Investors in Palm Jumeirah’s Golden Mile complex will this week serve the developer behind the project with a legal ultimatum to hand over their units or issue them with a refund.
Up to ten investors in the luxury complex plan to issue Souq Residences with legal notice in a bid to force a resolution to a dispute that has been ongoing for more than a year.
The group is caught in a legal feud between Souq Residence, a joint venture between Kuwait's Ifa Hotels and Resorts and a unit of Dubai World, and Palm Jumeirah developer Nakheel that has stalled the handover of their completed, paid-for apartments.
“Most of us purchased these properties back in 2004, we paid for them in full back in August 2009,” investor Martin Lawrence told Arabian Business.
“The properties have been fit to live in since April 2010, but yet we still have no idea when we get the keys if ever.”
Nakheel last year sued Ifa for the return of AED100m in advance payments for the purchase of retail units in the ground floor Golden Mile. The state-backed developer claimed it had cancelled the purchase agreement and should receive a refund.
Ifa disputes the agreement was ever cancelled and has countersued Nakheel in the Dubai World Tribunal for the remainder of the payment, which amounts to around AED1bn.
Despite the completion of Golden Mile’s residential apartments, Ifa has claimed it is unable to release the units to investors as Nakheel has blocked the certificates needed for handover.
In some cases, apartments were scheduled for handover more than a year ago.
The Kuwait company has claimed Force Majeure – a clause that allows it to rescind its contractual obligations in the event of extraordinary circumstances – as justification for its refusal to issue a refund to investors, a claim rejected by homeowners.
“Ifa/SR are claiming Force Majeure and we the investors say that an act of Nakheel is not an Act of God,” said investor Rahul Khanna. “Joint Venture partners fighting at our cost – it’s ridiculous.”
The dispute reflects the ongoing impact of the Gulf-wide real estate crash that saw the cancellation of more than half of planned real estate projects in Dubai. Property prices in the emirate declined more than 60 percent from their 2008-peak amid a global economic crisis that caused lending to dry up and speculative demand to decline.
Hundreds of investors have been hit by stalled construction, delayed projects and cancelled real estate developments.
Golden Mile buyers now say that legal action may be their only way to resolve the situation, after appealing to government departments for help.
“The communication between Ifa, RERA (Real Estate Regulatory Authority) and Dubai Land Department has been simply awful,” Lawrence said. “It sheds a very poor light on Dubai itself. Intervention from a higher authority is what is needed to protect all us innocent victims.”
Ifa and Nakheel both declined to comment while the case is ongoing.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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