Schon Properties investors optimistic after DLD seizure of developer's assets

Last week, the Dubai Land Department seized properties, land plots and funds registered to Schon
By Bernd Debusmann Jr
Thu 09 Aug 2018 10:01 AM

Investors in the UAE and around the world are praising the Dubai Land Department’s decision to seize assets belonging to developer Schon Properties, with many expressing hope that they will receive refunds of money invested into projects that never materialised.

Last week, the real estate authority announced its decision to seize properties and land plots registered to Schon, adding that it also seized funds deposited in the developer’s escrow account while the Dubai Public Prosecution completes “legal procedures to secure the rights of all investors and other parties.”

Hundreds of people – both UAE residents and individuals living abroad – made partial payments of in the AED 7 billion ($1.9 billion) Dubai Lagoon project, which was launched in 2005 and slated for completion in 2008.

Last February, the company said it was transferring parts of the projects to another developer, Xanadu Real Estate, in a bid to speed up development.

In mid-2017, Schon also launched the AED 3.2 billion ($870 million) iSuites project in DIP, where construction was slated to begin in January for a Q4 2020 handover.

Faced with repeated delays and handover deadlines that didn’t materialise, many of the Dubai Lagoon investors filed cases and complaints with the Dubai Land Department and the Real Estate Regulatory Agency.

‘It’s been 12 years’

Among them was Dublin-based Indian national Shakeel Mangalgatti, who told Arabian Business he invested in the Dubai Lagoon project in 2006, when he was told that it would be delivered in “two or three years – not more than that.”

“But nothing happened,” he said. “They didn’t even start construction.”

In a copy of a formal complaint to the government he posted online, Mangalgatti noted that he was asked to pay 55 percent of the price of the property, a total of AED 341,501.

According to Mangalgatti, he made repeated attempts to contact Schon Properties, which was often unresponsive and “difficult to get in touch with.”

At one point, he added, he interacted directly with company president Daniel Schon.

“I got his number, but it was no use,” he said. “I spoke to him and he wasn’t interested.”

Mangalgatti also praised the DLD’s decision to seize Schon Properties assets.

“I hope to get my money back. That would be great,” he said. “It’s been 12 years.”

‘A big step’

Another investor, Omani national Said Al Balushi, said that he invested with Schon in 2017 after attending a sales presentation arranged by company representatives in a Dubai shopping mall.

Al Balushi said that he was asked to pay 20 percent of the price, totalling AED 30,000. When he realised that no progress was being made, Al Balushi said he approached Dubai Courts and the Dubai Land Department, which informed him that the project “might be cancelled.”

The seizure of the company’s assets, Al Balushi added, “is very good news and a big step.

“I hope to get the money refunded, at a minimum,” he noted. “I would also like the people, the management, from Schon Properties to be punished. They misled us.”

‘Asked for a refund’

Cherine Husseini, a French-Lebanese architect who splits her time between Morocco and Senegal, told Arabian Business that she invested 64 percent of her purchase, totalling AED 341,280 – part of an inheritance left by her late father – to Schon in 2015, only to realise the following year “that there were no buildings.”

“I asked the company for explanations. It was always promises and lies,” she said. “In 2017 I asked for a refund, so I signed a repayment contract. But…I did not receive anything.”

Husseini added she wants the UAE’s government “to know that we very much appreciate the consideration it has given us in recent days by seizing the offices of Schon Properties. This is a first step.”

Arabian Business spoke to a number of other investors, many of whom expressed concerns whether they would receive the money they deposited into Schon’s escow account.

The Dubai Land Department has been contacted for comment.

Multiple attempts to contact Schon Properties have gone unanswered.

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Last Updated: Thu 09 Aug 2018 11:00 AM GST

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