By John Irish
Developer's move to help customers amid liquidity constraints in banking sector.
Emaar Properties said on Friday it had started extending the time period for customers to repay mortgages as liquidity constraints in the local banking sector had made it harder for customers to secure home finance.
Issam Galadari, Emaar Dubai chief executive and managing director of the group's international operations, said the Arab world's largest developer by market value was also planning to launch two projects in Dubai next year worth at least $5 billion each, although it would monitor market conditions.
"The credit crisis has affected everybody ...We have extended the time for them (clients) to pay their money," Galadari said on the sidelines of a World Economic Forum meeting.
"We introduced this about a week, 10 days ago."
Galadari said Emaar would keep this policy for a "while" until people found it easier to secure funding.
"We have to rely on these (financial) institutions ... they are financing our customers and we have pre-sales," he said.
Galadari said the group was "watching the market", but had yet to cancel or put back any projects.
"There are a lot of projects on the drawing board ... there are two in different areas in Dubai for next year," he said.
"We are working on these, but it will depend on the market." (Reuters)
This move by Emaar to delay mortgage payment deadlines is a move meant to protect Emaar and has NOTHING to do with the people who bought their properties...let me explain. First, whoever put a down payment on an Emaar property without doing their home work to find out requirements to obtain a mortgage, loan to value loan ratios, etc. is either a speculator who thought they could quickly flip the property for a quick profit or a moron. This move by Emaar may prevent some of the panic selling that is going on at other developments like Palm Jebel Ali. This is Emaar's goal. I am receiving at least 5 e-mails a day from real estate agents who have properties available at either no premium or up to 5% below purchase price.....why? Because payments are coming due and the current owners have not found anyone to buy their properties. Emaar does not want to see this type of panic selling with their properties. By telling their clients that their next payments are delayed it allows buyers more time to secure morgages or more time to find buyers for the properties. If Emaar buyers start to panic and lower their premiums or worse, lower their prices below the purchase prices, this could start a big sell-off of Emaar properties. Neither Emaar nor Dubai needs this to happen. Emaar is going to do what is good for Emaar no matter how they portray their moves to the market.
I just requested a payment extension from EMAAR and they explicitly REJECTED my request. They said my project did not qualify ('M' BURJ DUBAI). DO NOT ASSUME YOU WILL GET AN EXTENSION because its not true. Emaar said to me that they are under NO OBLIGATION to refund any monies according to the LAW 13. Beware.
Our case was that amongst friends, in order to spread the risk we had purchased 4 few properties. We were insistent on buying from EMAAR, due to its reputation and high standard of delivered products especially in Downtown Burj Dubai. We had intended to skin our accounts to pay as much as we can and when the time is right proceed with individual mortgage loans. However, the subprime meltdown changed all our scheduled propositions and left us in the dark alley with no respite. We do not have any money to pay the next instalments. We are at the risk of losing all our hard earned money. We decided to bring this to our developerâ€™s notice, since they were already launching the PTO & RTO schemes. My friend and I visited the EMAAR sales office in Downtown, which resembled a ghost town, a sense of feeling more like living amongst the dead. Not a single customer on sight. EMAARâ€™s cost cutting on hospitality was quite evident from the vanishing act of the waitress who used to previously impromptu serve Tea & Coffee. We were served a coffee after an hours waiting whilst the customer service representative whom we have signed on an appointment were up to some odd work like booking down-gradable apartments giving the current availability chart over the phone. On approaching him, he advised us to consult Customer Care centre at Yansoon 9 who can help us in making a decision on how to save our money without us or EMAAR losing. Customer Care centre had plenty of investors in the queue, waiting for their turn to meet the EMAAR representative. Soon our turn came and we were led to the customer care representative, who went on like tape recorded message and did not encourage any questions in between. We could easily empathise with his frustration in having to deal with hundreds of customers with similar requests. He explained to us first the option of downgrading the apartment to a sizeable standard, which can assist us getting mortgage easier. We explained to him that this was not an option at all, for the fact that even then we cannot get banks to mortgage the balance outstanding due to their current policies of mortgagee lending. He listened carefully and gave the second option, to extend the repayment schedule by three months. We couldnâ€™t find much sense in that too, since we are not expecting nay windfall of money to fall into our laps after 3 months other than bank mortgages. The added catch to this proposal is that the investor has to pay penalty on this agreed payment schedule postponement. Is this a bail-out offer for investors? We proposed to club all our payments and go for one property fully paid up, where EMMAR will not lose and the customer is also happy in having secured his money. The CC executive did not even want to consider such an option and found ways and means to negate our requests. We had even expressed that we would provide all legal documents for this subject consolidation, which was again turned down by the CC representative. The shocking part is that our conversation ended in his statement, that we will then have to lose the money we have put in, if the above 2 options were not acceptable. How much will we lose? Over a whopping AED 3.55 million will go down the drain. Is their no law or order in this country to give justice to salaried people like us?