the millions in developments that have been on a permanent pause for two or more years? Kipp doesn’t know. And we can hardly imagine the kind of limbo they must be going through.
Are you one of the investors who’ve successfully maneuvered your way through Dubai’s property maze? Or someone who’s still trying to claw out of it? Please share your stories with us.