What you can do if your property project is on hold
According to a recent report, 243 real estate developments in Dubai have either stalled or been cancelled. Here are six courses of action if it happens to you.
March 8, 2010 3:09 by Aarti Nagraj
3. Swap properties with the developer
While some developers are still not being transparent about their projects, others have offered their investors so-called swaps, i.e. completed properties in exchange for stalled developments. And analysts say that investors should just grab the opportunity.
“A lot of developers are now offering swaps to the people that have bought in projects that are clearly not going to happen,” Craig Plumb, the head of Research at Jones Lang LaSalle told Kipp at the sidelines of a conference last month. “Take your money out and put in into projects that have been built,” he said, adding that it is important to turn your investment into an income-generating asset.
However, you have to be careful; in January this year, Dubai’s Real Estate Regulatory Agency (RERA) warned that some schemes offering property swaps between Dubai and the US were unauthorized.
“Any marketing campaign involving Dubai real estate requires the prior approval of the RERA, as stipulated by Law No. 16. We have not received any request for such approvals from firms offering to exchange properties in Dubai for properties in the US,” Marwan bin Ghalita, RERA chief executive, told Emirates Business. “None of the ordinary safeguards are applicable [in such deals], or recourse to the protection offered by the law, by RERA or by the Land Department,” he added.
4. Team up with your developer
If you don’t want to go the legal way or get stuck with a house you don’t like, you could just team up with your developer, a solution that is proving more and more popular in Dubai. Earlier this month, The National newspaper reported that a group of investors from Park Towers in Dubailand struck a deal with their developer to co-own the land.
“We think this is a good model for Dubai,” Rakesh Wifi, an investor in the project told the paper. “The developer could have forfeited our money under the law. But he has decided to make us partners. When the market recovers, we can decide to sell our land or put more money in to build it.”
And this option will not lead to any legal difficulties, according to Rera. “If this is the preferred option and there is full agreement between all parties the formal agreement should be registered with the legal section and a full financial audit carried out as the next necessary step in order to move to finalise the arrangement,” Rera’s CEO Marwan bin Ghalita, told the paper.