Developer of delayed Dubai Lagoon pledges February delivery

Schon Properties ‘full speed’ for handover of first units; project more than two years behind schedule
Developer of delayed Dubai Lagoon pledges February delivery
Handover of the project’s first residential units is slated to begin in February next year
By Shane McGinley
Thu 07 Oct 2010 08:20 AM

Schon Properties, the developer behind the delayed AED3bn ($817m) Dubai Lagoon project, has said handover of the project’s first residential units is slated to begin in February next year.

“We are working at full speed,” Danial Schon, vice president, Schon Properties, told Arabian Business.

Eight buildings in the zone 1 phase of the project are nearing completion, he said. The zone’s eight towers are then scheduled for handover at a rate of two a month and Schon is forecasting that all 442 units will be occupied by July 2011.

The project, which is more than two years behind schedule, comprises seven zones across a 5.7 million sq ft site. Earlier this year, Schon Properties confirmed that zones 5, 6 and 7 in the project – covering 1,708 of the planned 3,826 apartments – had been put on hold, to prioritise the construction of zones 1,2, 3 and 4.

“The entire project, all seven zones, could take up to five years [to deliver] but the first five zones, which is what is sold, those zones will be 2012,” Schon said.

More than 90 percent of Dubai Lagoon’s 2,000 investors defaulted on their payments in the wake of the emirate’s real estate crash, which saw property prices in some areas halve. Relations between Schon Properties and its investors soured, as progress on the site slowed to a crawl.

In April, the developer asked investors to switch to a new construction-linked payment scheme, in a bid to fast-track building on the Dubai Lagoon site.

Buyers of flats in delayed buildings were also invited to swap into apartment blocks with confirmed completion dates.

“We are facing AED3.5 to AED4m a month in overheads on the Dubai Lagoon project… Every day [delayed] that goes by we lose AED100,000 so it is not in our interest to delay,” Schon said.

The RERA-backed payment plan asked investors for an initial 30 percent outlay, followed by a further 10 percent when each of six construction milestones was met. The final 10 percent is handed over on completion.

Jamal Sirhi, of the Dubai Lagoon Investors Committee (DLIC), said the scheme had prompted a “huge” improvement in communications. Schon Properties operates an “open-door policy” he said, adding that investors received daily updates on site progress.

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