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Mon 7 Feb 2011 09:07 AM

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Fresh delays for troubled $817m Dubai Lagoon project

Promised handover pushed back by five months after utilities delay, says developer

Fresh delays for troubled $817m Dubai Lagoon project
Under construction buildings at Dubai Lagoon site, pictured in October 2010

Dubai Lagoon, the delayed AED3bn ($817m) real estate project, will fail to meet a February deadline for handover of its first residential units, the developer behind the plot has said.

Handover will be pushed back five months to July after delays in utility connections put the project behind schedule, the vice president of Schon Properties told Arabian Business.

“We are a little bit delayed because of infrastructure issues, which we are tackling now,” Danial Schon said.

Essential infrastructure, such as water and electricity substations, had proved slow, but the developer is “in the process of signing contracts,” he said.

Schon in October said eight buildings in the zone 1 of the project were nearing completion and that delivery would begin in February at a rate of two buildings a month.

Schon had previously pledged to work at “full speed” to meet the handover deadline. The development is currently more than four years behind schedule.

 “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 last year.

Dubai Lagoon, which spans seven zones across a 5.7 million sq ft site, was among the dozens of real estate projects in Dubai that facing funding issues following the collapse of the emirate’s property market in 2008.

Hundreds of the project's 2,000 investors defaulted on their payments as construction on the site slowed to a crawl.

In April 2010, Schon 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.

In early 2010, Schon Properties suspended work on zones 5, 6 and 7 – covering 1,708 of the planned 3,826 apartments – to push through 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 last year.

Schon had initially forecast that all 442 units in zone 1 would be occupied by July 2011, but handover is now likely to be completed towards the end of the year.

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