Saudi real estate scam involves UAE developer

JEDDAH SCAM: UAE developer sold apartments in an unapproved residential tower on Jeddah Corniche. (Getty Images)

A well known UAE developer is at the centre of a real estate scam involving the selling of residential plots on paper before their construction, it was revealed on Sunday.

The company, which has not been named, sold non-existing apartments in a planned 40-story residential tower to be built on the Jeddah Corniche – before it had even obtained building approval from the local municipality.

The same compnay had also announced a similar real estate project on King Fahd Road in Riyadh, it was reported in Saudi daily Arab News.

An investigation into the real estate company, and others operating similar scams, is now being launched by Jeddah Municipality.

The move came in response to complaints from affected customers and concerns over incomplete development applications, the municipality said.

The Ministry of Commerce and Industry has warned that such real estate practices may become more widespread in the Kingdom because of a lack of regulations protecting citizens from fake real estate companies.

This was of particular concern in the current economic climate as the Kingdom’s real estate market continued to grow in spite of real estate in other Gulf countries going bust, the newspaper reported.

“Some real estate development companies started marketing their projects on the Corniche without obtaining licenses from the municipality to commence construction,” confirmed Dr Tarik Fad’ag, head of the civil council at Jeddah Municipality.

“The council will start its investigations next week by looking at the files of these companies and will make strenuous efforts to stop such illegal operations,” he said.

The municipality confirmed it had received an application from the company in question for the Cornice project but had not granted permission for the announcement of a real estate project because all the requirements had not been satisfied.

“The company did not address our concerns nor did it follow up on the procedure for acquiring an approval despite selling all of its planned apartments,” the municipality added in a statement.

An awareness campaign warning people about the risks of buying apartments on paper before they physically exist was being planned, Fad’ag added.

Jeddah Municipality has approved five real estate projects on Jeddah Corniche and is considering 12 more.

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

why not mention the company ?
Posted by jimmy, manhattan, nyc on Sunday 1 February 2009 at 10:44 UAE time


it is such ambiguity and lack of transparency that has contributed to the collapse in the real estate market. wake up uae!

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM