Damac threatened with lawsuit after project axed

LAWSUIT THREATENED: Investors in Damac's Palm Springs project on the Palm Jebel Ali are threatening legal action after the developer cancelled the venture.

Investors in Damac Properties' Palm Springs project on the Palm Jebel Ali are threatening legal action after the developer cancelled the venture five years after launch.

The project was axed due to changes made to the Palm Jebel Ali masterplan, which meant Damac would suffer a significant loss if it continued with the venture, according to UAE daily Gulf News.

Investors are unhappy with the compensation offered by Damac, which said it would only offer 6% per annum interest on the sum invested, the newspaper said.

The cost of real estate in Dubai surged up to 15% in 2007, according to Egyptian investment bank EFG-Hermes.

Damac has said it will either refund customers' investment or allow them to transfer their investment to any other project in its portfolio at a discounted price of 15% below current market value.

“Due to redevelopment of the plots, the building forming the Palm Springs development cannot be situated on the re-allocated plot and as a result the Palm Springs project has been cancelled,” Hussain Sajwani, chairman of Damac Holding, said in a statement carried by Gulf News.

The 25-storey Palm Springs project had originally been planned for completion by late 2007, and buyers were already angry over repeated delays, contractual issues and complaints of poor customer service by Damac.

Damac currently has real estate interests worth $30 billion across Dubai, North Africa, Jordan, Lebanon, Qatar and Saudi Arabia.

The developer announced in September that it has launched a total of 79 towers across the region over the last five years, all of which are in various stages of construction.

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READERS' COMMENTS

i agree
Posted by Hussain, Jeddah/Thuwal, Saudi Arabia on Sunday 13 April 2008 at 11:49 UAE time


i see the same thing here in jeddah,

big swanky Damac ADS and nothing..... big empty lots....

sad really

Stop complaining
Posted by Mart, London, UK on Wednesday 9 April 2008 at 15:56 UAE time


Good luck with any legal action! You bought property in a market with no established system of law land (unlike UK etc). You are subject to a legal system that is arbitrary. That is the risk you took.

I also run a business in the UAE. I accept the risks. The government can arbitrarily change the law. They can decide to block voip phone systems. You have no appeal, no recourse. We accept that when we move to such a place. Off plan investing is a risk. You take the risk that you'll be able to sell at a profit, and that the company you are investing with won't do you over.

Good luck with any legal action! But I suspect you are throwing good money after bad.

First impression is false
Posted by Richard Ross, Dubai, UAE on Friday 4 April 2008 at 00:00 UAE time

When the "fresh" investor arrives to Dubai - he/she sees Damac everywhere....at the Airport, Highways, huge ad booths in shopping malls....waaw - big company with nice ADS..giving "nice" impressions to the person who believes to colorful pictures, ads and impressed by give-away jaguars, bmw, etc etc.... In other words, DAMAC is enjoying money of foreigners, who does not know the reality - and that was my first impression....

Good thing that I did not buy anything from DAMAC and I am thankful to my old Emirati friend, who opened my eyes on that company :)

Get some info on developer's reputation before investing....Good luck

Damac Palm Springs
Posted by Vic Groves, Guernsey, UK on Wednesday 2 April 2008 at 12:09 UAE time


Is there any way that I can join in with any group of investors seeking legal action against Damac in respect of the Palm Springs cancellation? There are numerous references to the possibility of investors joining together to seek redress and I would like to join one such group as I feel it will have more credibility than pursuing a claim on an individual basis.

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