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First Lagoon properties 'ready for Q4 in 2009'
Schon Properties has announced that first eight buildings of its much delayed Dubai Lagoon community project will be ready in the fourth quarter of 2009.
Company chiefs said on Monday they are moving full steam ahead on all current projects within the portfolio, despite the market slowdown.
Residential units at the Lagoon were initially scheduled for completion by December 2007.
Danial H Schon, vice president, said: “Schon Properties has a solid financial position and our commitment will not waiver.
"There is no borrowing and zero liability both in Schon Properties and Schon Group, and this makes us one of the strongest real estate developers.
"A reduction in sales is inevitable for the short-term, but as the majority of our projects are 75 percent pre-sold, a slow down will not have a major impact on business activity."
The announcement, he added, had been made to allay fears of non-deliveries because of the current economic situation.
"We see the current situation as blessing in disguise, an opportunity to consolidate our current portfolio and concentrate on completion and delivery,” said Schon.
"On Dubai Lagoon, works on zones 1 and 2 are in progress by Power Line Gulf Construction. The contractor for zones 3 and 6, Belhasa Engineering & Contracting Co, is currently mobilising and permits have been obtained and essential contractor site facilities, such as offices and ablution blocks are being installed in preparation for the full main works activity at site, which will become more apparent shortly."
Other projects including Schon Business Park, Schon Residences, Schon Suites and Libertas are also moving ahead as scheduled, he added.
“2008 has been a challenging year in more ways than one, but we are confident that the new year will bring many positive developments and are taking measures to reinforce our market presence by creating value-added services such as a facilities management division and the recently launched subsidiary company NOHCS Property Advisory,” said Schon.
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Comments 1-8 of 8
Posted by Joe, Dubai on 17 December 2008 at 09:35 UAE time
All off plan project payments should be tied to a construction schedule with at least 50% of the total price payable at the time of handover. The first 50% is put in Escrow and released to the developer throughout the construction schedule so that when the project is complete the developer has received all 50% of the Escrow money. The remaining 50% is paid at handover. And I believe this should be a UAE rule and not just for Dubai. Right now Ajman is like the wild west...who knows how many of those projects will be cancelled in the next 6 months???
Posted by Anonymous, Dubai, United Arab Emirates on 16 December 2008 at 16:51 UAE time
Where the hell is free speech then???
Posted by Anonymous, Dubai, United Arab Emirates on 16 December 2008 at 14:22 UAE time
Absolutely right!!! They are two completely different developments.
Posted by shilu, Dubai on 15 December 2008 at 18:26 UAE time
If the information contained in this article is accurate, then we have a good example of how to develop real estate projects?
This whole system of selling off plan and then executing slowly but not surly is unjust for the entire economy and society. When we will go back to buying things that we can check, assess, evaluate, and then make informed buying decisions?
The whole thing is like printing dollar without coverage from the real economy.
I will appreciate if someone can tell me what will happen with down payments made on off plan developments from buyers who will not be able to meet payment milestones? Isn't it 10% of the total sales value of the development? So one billion development fully sold and booked should have raised around 100 million from down payments. From what I know from several developers the cost is 1/3 of the total sales value (as a rule of thumb, is this accurate rule?! comments are welcomed), which means they have to pay 300 million to build it. So they are short of 200 million (assuming all buyers will not meet their obligations).
Under this scenario the real estate developer have made 100 million without executing the project, because all these projects are cash positive after all units are sold before the actual construction works start and typically the initial investment is far less than the 1/3 down payment.
So if a developer declare project cancellation it mean he will recover his initial cost, makes a profit (the down payment minus the initial cost), keeps the land for himself as an asset for future use. Under this scenario the investors who failed to meet milestone will end up with no asset and a zero balance in the bank in best case scenario or with a debt that he will pay at the cost of his family living...
Developers may go out of business because they don't have to interested customers but I have a great doubt that they will have no money with them when they go out of business.
Posted by Anonymous, Dubai, United Arab Emirates on 15 December 2008 at 18:11 UAE time
From 3rd Quarter 2007 it goes to 4th Quarter 2009...i wouldn't hold my breath...this may not be ready by 2020 also!!!
Posted by Christian, Dubai, United Arab Emirates on 15 December 2008 at 15:59 UAE time
I love the statement! There is no borrowing and zero liability both in Schon Properties and Schon Group.
Of course, not all buyers had to stick to there payment terms so 80 % is paid as delivery was last year and nothing is delivered yet.
Playing nice games with others peoples money.
Posted by Ron Saldanha, Dubai, UAE on 15 December 2008 at 15:04 UAE time
Correct me if i am wrong, Dubai Lagoons and The Lagoons have nothing to do with each other!
Posted by Ron Saldanha, Dubai, UAE on 15 December 2008 at 15:03 UAE time
Correct me if i am wrong, Dubai Lagoons and The Lagoons have nothing to do with each other!