By Ed Attwood
Developers will have to compromise with investors in 2010 - Jones Lang LaSalle.
Real estate developers in the UAE are going to have to negotiate creatively with investors during 2010 to avoid a rise in defaults, a local expert has warned.
“Clearly, there will be more investors who have decided not to pay for things that are never going to get delivered and if I was in that boat I would probably default as well,” Craig Plumb, head of research, Middle East and North Africa, at Jones Lang LaSalle told Arabian Business on the sidelines of an event on Monday.
“What’s happening is that owners and developers are going back to those investors and coming up with different options.”
Plumb added that due to the lack of established regulations, and the expense of the legal option, negotiation is often the only course of action. He confirmed that Union Properties, Nakheel and Emaar are all pursuing this route.
“Developers can offer a unit in a finished building instead of one in a building that will never be built,” the executive added.
“So if a developer has ten projects, and only ten percent of them are sold, they can put all of that ten percent of payments into one project and leave the other nine until demand returns.”
Plumb was speaking at Jones Lang LaSalle’s ‘Top 10 for 2010’ assessment of the trends in the UAE real estate market.
During the event, regional managing director Blair Hagkull told reporters that he expected that prices would remain flat during 2010, with a margin of five percent either way.
However, he added that outlying areas that don’t have the amenities or proximity to services of locations like Sheikh Zayed Road and Downtown Dubai could see prices drop by between fifteen and twenty percent.
What Mr. Plumb is saying is absolutely correct . To take it a little further ,we are a group of 13 investors in a Project called Verde in Maritime City ,nothing is moving ,the money is in Escrow account and the developer ETA says ,that neither they can change the money from one project to another ,neither they can do anything ,as the Maritime Authority is not cancelling their plot. If the Master developer is forcing the developer to go ahead with projects ,which are at the moment unworkable ,how the developer can negotiate. We are in dilemma.
Good initiative by Mr Plumb So far not much has been done by developers.Compromise is the best solution at this moment.This way developers can maintain their reputation as well things will not be stagnant.They have to act fast and discuss the issues with the investor on case by case and resolve the matters mutually by absorbing the losses for a better tomorrow.This way they will succeed in overcoming the present negative image of Dubai property market.As suggested by the originator of this article,consolidate the projects and make use of already paid amounts into the completed projects available with them ,evaluate the present paying capacity of the investor by offering a down graded property,make good use of the cash available with the investor which he is blocking due to uncertainty in the market or investing in other safe options.The incomplete projects are spoiling the beauty of the city and depicts an ugly scar on the already developed locality.I wish if the organisations had engaged the services of highly capable financial advisors and not fallen in the hands of greedy and selfish motives for their own benefits ,then the present crisis could have been avoided.
To date, ACW Holding donâ€™t have plot for platinum 2 project, and they sold out full project to investors in July-2008. Where the investor default and why investor will keep paying money if the project is nowhere exist on this earth. ACW showed project drawings and location to investor which they never had. I paid 2 installments and I stop, instead I received cancellation notice from ACW. I request to RERA Dubai government to look at this matter seriously and return money to our families.
Let's see if something happens so far investors have been disappointed and taken for a ride. Why should any investor be held to ransom by any developer who thinks they can offer an off plan projects claiming it to be safe, claim monies paid would be held in an escrow account, claim it will be completed by a certain date and that doesn't happen nor was it their intention of completing the project by a the date as different contracts had different completion dates. Yet the investor has paid the majority of their installments (above the recommended regulation that RERA introduced of 20 percent and there is nothing to show for it but holes in the sand. Why is it that certain laws are enacted after the fact in favour of the developer. Why can't the investor demand their monies be returned if a project has not materialised and the developer has breached in all aspects the contract including non delivery of a service to the investor. Why is the Dubai Govt allowing all this to happen and not doing anything to protect their reputation or that of Dubai's when investor confidence has totally diminished because of all of this. Like many have already said it will take a very long time for Dubai to recover and it will take those who have been bitten once to be very shy to be bitten twice. Like they say fool me once, shame on you, fool me twice, shame on me...the latter will never happen to those who have been fooled and they are the ones that will continue to fight for justice.
Let there be freedom of speech - allow the investors to speak out and tell the world what is happening to them - negotiate or face default - it's about time the developers were made accountable for what they have done to every investor in respect to projects. These projects have been solely funded by investors and this is the way that investors have been treated to date by developers not coming clean with their promises of completing what they have taken monies for. Seriously how are all the other developers going to come up with the goods when you have 3 developers facing the same problems mentioned in this article - seriously listen to the investors and not these people who wear the ties and suits making claims of negotiations - show us the money then we can make up our own minds if we want to stay or we want to go but give us that option after so many years of frustration!!!
I put down a 30% deposit in August 2008 with Bangash Properties my apartment should have been finished July 2010. I know understand this project will not go ahead, I thought I was safe with my deposit held with Escrow, but now have so spend money on taking Bangash to Court. Is this fair. Who in their right mind will be investing in dubai in the future????
I think we as investors need to make a stand and move our money to another place. Where our investment is safer and the developers have scruples. I have invested in the UAE, Iran, Philippines and Malaysia. I have to say that Malaysia has been the best in every respect, and the UAE the worst. On delivery time, build quality, after sales service, delivery of amenities promised, maintenance fees, up keep, etc, UAE looses. We will not invest here any more.
yes i agree to the comments of mr. mirza baig. i have invested in emaar and paid 40% till now. the site is dead and no construction is in progress.i have contacted emaar to get my contract cancelled after they deduct the 25% of the property value as mentioned in law no 9 of rera court, but there is no progress. pls help for the recovery as i know for sure the project is shelved for indefinate period.
so you went to the cout did u recive your money because i have the same problem thanks