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Sun 1 Feb 2009 09:15 PM

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Emaar in talks with contractors

Emaar Properties has confirmed it is in talks with its contractors and consultants to reduce contract costs.

Emaar Properties, the Arab world's largest listed developer, says it is in talks with its contractors and consultants to reduce contract costs after falls in the prices of raw materials.

"Emaar Properties is in discussions with our contractors and consultants regarding the procurement strategy to achieve potential cost savings from the decline in the price of raw materials globally," an Emaar Properties spokesman told Reuters in an e-mailed statement.

"This is part of our strategy to take advantage of opportunities arising due to current global economic conditions and ensuring higher returns for our shareholders."

A global economic slowdown has led to a fall in costs of building materials and prompted Gulf Arab companies to try to reduce construction contract costs.

Dubai's once-booming real estate sector is grinding to a halt as property prices fall, jobs are cut and developers scale back or stop projects. (Reuters)

Masd 10 years ago

But what happens to the end-users that got screwed after summer of 08'? Emaar also sold its properties thru finance to end users on the same grade of speculated prices that the blameworthy speculators were selling in resale market for no reason... So what happens to those hard working end users and thier hard earned money that is now gone, because they put into offplan properties with emaar? Emaar will surely save on constructions costs going forward, but how will it help thousands of entrusted homeowners who will get the short end of the stick. Because very soon they will up against, huge negative equity mortgages. Btw, I think if Dubai "CRISIS COMMITTEE" doesnt think about a solution to this fast enough, we may be getting in a big mortgage default scenario come summer, because i doubt the hard earning expatriates will want to ride thru 1+ miillion dirhams of negative equity, and as well gettting hit by huge interest rates. I think people will start leaving voluntarily leaving behind defaulted mortagages... Especially because there is consumer protection, nor is anyone going to stand up against Emaar to come clean on the prices they were selling there properties between June - October 08'. They should refund the unnecessary prememiums and renegotiate the prices with the buyers. Infact I would urge the banks that have mortgaged on deals to negotiate on REAL prices with Emaar on those transactions.

paul 10 years ago

I am still amazed at the cheek of all those people who bought property at the peak of the bubble and are now whining about getting money back and needing 'help' from Emaar or whoever. No one forced you to buy at that price. They offered the property at that price, you accepted. Let's say your little gamble had paid off and the property had risen in value by 50% now. Would you be happy if Emaar came to you and asked for more money because their costs had risen more than they though?

Peter 10 years ago

Yes, the buyer should beware, but surely with all the mis-information about the never say die Dubai property boom of last summer in the media spouted by the developers, some investors might well have been duped. The term "affinity fraud" has surfaced again as thousands of Jewish investors lost their shekels to one of their own, Bernard Madoff. Has something similar happened in the Gulf?

Peter 10 years ago

Yes, the buyer should beware, but surely with all the mis-information about the never say die Dubai property boom of last summer in the media spouted by the developers, some investors might well have been duped. The term "affinity fraud" has surfaced again as thousands of Jewish investors lost their shekels to one of their own, Bernard Madoff. Has something similar happened in the Gulf?

Masd 10 years ago

Its not about gambling or investing. Iam talking about the end users. In the more developed countries, banks have re-negotiated prices with builders as well as the government has jumped in to buying out negative equity loans. Since here, the builder, the bank and the government are all the same, it should be even easier to implement such to protect and retain the end users, and as well the real investors. What has the builder aka government got to loose with this approach. They are ones claiming 20% drop in prices, and they are ones claiming 30% drop in steel. Then do the math, reduce the SPECULATED prices they sold thier homes on during the last quarter by atleast 10-15%. This way everyone wins. The builder, the government and banks, because the end users and investors will stay. Banks wont have default on these loans. And the government will not have to deal with people leaving, and inturn help the local economy. But then maybe my wishful thinking is going over the heads of the SAME PEOPLE who thought Dubai market was never going to crash...

K 10 years ago

Emaar Owners should renegotiate their maintenance prices with emaar as well. In some of their buildings in Downtown Burj Dubai, they are charging a wopping 38 DHs per sqft as a maintenance fee, while everyone else is between 12 to 19 Dhs per sq ft!!!!! Emaar should act responsibly and should re-adjust their charges.

mohamad 10 years ago

Well this is very interesting to know. Instead of starting construction or cancelling projects and returning the money to investors, Emaar is re-negotiating contracts for projects that were sold at the peak prices to investors (more than 50% more than current prices) in order to reduce costs. If Emaar has the right to re-negotiate contract prices why is it that the investors dont have this right. Emaar launched projects sold and signed contracts with investors and then signed contracts with contractors. I think any reduction in cost should be carried forward to the investors. Otherwise the ever fading trust in the real estate market will fade forever.

Manzoor 10 years ago

i am 100% agree with what Mr. Mohammad has suggested and personally thanks for such a good article, i think if Emaar have the right to renogotiate why shouldnt have the investors, afterall it were the investors who took the dubai property from bottom to sky, where is RERA, LAND DEPARTMENT ETC, who,s job is to protect the interest of investors, i am sure they must have some plans.

MikeH 10 years ago

Honestly, I am staggered by some of the comments on Dubai's property prices. I've been here more than four years and have never been tempted to buy even as my friends were sucked in. It always seemed to me that it was a classic pyramid selling scheme. In other words the fantasy continued as long as there were sufficient mugs coming in at the bottom and buying off-plan to keep the pyramid building. So, today, those buying off plan have been caught cold and no amount of stories trying to talk up the market will change the situation. The market is going to continue to fall until prices reach a level which are attractive to the end user. Still a long way to go, I think. Good luck to those who have bought - you won't know what your flat or villa is really worth until you try to sell it.