Emaar says it will work to reach resolution; Crescent Bay remains a 'key project'
Emaar Pakistan, a subsidiary of Dubai-based property developer Emaar Properties, is in a dispute with investors who claim they are owed more than $15m after buying off-plan properties in its stalled project in Karachi.
Emaar launched the Crescent Bay mixed-use community in July, 2008, as part of its multi-billion dollar investment into the country.
The 108-acre development was due to be built with the Pakistani Defence Housing Authority (DHA) and completed by 2013-14, featuring high and mid-rise towers for residential and commercial use, a shopping centre and five-star beachfront hotel.
However, construction is still yet to start.
The delay led investors to stop paying instalments on their properties, eventually causing Emaar to cancel their contracts until a Pakistani court issued a stay order on the bookings, preventing them from being cancelled.
About 300 investors claim Emaar, which built the Burj Khalifa, the world’s tallest tower, abandoned the project, making it liable to refund their deposits plus interest at a rate of 12-17 percent, as well as pay 10 percent compensation. The amount claimed totals Rs1.5bn (US$15.2m).
However, Emaar denies it abandoned the development, claiming it was delayed due to the financial downturn and that work will soon commence.
“Following the global financial crisis, the various aspects of the project had to be evaluated and we were in continuous discussions with DHA to finalise them,” Emaar Properties said in a statement to Arabian Business.
“We have now reached an agreement with DHA, and work on Crescent Bay is likely to commence in May, 2013.”
The investors are seeking a court order preventing Emaar from re-launching the project until the dispute is settled.
Emaar Properties said it would work to reach a resolution and Crescent Bay remained a “key project” for the company’s Pakistani arm.
“As per our agreement with DHA, all the original contracts of the customers will be valid, and along with our partners, we will discuss with the investors to achieve an amicable resolution to address their concerns,” the statement says.
“Pakistan is one of the key international markets of Emaar, and we are committed to the projects we have launched in the country.
“We have already handed over homes in our flagship development, Canyon Views in Islamabad, which is now a full-fledged lifestyle community, and highlights our commitment to project delivery.”
Emaar is the developer behind many of Dubai’s community developments, including Dubai Downtown, Dubai Marina and Arabian Ranches.
It was significantly impacted by the 2008-09 crisis that saw property prices plummet up to 60 percent. But it has shown it is making a comeback, last year recording an 18 percent rise in profits to $577m from $2.24bn in revenue.