By Andy Sambidge
At least two companies take back homes from cash-strapped owners - report.
Developers in Dubai have started to repossess units from investors who have defaulted on payments, it was reported on Thursday.
Bonyan International said it had followed procedures laid down by the Real Estate Regulatory Agency (RERA) to take back units in its Gate 2 project in Jumeirah lake Towers, Emirates Business reported.
Anas Atatreh, vice-chairman, Bonyan Intern-ational Investment Group, told the paper: "We have repossessed some units from investors in our Dubai Gate 2 project in Jumeirah Lake Tower. Currently, we are holding onto these units. We are ready to help the investors, but everybody has to be reasonable."
Cayan Development CEO Kareem Derbas told the paper it had registered with the Land Department to auction off two office units in its Cayan Business Centre after repossessing them.
And South Korea's Bando Construction said it was also looking to take back properties.
Bando, which is developing the U-bora Tower in Business Bay, said about seven investors have not fulfilled their contractual obligations.
"We have approached investors who are in default. Unfortunately, cancellation may be the only way forward in some cases," Ian Powell, business development manager, Bando, told the paper.
I'd say it will be a VERY busy year ahead for the repo men and RERA & the auction houses...maybe thats a new sideline business to start that will thrive here
Most of the developers, in my case, Al Derra developers, are threatening that we shall pay in the balance to full as per the rates agreed for during the peak. The cost presently in DSO is 50% which is Dhs. 500 per sq.ft. They are not ready to adjust even though the construction costs is AED 265 per sq.ft. When asked about buy back, they claim the company policy does not allow so even though they are selling the flats at Dhs. 1,550 per sq.ft. What do we call this? By force or by default? Who bells the cat? RERA is busy on updating web sites. What about Investors?
THIS WILL BE A DISASTER IF DEVELOPERS STARTS TO TAKE BACK UNITS FROM INVESTORS, AS NO ONE QUESTIONS THE DELAYS FROM THE DEVELOPERS WHICH IN SOME CASES ARE MORE THAN TWO YEARS, THUS CREATING HUGE LOSSES TO INVESTORS FROM INTEREST PAYMENTS ON FUNDS PAID TO DEVELOPERS AS WELL LOSS OF RENT OR SALE. DEVELOPERS ONLY STICK WITH THE CONTRACT TERMS AND THE FAMOUS "AS ANTICIPATED BY DEVELOPERS" WHICH IS NEVER ENDING. IN THESE CASES RERA SHOULD ALSO PENALISED THE DEVELOPERS FOR THE DELAYS CAUSED BY THEM AND NOT TO INVESTORS WHO BOUGHT THE PROPERTIES TO PAY BUT DUE DELAYS THEY ARE NOT PAYING AND I AM ONE OF THEM. RERA SHOULD BE MORE FAVORABLE TO INVESTORS THAN DEVELOPERS AS DEVELOPERS HAS TAKEN INVESTORS MONEY WITH FALSE PROMISES AND NEVER ENDING DELAYS. HOPE SOME ONE WILL LOOK INTO THIS PLS.
Already 60 per cent off the curve, property prices are going to be negatively affected by the repossession process, as developers are desperate and will sell at any price to maintain a trickle of cashflow. Pity the investors who are losing their shirts, because they bought in good faith.
Eswar S B wrote: "Most of the developers, in my case, Al Derra developers, are threatening that we shall pay in the balance to full as per the rates agreed for during the peak" Isn't that the point of a contract - you pay the price you agreed? If the market price has fallen since then, that doesn't affect what you agreed back then. You pay what you agreed. Or to put it another way, imagine you'd agreed a price and then the market price doubled? Would you say it was fair that the developer can demand double the amount you'd previously agreed? If you agreed a price that turned out to be way over what the market price later fell to then you made a bad deal. That is the risk you took. Its not the developer's fault that you were silly enough to agree an absurdly inflated price. If you can't pay it, then they've every right to repossess.
If the so-called investors did not have financing for the properties they were buying, they were pure speculators looking to flip properties in few months time and were caught at the end holding the bag. Real estate investors don't buy properties which they could not afford. Flippers who kept bidding prices up by engaging in an irresponsible behavior have to pay the price. Repossession is the right way to go. It is only when auctions clear the supply overhang that we will get the market stabilizing and probably going up again. Until then, no action will only prolong the agony for all.
I have book my appartment for 3 years now and till now no construction has started. it was supposed to be completed in last year but i am stuck with no guidance from either RERA nor the Land Department. I didnt even sign any contract except the booking form which i Paid.
We chose to get sucked in to the Real Estate vortex of Dubai when it was at its peak. Even though, there were voices of sanity, that were appearing every now & then in print media and otherwise, that there is a bubble in the making. Blinded as we were because of our dreams of owning a piece of this wonderland, we invested against our best senses, and wishful thinking, that things will eventually turn out right. And now that the Global turmoil has precipitated a burst all around, we must suffer as everyone else, the pains of all that is happening around us. Its a zero sum game. There are few who made money and others who lost. The ones who made money were seasoned, while the other, naive !
One day the truth will come out and many will shiver realizing the whole scale of implications.
Mart! thanks for your understanding! I think you did'nt get the point. None are extending loans. None financing. Similarly, a lot of working class except you (may be) has put in their savings to get apartments with hopes of continuing in UAE. The jobs were lost. What about the protection on the money they have paid? No construction seen progress. What do you say for that? Can you forward yourself to clear these problems? Can you talk to the banking institutions to do some thing? None needs your suggestion as we know what has been agreed for. The forum is to address what can be done to address these issues and identify what caused. I think you shall better do some research on later part. Hope a person with common sense does not write like this or reply matters wasting time.