Kabir Mulchandani, the Indian businessman accused of real estate fraud in Dubai, has pledged to close AED1bn worth of property deals in the emirate by December under a new venture.
Mulchandani, former chairman of Dubai property firm Dynasty Zarooni, was arrested on allegations of fraud in 2009 but was cleared of all charges by a Dubai Court in December 2010.
The businessman has launched a new property venture, SKA1, and plans to generate up to AED1bn by the year-end. The company aims to offer funding to real estate projects which have a viable future, but are in need of bridging capital to meet their complete date.
“There are a lot of good projects out there and a lot of quality developers; I meet them all the time… [but] there is a lack of traditional capital. The banks are heavily exposed to real estate, here as well as globally,” said Mulchandani.
“We come in and provide the capital, we work with the contractors to finish [the project] and then we have our sales and marketing team that can resale it once it is completed.”
Dubai’s property sector was hit hard by the downturn, with billions of dollars worth of projects put on hold or cancelled after real estate prices fell more than 60 percent from their peak.
Speculators caught with multiple properties and little chance to turn a profit fled the market and defaulted on purchases, while other buyers continued to honor their contracts, often paying installments even after work was halted in the aftermath of the crisis.
About half of real estate projects in Dubai were cancelled or suspended after the market collapse.
In the year-to-date, SKAI has completed one deal for an AED300m building six months away from completion in Dubai Marina and plans to seek out further opportunities in the emirate.
“I can tell you this… We estimate the transactions we will conclude this year will exceed a AED1bn,” he said.
Despite his previous legal battles, Mulchandani said there were no restrictions on his business activities and he is confident for the future.
“I have no restrictions on what I can do. Remember, I wasn’t convicted. On a strictly legal issue I am clean and clear. In fact, I am probably the most investigated real estate executive in this country and one of the few that has been exonerated.”
Mulchandani was investigated by police in January 2009 when up to 20 investors claimed they had paid him a monthly fee of AED300,000 under an investment scheme. The buyers said they were promised a guaranteed return of AED1m after six months.
Mulchandani, who spent 140 days in custody, denied the allegations, stating the fee was a non-refundable charge for real estate services, such as advertising and priority access to resale units on developments in Jumeirah Lake Towers.
In December 2010, a Dubai court ruled in favour of Mulchandani, deeming the fraud allegations to be “baseless and without foundation and without evidence.”
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