Investors in Damac Properties’ Palm Springs project on the Palm Jebel Ali are threatening legal action after the developer cancelled the venture five years after launch.
The project was axed due to changes made to the Palm Jebel Ali masterplan, which meant Damac would suffer a significant loss if it continued with the venture, according to UAE daily Gulf News.
Investors are unhappy with the compensation offered by Damac, which said it would only offer 6% per annum interest on the sum invested, the newspaper said.
The cost of real estate in Dubai surged up to 15% in 2007, according to Egyptian investment bank EFG-Hermes.
Damac has said it will either refund customers’ investment or allow them to transfer their investment to any other project in its portfolio at a discounted price of 15% below current market value.
“Due to redevelopment of the plots, the building forming the Palm Springs development cannot be situated on the re-allocated plot and as a result the Palm Springs project has been cancelled,” Hussain Sajwani, chairman of Damac Holding, said in a statement carried by Gulf News.
The 25-storey Palm Springs project had originally been planned for completion by late 2007, and buyers were already angry over repeated delays, contractual issues and complaints of poor customer service by Damac.
Damac currently has real estate interests worth $30 billion across Dubai, North Africa, Jordan, Lebanon, Qatar and Saudi Arabia.
The developer announced in September that it has launched a total of 79 towers across the region over the last five years, all of which are in various stages of construction.
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