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Tue 24 Jan 2012 10:36 AM

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Investors petition Dubai over unfinished properties

Buyers report threat of fines if they fail to accept handover of homes in incomplete DPG project

Investors petition Dubai over unfinished properties
Dubai’s Remraam Community was slated for completion in 2010

Investors in Dubai’s Remraam
Community have petitioned the emirate’s ruler to intervene in a dispute with
the project’s developer, after they were told they risked fines if they failed
to accept the handover of properties in the unfinished complex.

The Dubai Properties Group
development
was scheduled to complete in June 2010, complete with pools, malls,
landscaping and retail features. But owners said in a petition to the Ruler’s
Court that they were being forced to accept properties without water and
electricity connections.

The document, seen by Arabian
Business and signed by 37 buyers, asked the court to intervene to insist DPG commit
to connecting homes to utilities and developing promised infrastructure.

Buyers have also asked for
compensation for losses incurred during the delay of the handover, such as
interest on mortgage payments.

“We are being forced to take
possession of half-baked apartments and communities in Remraam, which is in the
middle of the desert with no amenities and no DEWA. The electricity is provided
through generators [and water tanks],” a spokesperson for the group told
Arabian Business.

“DPG
needs to commit to the completion of facilities and proper infrastructure.
Non-completion makes Remraam an unlivable community.”

DPG, the company behind the stalled
mega-resort Dubailand, said in emails to buyers that they faced penalties if they
failed to accept the handover of the properties in their existing state.

“We
understand that you may wish to defer your own occupation of the property until
the community has matured and of course this is your right,” said one email.
“However, you are contractually obliged to complete the handover process within
30 days of the completion date.”

Another email, dated Jan 4, said:
“The final date to complete handover formalities, without penalties, is January
16, 2012 so we recommend that you schedule your appointments without further
delay.”

Investors have also been issued with service fees before the
handover of their properties, a charge they are contesting. One couple, yet to
take possession of their property, received a letter requesting AED1,682 in maintenance
charges for the period Jan 5 to March 31, 2012.

“This is total injustice – they can’t just barge over people
like this. This is our hard-earned money,” one investor, who asked not to be
named, told Arabian Business.

“We just want DPG to give us what they showed us on the
brochure – to give us a community that is livable for families so we can get
some return on our investment.”

In a statement to Arabian Business, DPG said the basic
infrastructure for the project was in place, and denied charging homeowners service
fees before their units had been transferred.

The company also highlighted its attempt to help customers
who were struggling financially.

“We have offered a series of initiatives to help our
customers that include but are not limited to; price reductions, unit upgrades,
late payment fee waivers, family consolidations, deferred payment plans etc,”
the statement said.

Ashish 7 years ago

DPG should at least compensate (by way of adjustment in the apartment price,) for the interest paid by the home owners to their finance company for the entire period after the scheduled / promissed hand over date i.e June 30, 2010.

Red Snappa 7 years ago

When it boils down to it they simply need the money, the only answer is to deliver property whatever the status or condition and grab the final payment, the property market just got worse and even further away from recovery because of this. Plus you will see a lot more of this, I can guarantee. Transfer the financial pain on to the Emptor.

As an aside I thought, certification that all was fit to handover a property to the owner was required from the Municipality, DEWA etc? Surely they cannot issue a certificate of fit for purpose if there is no electricity connection. Also how can you perform maintenance without an electrical connection, heavy drilling, just carry a generator at all times so service charge, no district cooling on line!

Remraam frustrated investor 7 years ago

Excellent article depicting the sorry state of Remraam. 198 buildings were planned and sold to investors and after 4 years only 50 buildings in extremely poor state of infrastructure is been forcibly handed to investors.

