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Thu 16 Jul 2009 04:03 PM

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EXCLUSIVE: Damac accused over selling flats on UN site in Dubai

Lawyer says the developer knowingly sold units on land occupied by United Nations.

EXCLUSIVE: Damac accused over selling flats on UN site in Dubai
UN SITE: The UN has a considerable presence in Business Bay in Dubai. (Getty Images)

A UK lawyer has accused Dubai property group Damac of selling off-plan units on a plot which it knew was occupied by the United Nations (UN).  

The UN has a considerable presence in Business Bay - and occupies the site where Damac plans to build two residential projects: La Residence and La Residence 2 at the Lotus.

The projects were launched in late 2006 and early 2007.

Retired lawyer Jeff Kershaw, who lived in Dubai for 11 years but is now based in the UK, is preparing legal action against the private developer over the dispute.

His UK-based client, who is one third of the way into the payment plan - having paid installments worth AED420,000 on the property worth AED1.39m - is demanding a refund, which the developer is so far refusing.

“I want to know whether Damac recklessly forged ahead to sell off-plan units on a site which they knew they couldn’t build on,” Kershaw told Arabian Business.

“My client paid his money in 2007 in good faith but in his case Damac claim they are unable to start building as the United Nations have a tenancy agreement over the land or part of it,” he added.

“They did not in our meeting offer this information immediately and only yielded it under pressure.”

Damac on Thursday was at a loss to explain when the plot would be handed over by the master developer Dubai Properties and when construction would start at Lotus.  

In a statement a Damac spokesman said: “Damac Properties is unable to commence works at this time at the Lotus plot. This is due to the relocation of the existing occupant at the site. Until such time as a plot is handed over to Damac, construction cannot commence.

“When timeframes are discussed with customers, all indicated timelines are from the date the plot is handed to Damac for commencement of construction. This project will be completed within 36 months from handover of land,” the spokesman added.

Damac owns the land at the Lotus development site.

La Residence is a planned 58-storey tower, while La Residence 2 will be 64 stories high. In February 2007, Damac said 83 percent of La Residence had been sold.

Damac Properties is part of conglomerate Damac Holdings.  

The UN has a number of agencies based in Business Bay such as UNOPS (the United Nations Offers for Projects Services). UNOPS is a member of the International Humanitarian City (IHC), a Dubai free zone.

A spokesman for IHC was unavailable for comment.

Arabian Business: why we're going behind a paywall

The Councillor 11 years ago

This should be a bread and butter issue for RERA to step in, review, and enforce a decision on all parties in line with the laws of the land. HH Sheikh Mohammed should personally be involved if RERA cannot come up with goods, which in my opinion, will prove to be the case. With the UN involved nothing but such a course of action would staisfy the world. This is a chance for RERA to show the world that investing in Dubai is sound and Dubai has regulatory laws which can protect all parties in line with international best practise. I will watch with interest.

Juergen 11 years ago

Well done Jeff. Take off the mask of the so called biggest private developer in Dubai. (Insider: My wife can tell stories as well)

Hydee 11 years ago

As an Ex-employee I can comfortably state that the company had asked all its salesforce to mention that incase a prospective client asks us about the plot site we have to mention that UN would be moving out of the site soon and that the Master Developer which is Dubai properties would get the land immediately for the company for construction. Deep inside I knew the company was fudging. Hope the investors get the money back

Mohammad Ali 11 years ago

If purchaser is at payment default, the developer can can retain more than 30% amount. If the purchaser met all payment obligations, and developer is at default i.e. not started construction though first installment collected more than 2 years ago. The purchaser has paid a total of 50% (in 9 installments) and balance 50% is due on completion which is not going to happen. In this case, what compensation is developer liable to pay? Can any one advise ?

