By Jason Benham
Suit claims developer's Index Tower should have been completed two years ago.
More than 30 investors have filed a breach of contract case against Dubai developer Union Properties for the non-delivery of homes on one of its projects, a local daily reported on Monday.
The developer's Index Tower project which is under construction in the Dubai International Financial Centre, should have been completed two years ago, the suit claims, according to newspaper Emirates Business.
"The respondents' continuing failure to deliver the units and the failure of the respondent to issue SPA (sale and purchase agreement) in a timely manner is a breach of its contractual obligations," according to documents seen by the paper.
Union Properties' chairman Khalid bin Kalban told Reuters he was unaware of the legal case. "There are complaints of course but management is dealing directly with them," he said. Earlier in March, the firm said it received "negotiable" offers for its Ritz Carlton hotel in Dubai, which the debt-laden firm is hoping to sell for about AED1.5 billion ($408.5 million).
The developer has AED6.5 billion of outstanding debt, of which AED2.8 billion had been rescheduled for payment to 2011 from 2009, with the remainder maturing in the long term.
The firm's shares were off 1.9 percent at AED0.5 a share at 0716 GMT, underperforming Dubai's index which slipped 0.3 percent. (Reuters)
This is same problem with other developers and the issue is more complicated since these developers took payment before escrow account law was established . Any advise
It doesn't matter if the SPAs were signed prior to Escrow accounts. If the developer is late in meeting the construction hand-over date without a valid reason, and depending on the specific wording of your contracts, then they are in breach of the contract. You should then seek legal advice on the best course of action, the likely outcome, and the associated costs.
There were some projects that were delivered in time (Springs/Meadows), so I would not generalize. I completely agree that this is the biggest area of improvement and it actually is investors exploitation. The developers can simply ask for money and punish the investor for delayed payment but investor can't do anyting on delayed delivery. I am not sure if anyone in future will be able to trust any developer of Dubai (Abu Dhabi has opportunity to prove it wrong as they would start delievering now) for timely delivery of project. I wonder if they would have mentioned longer time for completion the payment burden on investor would have been spread on more years and probably would reduce the panic. The supply projections would look even better and evenly spread. I heard of construction linked payment plans, but have not seen any implementation of that. Logically, developers should refund that portion of value which they have taken in excess of degree of completion of project.