Property swap and raw deals
…just another day for investors struggling to navigate through the rough seas in the UAE
July 26, 2011 12:52 by Eva Fernandes
There is ridiculous and then there is the UAE real estate property market. No we are not going to go off on an angry tangent; we do, however, wish to point out an unfortunate injustice that some investors are finding themselves in.
Do you remember the White Bay Project- or the UAE’s first court-mandated bankruptcy of a distressed property project since the downturn hit, as it is otherwise known?
Al Murjan was behind the White Bay project, a $3 billion development in Umm al-Quwain that boasted 8,000 homes. The project was to span a waterfront strip and two man-made islands. While its infrastructure was reportedly in place the main construction was yet to begin. The failure seems to have been down to a combination of lack of payments from some investors, and problems with government planning.
When news of the insolvency did emerge, Kipp first thought of the struggle ahead for the thousands of investors who were waiting on the development. And earlier today Emirates 24|7 reported of the kind of offers that investors of the project are getting: property swaps.
Ahmed Shaikhani the Managing Director of Memon Investments, told Emirates 24|7 “We are presenting this offer with the permission of liquidators. The offer is part of our move towards offering a viable solution to affected customers from other developers. This also adjusts the new sales of our own units.”
So what does this mean for investors? A pretty raw deal, if the testimony of one investor is anything to go by. Emirates 24|7 reports that one AA was given an offer from Memon to swap his property in White Bay for apartments in the Dubailand. Though property value is sure to increase from Umm Al Quwain to Dubai, the upgrade isn’t without costs. AA would be required to pay an additional Dh1.3 million after adjusting the amount he has paid for his White Bay apartment.
Now with the insolvency proccess going as slow as it has been, (absolutely nothing to be heard of for the past 9 months), the mere developments is enough to make some investors pleased-but at what cost?