Following are just tip of the iceberg:
Water Supply Testing and commissioning not carried out
Electricity Testing and commissioning not carried out
Building works are still ongoing in majority of the apartments. Cranes and sand castles at height of 2 storeys are surrounding the apartments
Apartment final finishing are not completed and we have got notices to take handover
No easy Entry and Exit to the community. Nearest grocery is 15 kilometres away
No Landscaping around the buildings or anywhere for that matter
No pathways for pedestrians.
No community center or retail/shopping area. No health club, swimming pool
No construction of grand mosque
No Emergency service like medical center or clinic
No Connection of Telephone line by Etisalat/Du

Remraam frustrated investor 7 years ago

See the below link to DPG's website advertising investors to invest in Remraam. See the glossy ad. We were all misled by this and now in this dire situation.Imagine the plight if investors would invest in the still not constructed units; which for sure will never be constructed.
http://dubaipropertiesgroup.ae/en/properties/Remraam

Even big banks and mortgage institutions like Tamweel. See below link to their ad are offering mortgage for this.
http://www.tamweel.ae/en/Media/Promotions/Remraam.aspx

I just fail to understand how can all this happen in a country like U.A.E. I am sure the high profile government officials are not aware of this and once they are aware they will surely come forward to help us investors.

All we are asking is to make Remraam a livable community.

Siwash 7 years ago

My personal experience has been a disaster and shows how far DPG will go just to receive their money. I was supposed to be handed my apartment by June 2010 as per my SPA. I emailed DPG demanding my money back as the contract stipulated that I could do that after one year from the anticipated completion date. They have responded stating that they have till June 2012 (based upon what I do not know).

amritika 7 years ago

this is not only the story of one project but so many around dubai . I have bought an office unit in Al attar in 2005 december and to date there is nothing ready . the project was supposed to be a 64 storey office tower called sky scraper . To date the project has not moved in its construction target . last i saw 9 months back was a plinth which was not ready , only 5 - 10 construction workers . I have paid 750 k , lost my funds , begged and pleaded them but the developers cares a hoot . Inspite of me taking them to RERA , not a stone has moved . Atleast the DPG guys have got something.I am sure every party or get together the ex pat population speaks of these issues more than how the country is doing .

Investor IN Remraam 7 years ago

DPG had sold in 3 Phases, at 3 different prices, but their construction has been at one cost. That too much lower what they expected. They renegotiated with the contractors, but the investors are still asked to pay dhs 820/ft (which they claim is the best price they can give it at). Though the cost of construction is not more than Dhs400 for low rise buildings of that quality, and the land (in the desert with nothing around) is virtually free. Plot of land in The Villa project available for not more than dhs 120/ft. so this should be even less. Why are DPG asking for 820/ft? And with such delays in construction (while they keep renegotiating while we pay bank interest for delays) why should they not pay for the delays?

After making a commitment, as a developer if they have the right to scale their project, why then as an investor we cannot scale our investment. Or why can't they be penalised for the delay, because a rate reduction is not a penalty to them as they're not making a loss

Anonymous 7 years ago

Ashish, my friend, are you new to Dubai, like just arrived yesterday? If Dubai authorized the compensation of the extra interests paid after the completion date this opening a door which could impact other developers. I have friends who bought at City of Arabia, a monster project launched in 2005. To date one building, Wadi Tower, is under construction. The original completion date was Dec 2008. Many people have mortgages with ADCB with interest not accumulating every month....no, they are paying monthly!! Expected completion now...maybe early 2013...point is, paying interest would be GREAT but I don't think it will happen...

Jag 7 years ago

@Ashish

If DPG were savvy, they would have passed on a small portion of the savings on construction cost to the home buyers and made the price of these apartments at least somewhat in line with current market prices. That way they would have a minimal rate of default, been able to complete the whole project and not earn the ill will of thousands of middle class investors.

Instead they insist on charging double or more of what the property is worth, delivering a half built, rubbish quality project and being exceptionally rude to their customers.

Really, the first thing they should do is fire their heads of customer service and strategy!

Frustrated Remraam Investor 7 years ago

The project is delayed beyond agreed terms in sale Purchase agreement with Mizin / DPG on the other hand, RAK bank continue to charge heavy interest rate under mortgage loan to investors in this project . The current rate of interest charged to the investor is around 2% more as compared to other banks . No wonder RAK BANK earned huge profits and yesterday's Gulf news article clearly states that their net income through interest rates have increased to 23.4%( Dhs 1.98 billion ).Dubai Islamic Bank(http://www.emirates247.com/business/dubai-bank-waives-loan-charges-for-delay-period-2011-03-29-1.374484) have stopped charging interest for the delayed period helping their customers or by not paying mizin for delay.RAK Bank continues purely to earn more interest income. I have personally suffered a lot due to the heavy interest charged Unfortunately,RAK bank has never shown any consideration towards its customer . Regret to have chosen RAK bank for the mortgage loan!