The Arbitrator Group UK 11 years ago

At long last this big cover up will now surface out which RERA has known for some time but has silently corroborated with Damac. It is time now that RERA Cancells this project with the other 27 anticipated project cancellations which we have been waiting for since June. I bet that Rera and Damac will conjure up a plan and announce a change in Law to suite their plans and seek to retain part of the payment which Investors have made. RERA as usual will advise investors to take Damac to court as a ploy for delaying tactics. People are fed up with RERA sitting like a Lame Duck to suite its end however they have to seriously look at the outside word's opinion that they have no clout. Damac have still no idea when the Land will be handed to them, and based on their performance I do not see that the project will be completed by 2015 at the earliest. This will make interesting news by then that the project will almost be 10 years old since its launch. The off plan payments made by investors will have doubled by earning interest etc and also by this time many investors would have lost 15% of their life span for the project they may have considered their home! Damac have launched projects in UK with frivioulous banquets, howevever they have lost all faith from UK investors. and next time they are in UK they will be pelted with eggs! Lets see what happens now as the Lotus is now at the Lime Light!

The Don 11 years ago

What a mess created in Dubai during the real state bubble build up.

Delhifriend10 11 years ago

Dear Moh...we are also in a similar situation for Living Legend project where the company had collected @ 35% from all of us andfor almost 2 years + didn't startthe project and n0w when they hv done it it still looks like a sham...and most importantly they have started conswtruction for Villas only,,,no construction for Apartments.........legally..tried with RERA.they refuse to talk the minute you talk about a refund

Paolo L 11 years ago

and there is the truth of Dubai. It's not about one company, it's about the poor legal status and awful diligence of companies and gouvernment entities. Big projects based on no experience of planning and management . Investors can forget their money. Promises will not be kept because locals are holding their and others money tight.

Peter Peter 11 years ago

Deeyar have collected money from us for apartments in Jebel Ali for which they have not yet acquired the land. So it is not just DAMAC who is guilty of this kind of behavior. I would like to appeal to HH Sheikh Mohammed to intervene personally and release the money of innocent expat investors who believed in his vision and his dream and put their hard earned money into Dubai. Most of our money is sitting in Escrow accounts and it would be better if we can invest it in other completed properties which can then become humming communities instead of just empty shells. Unless something is done Dubai will be more widely known for the pain and deprivation of its expat population than for the beautiful and throbbing city that H.H. envisioned. Your Highness , PLEASE DO SOMETHING .

GWhiz 11 years ago

There now needs to be a time for reflection for Dubai. Investors money has obviously been blatantly used by the unscrupulous for careless projects without thought or mind of HH's vision for Dubai. It is all very well to claim that no money can be returned as both sides went in with their eyes open, if money was made from these projects then we would have nothing to discuss except crowing how wonderful the huge construction site, that Dubai has become, can only increase. NOW is the time to stop, think about the infrastructure and decide where we go from here. Rest Dubai, reflect. ' Decisions NEED to be made as to sort out the question of the investors money, which amounts to millions if not more. To address the further question as to who exactly or what business is going to take over the buildings that have already been constructed but lie empty. I do not think that the leadership envisioned one Emirati per tower was quite in their minds! This is not making light of the above situation, this is a situation that needs addressing so seriously that ALL businesses should have an input into the next steps as well as the people and the Government. If projects have been started, then they should be finished, any new ones taken off the plan and money returned. Easy to say I hear, even whimsical by some business "experts", but a pragmatic approach needs to be addressed asap. Visas for residents should be addressed logically. Lifetime, non transferable visas for property owners, so that the owner can then sell the property as and when (NO FLIPPING) and the following owner can be reassured of buying a secure home/investment with their own visa, which will be obtained as they are investing in the country via property. Citizenship should be also addressed, on a points basis as per any other country, investment, property, age, skills experience, family etc etc. Thus this gives the local population a say as to WHO resides in their country and as to what benefits, long term, they will bring to the country. As one can see, so many transient people passing through taking their money or sending it home without helping the GDP of the host country will never work, the host country will be forever reliant on outside help. Dubai needs a rest after ten/twenty years of spectacular growth. Even DEWA cannot cope with the demand that is asked of it, the current buildings in some areas are cracking under the strain. The people whom have commented above perhaps see this as cynical due to their losses, but this is what investors do, some you win some you lose, it is called risk, unfortunately due to the greed of the few, many have been burnt, where all wanted a stake in Dubai. Dubai does not need to sell itself anymore, everyone knows where Dubai is, good or bad, let us hope she stands back and looks at the achievements and the failings with new eyes in this very uncertain world.