By Claire Ferris-Lay
British investor has won several court cases against developer behind stalled Niki Lauda Twin Towers
A British investor has spent more than AED800,000 ($217,800) in legal fees in a bid to reclaim money he invested in two offices in a celebrity-branded real estate project in Dubai.
Ron Oakley, who invested AED1.28m in Niki Lauda Twin Towers, has won several legal cases ordering Alternative Capital Invest (ACI) to pay back his money for both failure to complete and for registering the property in another party’s name, but he has yet to see any money.
“If I had my time again, I wouldn’t have done it. It has cost me nearly AED800,000 so far to take them to court, of which we’ll see nothing,” Oakley told Arabian Business.
“There were two different rulings for each case as each office had a separate case. One ruled in my favour based on a court-appointed expert… finding the building to be only five percent started and abandoned for more than two years."
“The other was ruled in my favour as they had registered it to another party with the Land Department,” he added.
ACI unveiled its plans for three celebrity-branded towers at the height of Dubai’s five-year property boom in 2008, fronted by its CEO Robin Lohmann.
Michael Schumacher Business Avenue, Boris Becker Business Tower and Niki Lauda Twin Towers were to be built in the city’s Business Bay district and include residential, retail and office space. ACI’s website describes the development as “truly fit to be named after a legend”.
All three towers stalled following the collapse of Dubai’s property market in late-2008, which saw speculators flee the market and house prices slump more than 60 percent from their peak.
Court bailiffs and several attempts to attach assets to the German developer have been futile, said Oakley. “Initially the court… sent the bailiffs in because they refused to pay, but the court bailiff couldn’t do anything because they had switched trade licenses."
“Then we went back to the courts and we tried to attach some land [but that didn’t work]. The court then sent around to all of the banks in the country to check whether ACI had any bank accounts with them and they all came back negative…. We are in a catch 22,” he added.
ACI filed for bankruptcy on four of its seven property funds in September 2010, according to German media reports. The firm’s website still lists 11 projects that it says are under development, with another six being undertaken by “third party developers”.
Both Niki Lauder and Boris Becker have distanced themselves from the project. Speaking to Arabian Business last February, Becker said he was unsure whether he was still involved in the project that bears his name.
“I have to think about it, because I believe the deal was three or four years old and I’m not sure whether I’m still involved,” he said. “The name is still on it, but whether I’m personally involved? I don’t think so.”
Ex-Formula One racing driver Niki Lauda told Arabian Business last year that he hadn’t heard from the developer since the launch of the project in December 2007. “Who is he? No, I only met him once, when I was there in the beginning and I haven’t heard from him since then,” he said.
Moral of the story : dont buy property in UAE. Buy in the UK, at least you are fully protected by the law.
Red Snappa, the advice resulting from this deplorable story is simple NEVER BUY OFF-PLAN AGAIN and make sure that you establish the off-plan price as would have been and buy any completed property at that price, because that is all it's worth as the market is almost starting from scratch again.
Do not deviate from that offer price, unless the owner occupier has made significant improvements plus you get to talk to the owner not just the agent, then calculate the rough cost of the enhancements and add that to your off-plan price offer.
Once you have your completed property at the off-plan price, use a third party escrow or conveyancing service or lawyer, they exist in Dubai, that will hold all monies until all contractual matters, title transfer etc have been concluded; i.e don't hand over a fil until the transaction watertight.
Or if you have been too badly burned to ever trust the system again, then buy in London, I hear that's where most savvy investors are going these days.
Unfortunately stories like this will further damage the UAE real estate sector. A case like this would be a problem in any part of the world, but even more so in the UAE, where the legal system is not fit to deal with gangsters such as ACI. In order to protect the end user and the investor, the developers must be closely monitored by the authorities before letting them start a new project. The UAE he's been in a learning process for the past 10 years, but now action needs to follow all the words by the authorities.
Good Advice, Red Snappa.
Buying property off-plan in Dubai today would certainly be crazy beyond belief. (Cannot imagine why Nakheel are trying to re-launch exactly that on the Palm, just as they are destroying their worldwide reputation with terrible treatment of so many of their tenants).
As for buying completed properties in Dubai, that may be slightly less risky, but you could still end up with a situation like the Palm Shoreline Apartments where the common areas (Beach, Gyms, Playgrounds, grass areas) were contractually owned by all the residents, but just Nahkeel wakes up one day and claims Nakheel now owns the common areas and charges arbitary fees and constant bureacracy to residents to get to use them.
My strong advice in the current legal and regulatory environment in Dubai is to RENT only. If you take out the service charges paid by the landlords, the rents are lower than Dubai mortgage interest, so you are winning + no capital risk.
I congratulate Ron Oakley on having the courage to tell his story, and also for having pursued the developers who ripped him off. Good luck Ron.
Back in those Dubai boom years, any of us could have potentially got caught in such a situation. Obviously now we all know not to buy off plan from anyone (especially Nakheel) but people were more trusting in those days.
Bravo to Arabian Business for running stories such as this. There is a whole generation of new investors coming into Dubai from Africa, China, India etc who have not seen the terrible things that have gone on, and we should all try to warn them not to get into the same messes. I was recently in Nigeria, and there unscrupulous agents are promoting Dubai as a sure bet, with 20-30% returns on properties etc etc, to unsuspecting investors. And Dubai does look spectacular when you first see it, and you believe anything can be possible.
I agree with the commenter below, renting in Dubai is the answer.
How can you avoid justice by merely switching trade licenses?
Why is it not possible for the Courts to attach assets such as Dubai Star currently under construction at JLT?
How can RERA endorse the Dubai Star project when it is developed by ACI? Does that not make RERA an indirect supporter of industry malpractice?
ACI is still trading and should be held responsible. They apparently fight investors in Court only to evade once evicted.
There is a fundamental failure in the system and the authorities need to step in and deal with it, right now ACI is taking full advantage of the flaws.
My story is the same as this investor. i invested 2,750,000 AED on ACI project "Feretti towers. i won all the dubai court cases and still no refund.
I am one of the burnt investors, investing over AED one million in ACI Victory Bay. ACI has not started the construction and I am sure they are not in a position to do so. Victory Bay's land is a valuable piece of land in Business Bay close to Sh. Zayed Road and I am sure it can be sold and the investors could at least get back some of their investments. But how ? Who is going to force them to do so ? It seems that nobody including RERA is prepared to take even one step towards assisting investors and solving these issues. RERA seems to be more interested in supporting the developers rather than the individual investors who invested all or most of their savings in Dubai real estate market.
Investors of Dubai. Do you believe the justice is working for you?
It is unfortunate for this guy to spent AED 800,000 in legal fees. Justice must be affordable, specially in such clear cases. If not, then it only encourages crooks and criminal to setup base in Dubai, as they would reckon most people falling pray to them won't fight back due to high legal cost, lengthy and complicated court system, and low chance of recovery.
Huge price has been paid by Dubai and it's investors. I sincerely hope everyone have learned something and make sure never such things happen again.