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Investor: 'Lagoon problems are far from over'
A Dubai Lagoon investor insisted on Tuesday that there were still a lot of people who felt let down by developer Schon Properties, despite what company bosses claim.
UK-based Sheraz Bhatti told Arabian Business that the Lagoon project was his first sortee into the Dubai property market and his experience had deterred him from making further investments.
He was responding to comments by vice-president Danial Schon on Monday when he said the problems with delays had been "beyond the company's control".
Schon Properties said it has conducted a meeting with all investors and the issue was solved, resulting in most investors choosing not to refund their money.
But Bhatti, who has been refused any refund, said there were still a lot of investors who were angry with the developers.
He told Arabian Business: “Schon had an open forum where investors were invited to attend. Unfortunately, I do not believe any overseas investors would have attended due to the short notice – one day. Most of the attendants were local investors.
“Furthermore, Schon have not communicated the responses to me or other investors,” he said.
Bhatti added that he was not convinced investors left the meeting satisfied “as the refund issue remains outstanding and payment plans are not being revised to link it with construction”.
The developer told Arabian Business on Monday that problems were behind them and the project would now be finished by the second half of 2011.
They added that difficulties including cancelled contracts and work permit freezes were beyond their control.
Schon added that the majority of investors who have been offered refunds because of the delays have chosen to stick with the project.
After long delays and angry protests from disgruntled investors, the developer has agreed to grant refunds to investors who were sold plots in 2005 with a completion date of the end of 2007.
“They [Schon] mentioned this in a forum but I do not think many investors who do not belong to this group are happy about it,” said Bhatti.
“RERA says that all investors are eligible for refund. I am a phase 2 investor and a recent e-mail from Schon says that they are looking into my case, but they have been looking into it for the last three months!”
Bhatti is still hoping to get a refund for the money he’s invested in Dubai Lagoon. All he wants at this stage is to exit the project.
“We investors have been cheated,” he said.
Additionally, Bhatti claimed he had not been informed of any changes in the project’s layout, which Schon explained had to be implemented due to unavoidable road works decided unexpectedly by the government.
“No formal communication from Schon regarding this was made. Schon’s management team does not know how to manage its communication with investors. Communication is almost non-existent,” added Bhatti.
He added that investors continued to pay their installments when construction is yet to commence.
“I, along with many other investors, am dissatisfied but our requests for full refunds have been turned down.
“This is my first investment in Dubai’s real estate, which I hoped would be a very profitable and lucrative proposition. This project is turning out far from that,” he added.
Schon said it had suffered very high costs due to delays. The Dubai Lagoon project, which was initially estimated at a cost of $272 million, has today bumped its value to $598 million.
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Comments 1-6 of 6
Posted by yusuf husein, london, UK on 5 September 2008 at 01:42 UAE time
is the average price per sq ft of residential in Dubai AED1,600 ?
We need as investors to know what the average price per sq ft is , community by community; only then can the supply and demand mechanism begin to work ( I am not sure if its working currently)
Also i think inflating demand for the purposes of re-sales by investors needs to be reviewed by the Minister if we are to avoid cyclical booms and busts ; currently in London we are in the midst of a crisis in property;
Posted by paresh, dubai, dubai on 3 September 2008 at 13:23 UAE time
Yes it does make sense that such a company should be monitored on all the other projects by RERA given that they have probably made tempting promises on their other projects too.
It is I believe a requirement now that all developers have all the permissions including building permits before the off-plan projects are begun to be marketed to the public and once they are marketed, they have 6 months to start building unless the developer has genuine problems which stop them from proceeding.
The concerned investors should insist on RERA doing their due diligence on this matter to ensure their interests are protected.
Posted by Aliyah Butt on 3 September 2008 at 11:59 UAE time
Imran, Please talk sense. If Schon is abiding by the law 100% why would anybody freeze developments? Delays are common, so why are you specifically targeting this delay? Hmm... Makes me wonder which competitor you work for!!! Have you even purchased in this project !?!?! I HIGHLY doubt it. I have purchased in DL at AED 650 per square foot and will not let people like yourself ruin my investment. I am sticking with this project, with BELHASA on board, I am sure I will resell for AED 1,500 per foot by March next year, this is my target. Affordable housing isnt available in Dubai anymore and INTERNATIONAL CITY is more expensive than the prices I have bought at, and I have a waterfront comunity.
As for DL, I am frustrated with the delays as well, but I feel there is light at the end of the tunnel now. The developers are giving refunds, and that in itself is a positive sign, plus a new contract has been signed, plus RERA has stated they are complying fully with law and all money is in escrow, with all this positive NEWS, why you guys purposely try to be negative?
SO if you are honest, prove yourselves as genuine, because no honest investor would bad-mouth their own investment after all these positive news'.
Posted by paresh, dubai, dubai on 3 September 2008 at 08:45 UAE time
I can believe and empathise with the investor concerned that communication is non-existent from the developer for the simple reason that this is the modus operandi with any developer here especially when they have no answers to why their projects are delayed.
The practice of continuing to demand that the investor keeps on paying their dues as per the contract is totally unjust especially when the developer knows that they are not going to be able to deliver on the promised time and the project is going to take another couple of years to complete and handover.
The usual response that the developer comes up with when an investor questions them on the project delays is that the investor has bought cheap and they should be grateful that they bought when they did, given the current prices, ignoring selfishly the investor may have limited resources and could have used the money elsewhere.
Posted by Imran Malik, Dubai, UAE on 3 September 2008 at 07:44 UAE time
I urge Government of Dubai, to freeze all new launches of Schon Properties. Let them complete their first project in Dubai before expanding their empire.I also appeal to people to boycott Schon Properties because Dubai Lagoon investors have suffered we don't want others to suffer.
Posted by aaqib on 3 September 2008 at 01:20 UAE time
The entire refund issue is also just a Schon gimmick played with investors .FYI ,Schon Properties has agreed to refund only the Original Amount (Principal Amount) without any sort of interest or financial compensation even though its their fault .
I knew I would get a refund BUT its utter stupidity to take only the amount invested which will get me nothing worthwhile in Dubai Property nor any proper finanacial gain today when everything has skyrocketed .The value of my money in 2005 when invested with Schon ,has fallen now in 2008 .
In this whole scenario ,its Schon who will always have the upper hand as when they take my apartment for refunds ,they will list it the next day for 200% premium .AND HONESTLY ,I have the hunch that in the end they won't be at a loss because 35% of the project is still not sold .!