Reassuring investors during disputes is paramount

As if we need a reminder, things are a bit tough in the financial world. The flood of easy credit that financed the construction boom through the pockets of developers and investors has slowed to a trickle as the global credit crunch has tightened its grip.
Reassuring investors during disputes is paramount
By Rob Wagner
Sat 13 Dec 2008 04:00 AM

As if we need a reminder, things are a bit tough in the financial world. The flood of easy credit that financed the construction boom through the pockets of developers and investors has slowed to a trickle as the global credit crunch has tightened its grip.

Developers and contractors are scaling back and canceling or delaying projects across the board as the once heady demand for real estate projects fall victim to the wave of investor panic.

Ouf! That's pretty gloomy.

And it's during these uncertain times that one would hope that established authorities and regulatory bodies are there for support and guidance.

The Government of Dubai has done a sterling job in guaranteeing bank deposits across the Emirate, and government-controlled developer Emaar Properties has been pro-active in attempting to stimulate the stuttering residential sales market.

In fact, rather than behaving like a skittish kitten in a roomful of barking dogs, government agencies in the Emirates have demonstrated remarkable aggressiveness to deal with the problem.

But legal wrangles, such as that what is brewing between prominent developers ACI Real Estate and Define Properties and Dubai's Real Estate Regulatory Agency (Rera), has left a bitter aftertaste in the mouths of would-be investors in the Niki Lauda Twin Towers dispute.

As reported by Construction Week's assistant editor, Jamie Stewart, we have a developer on one hand pointing to a letter that he says allows his firm to withdraw its premium from sales of units in one of its towers at any time - which according to the developer is now.

Yet on the other hand the CEO of Rera - the signatory of the letter as viewed by Construction Week - says the letter only allows the premium to be withdrawn after 60% of funds have been collected.

ACI Real Estate's projects director has taken the valiant step of using our pages to reassure anxious investors that his firm is working towards delivering what they have been waiting a long time for.

We wish them the best of luck, and praise ACI Real Estate for its transparency concerning this sensitive issue.

But the exchange of views persists, and when two prominent organisations in the Dubai real estate market make claims and counter-claims against one another, the investors whose money is at the centre of the argument would do well to pay attention.

And it's a sure bet that unless Dubai's established players can put the disputes aside and start working through this crisis together, attention, and not money, is the only thing that investors will be paying in future because they'll be taking their cash elsewhere.

Rob Wagner is the editor of Construction Week.

RELATED LINK:Taking over Niki Lauda

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