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Fri 21 May 2010 08:39 AM

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Nakheel home buyers seek talks over delayed project

Investors who bought homes on a delayed project are hiring a law firm.

Nakheel home buyers seek talks over delayed project
DUBAI BUILDER: Nakheel has restarted work on some of its projects put on hold as a result of the global economic downturn. (Getty Images)

Investors who bought homes on a delayed project by troubled Dubai developer Nakheel are hiring a law firm to represent them as they seek negotiations with the company, a spokeswoman said on Thursday.

"Nakheel have recently informed owners of further delays of at least five to 10 years," said Aarti Chana, spokeswoman for Palm Jebel Ali Homeowners.

"The owners voiced major concern over the fact that Nakheel's statement has broken key terms in our contract without seeking owners agreement," she said.

A Nakheel spokeswoman declined to comment, when reached by Reuters by telephone.

The builder of the palm shaped island, one of three off Dubai's coast on the Gulf, repaid a $980 million Islamic bond on schedule earlier in May.

Its parent company, state-owned conglomerate Dubai World reached a deal in principle to restructure $23.5 billion in debt with core lenders holding 60 percent of the exposure.

The developer has restarted work on some of its projects put on hold as a result of the global economic downturn, local newspapers have reported.

"Why not Palm Jebel Ali? That is what we want to know," Peter Frayling, UK investor and group board member, told some 60 home buyers assembled at a meeting. "We want them to build today."

"There wasn't much hope for us when we thought Nakheel was going bankrupt but at least now they have some money and they should start our projet."

Among its high-profile projects that have been put on hold or cancelled as a result of the global downturn are a kilometre-high tower and the $789.5 million Trump Tower, a project designed by property magnate Donald Trump.

Frayling said negotiation was the preferred course for the group. "In terms of litigation, we are not at that stage yet."

Investors in the developer's Palm Jebel Ali have been offered options, including staying in the project, swapping the project into near-term projects or getting the cash back after five years without interest, Chama said.

Investors say they are unhappy with the developer's offer of alternative properties, saying that they are unacceptable.

"Alternative properties they are offering us are much more expensive," a UK investor told Reuters, declining to be named. "We don't want our cash back we want Nakheel to build."

Nakheel planned to build 1,300 villas by mid-2008. The project was launched in 2003.

While most investors have paid as much as 30 percent of the total cost of the properties, some have paid up to 50 percent. (Reuters)