By Ed Attwood
Clyde & Co associate warns investors not to rush to court, but to accept revised offers.
Property investors should accept revised offers from developers rather than hang on for original real estate projects to make progress, a leading local lawyer has said.
“My advice to them would be that if a developer is offering them revised payment terms or an alternative property in another development that’s in a more advanced stage of completion – take it,” Richard Bell, an associate with Clyde & Co, told
“Because you’ll either get a property, or if you don’t, you are in no worse a position than you are now.”
If investors rush straight to court, there is no guarantee of success and investors will incur heavy legal fees, Bell added. He also expressed his belief that if work on the development is still proceeding, the odds of winning a court case are against the investor.
“The purchaser also needs to bear in mind that if they are given what on its face is a reasonable settlement proposal and they reject it, that could count against them in any proceeding that they bring in court,” the Clyde & Co lawyer stated.
“The other thing they can do is contact the Land Department…it can be tough and frustrating to deal with the Land Department, but if you keep at it, something may be able to be done.”
But Bell also pointed out that the current market situation was difficult for both developers and investors equally. “I make no bones about it; it’s tough for purchasers, and it’s tough for both sides of the development project,” he said.
“But at the end of the day, there’s no easy solution; you have to make the best of a difficult situation. If you can possibly negotiate with developers, do so.”
This is, sadly, probably the best advice we will get on property investment for now, because so many developers are in deep trouble. However, there should be some mechanism to handle arbitration between investors and developers, to ensure transparency and fair trade. Being palmed off with a property one didn't choose is not an ideal situation, and determining what a fair revised payment structure is has to be handled above the parapet.
Is this a vegetable market? Were people buying potatoes and apples? Well this advice surely belittles the investment people made. We are talking about millions of dirhams, people's houses and their life savings... an advice to "just take what you can get" is definitely scary for any future investor that might be looking at this, making him think that this is not the kind of contracts he wants to sign in the future...
I purchased an one bedroom flat from AL ATTAR (Ahmad Abdul Rahim Al Attar Properties ) in international city TORENTO TWOR in 2005 for DHS 300000 , so far nothing has happend , now AL ATTAR saing that you chang it to Vue Du Lac Tower in JLT for 700000 , is it fair? They are abusing the rules .
Its time that land department should file a case against Clyde & Co lawyer stated for the above remarks. Its an government based organization. atleast they will be careful in future if they disgrace like this.
Sound advice from Clyde and co even if it isn't what we want to hear. I have little sympathy for the developers currently. Most investors have paid large amounts of money for their properties up front and what do these people have to fall back on, not alot in the meantime. I am waiting for an apartment to be completed, so far it is 12 months behind schedule and I know it is going to be delayed longer than that from monitoring current progress. Have I been offered any form of compensation for such a long delay? NO, instead i received a revised contract trying to revoke any delay clauses from the original one and trying to force me into signing to say the change in the law relating to the construction related payment plan meant i defaulted on my original payment plan! There is currently very little legal regulation, legislation or protection for investors suffering from delays and no current way to penalise developers for late delivery. The developers have money upfront and if they are currently struggling it is down to their own over ambitious, bad financial planning using purchasers funds to buy new plots for further projects in the hope the boom would continue. Taking too many projects on is not the investors fault so how can I have sympathy with the developer when they have just over stretched their financial capability funding future projects using buyers hard earned cash. As the developers have most peoples money upfront what should be stopping them from completing the projects???? I am really interested to hear some genuine reasoning here but suspect I won't get any...I appreciate some developers are suffering buyer defaults but I suspect this isnt the main reason for delays occuring. I have paid over 70% for my apartment and yet it is only at the 2nd floor stage, it should have been completed by the end of 2009 but a 9 month delay was handed out, they then should have completed the 4th floor by december but it is now march and currently the 2nd floor isnt even finished. I wanted this apartment to live in, what do i do now?? Who pays my rent in the meantime, me, more money down the drain.....who suffers from this, not the developer as for some unknown reason RERA sees fit to not penalise developers for late delivery. I know other people worse off than me and their properties are now almost 2 years delayed, for that 2 year delay they have been offered white goods to compensate, a disgrace given the cost of rent of a temporary villa for that 2 year period has been 10,000dhs plus a month to the investor who is also paying 20,000dhs a month for the mortgage on that unfinished property they can't live in and the developer doesn't care. Why should the investor have to pay out 240,000dhs extra in rent over 2years for the developers delay? Perhaps if the developer was given this amount as a delay penalty they may see fit to get the projects finished on time and use the upfront funds paid by investors for that project- as a matter of reference this person has paid 90% of the purchase cost for this property so it isnt like the developer can really say they havent had enough money towards the build cost. As far as i can see investors are paying financially for developers mistakes...when is RERA going to realise that investor confidence in the off plan market will never return until the investors are given the same protection that developers are. I follow dubai property market closely and it is interesting to note that the off plan market is almost non existant right now....umm I wonder why. While i think RERA have done a good job getting some laws into place they have a long way to go still and need to wake up to the fact that if they want to get the investors back they now need to start protecting them and give them some rights under the law otherwise the off plan market in Dubai is dead in the water.
We invested in a property where the developer from last 6 months is not even willing to accept our appointment for a meeting. where is the choice to accept whatever we can get back. They themselves know there will be no construction on that paid project anymore, because there is no mechanism in this country to support the investors, whether the developer or the individual buyer.
I think if the laws are one sided then the offers from the developers can only be one sided . In todays market the investor is willing and has been willing to take losses and move on , to try and protect their capital (I speak of also those investors who have bought properties not to trade but to live in ) . But the developers dont have that same frame of mind , and also they have no laws forcing them to act in an ethical way they dont want to incure any losses , al losses are for the investor . They have our funds and they dont deliver on the products . Also who is to judge what is an on going concern . If a property was to be delivered in dec 2009 and till date its a hole in the ground ( to put it crudely ) , is that an on going concern . I would say not , but the developer says he is gonna make the project , if you push him he mearly starts some of the work , to win the case and then goes back in to hibernation . If you were to accept they want to build , you are looking at an additional 2/2.5 years , should they not be held accountable . Its not fair to put the developers and investors in the same boat . The investor has parted with their money and the developer has recived the said money . Dubai needs to look after the investors as well as other stake holders , but for the time being they(Investors) dont seem to matter .
@vrmr: filing a case? on which grounds? Stating the obvious? That would certainly help Dubai case and help restore investors' confidence. Certainly attitudes like that will not help, hopefully these kind of suggestions will be ignored if Dubai is to bounce back (and the jury is still out).
There is NO SUPPORT from RERA, which is there to arbitrate issues. RERA is nothing but a conflict of interest - they are supporting their own people mainly. Simple - DON'T BUY PROPERTIES until there are LAWS protecting Investors.
Simply, say "YES" to all. If you look the economic value chain, property business requires customers (investors) who partially finance the development as well provide a profit element for the businesses to be motivated towards development. The fact is that the benefits are reciprocal; businesses want customers and customers want business (investment property). The economic model should support this concept; if one says take what is available, can this industry flourish, and will this situation motivate further entry of investors (customers). Simply, you canâ€™t have business WITHOUT CUSTOMERS. As such, a fair treatment is necessary for both parties As it was the fashion during the property boom; â€œmanipulationâ€ (sell short with profit margin) may not any more. The investors may have to occupy these properties at least until the of the mortgage. By this time, some may reach the age of 65 or lose jobs! It is again the economic model of the country; one sector should support one other and balance the economy