Investors in repossessed Dubai project safe

MONEY SAFE: Investors in Plantation Project equestrian development will be compensated, RERA has said. (Getty Images)

Investors in a luxury Dubai equestrian development that was repossessed by Dubai Islamic Bank on Thursday will be compensated, the Gulf Arab commercial hub's real estate regulator said.

DIB shocked investors this week by saying it had repossessed a "substantial area" in Dubailand, a multi-billion-dollar luxury theme park that was set to include world-class polo facilities.

The news sent DIB's shares down sharply as investors struggled to calculate how much the high-profile foreclosure will cost the United Arab Emirates' biggest Islamic bank, which is already embroiled in a real estate corruption probe.

At it's 2004 launch, Dubai's Plantation Project promised to create one of the world's largest equestrian facilities with air conditioned stables for 800 horses.

"The rights of all parties who invested in the project are 100 percent guaranteed, based on the DIB management's commitment to all the contracts and agreements signed between the developer and the investors, as long as they are proven," Al Khaleej newspaper quoted Marwan bin Ghalita, head of the Dubai Real Estate Regulatory Authority (RERA) as saying.

The regulator called on all investors in the Plantation Project to approach DIB with documents proving their ownership.

Bin Ghalita told the newspaper that a dispute had broken out between DIB and Plantation over the development of the plot in Dubailand shortly after they had reached a deal and sold some units.

The regulator had stepped in to resolve the dispute.

Worries about an overheated property market in Dubai, home to three palm-shaped islands and the world's tallest building, have sent real estate and financial stocks reeling in recent weeks with most indices erasing all 2008 gains.

The government's anti-corruption campaign in Dubai, which started this year and has also touched DIB, has resulted in a number of arrests. But worries persist that the property boom has resulted in widespread kickbacks and corruption. (Reuters)

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READERS' COMMENTS

DIB/ Plantation
Posted by Ian Kelly, Dubai on Saturday 13 September 2008 at 14:26 UAE time

Whilst it is good to see that RERA and the senior management of DIB have confirmed they will compensate all investors in the property they have foreclosed on it remains to be seen what they mean by compensated. Many people have invested millions in this property over the past few years and have ultimately expected to receive a luxury house in an exclusive development. Meanwhile as their money has been tied up the value of the property and equivalent developments have increased 3-4 fold in value. It would be unfair for DIB to profit from this transaction at the expense of original purchasers by compensating people at the price they committed to and have paid over the last 2 years and then onsell the land at 3-4 times this price.

Repossed Plantation Project
Posted by Lee, Dubai, UAE on Friday 12 September 2008 at 22:50 UAE time


I would like to know more regarding why this project did not move forward. The land value has probably tripled or quadrupled compared to the land value in 2004. Is this another example of a developer changing their mind because the economics are no longer in their favor??? It took 4+ years for the project to be canceled? This all sounds a bit dodgy to me.

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