Owner of Dubai Developer Damac Hussain Sajwani files case against Egypt corruption ruling

Dubai property developer Damac said on Tuesday it had filed an international arbitration case against Egypt over a land dispute and the conviction of its chairman and owner, Hussain Sajwani.

A Cairo court last week sentenced Sajwani in his absence to jail and ordered him to pay a $40.5 million fine in connection with his 2006 purchase of land at Egypt's Red Sea resort of Gamsha Bay near Hurghada. Sajwani filed the arbitration claim before the International Centre for Settlement of Investment Disputes, based on an Egyptian treaty with the United Arab Emirates that protectsinvestments made by UAE nationals in Egypt, Damac said.
source Reuters ...continue reading

2 prominent UAE businessmen facing corruption charges in Egypt

UAE - Egypt March 2011  source ahramonline Egypt

Six prominent businessmen facing corruption charges in Egypt have offered to make financial reparations totalling some LE2.375bn, with one pledging to return five million square metres of land on the country's northern coast he is alleged to have gained illegally.

The men - Ahmed Ezz, Mounir Ghabbour, Hisham Al-Hathek, Hussein Sajwani, Mohamed Abul-Enein and UAE businessmen Omar Al-Futtaim - made these offers during investigations into their business activities carried out by Ali Hawary, the Attorney General for public fund prosecution.

Former secretary of the National Democratic Party Ahmed Ezz offered to pay LE1bn, representing the value of shares seized by his Suez Steel Company in violation of trading regulations.

UAE businessman Omar Al Futtaim suggested paying LE1bn to cover the difference between the sum he paid for a plot of land in a deal with the former Minster of Housing Ahmed Al-Maghrabi, and the actual market value of the land, which was much higher.

Hussein Sajwani, Chairman of DAMAC Properties, pledged to pay LE150m representing the value of land allocated to him by Zuhair Garana, Egypt's former tourism minister. Hisham Al-Hathek offered to pay LE150m as reparation for his involvement in the same case.

Peter Riddoch Damac Properties CEO resigns

source Arabian Business

Peter Riddoch, CEO of Damac Properties, announced that he will be leaving his job at the Dubai-based developer October 2009.

Riddoch said he arrived at his decision to leave with great difficulty but that it was time for him to move on.

“To leave an organisation that has been a significant part of my life for so many years will not be easy, but I know that the time is right for me to make some changes, focus a bit more on my personal interests and family, and possibly even take on new challenges," Riddoch said in a statement published by UAE daily Gulf News.

Dubai, Damac, CEO, Peter Riddoch

Damac breaking Dreams

The comments shown below are in response to an article published in Construction Week online and show an extrac of what Dubai Real Esate investors think of Damac and the CEO Peter Riddoch:

comment: straks  (Jul 8, 2009)  United Kingdom

no longer to be trusted
Damac have not paid out the correct compensation, FAR FROM IT and regardless of what Damac 'claim the contract says. Also building still not fully complete and verging on dangerous with lifts not working and fire escapes not safe. Incidently another thing you might want to ask Mr Riddoch - it turns out that the apartments were NEVER OVERSIZED IN THE FIRST PLACE so where did the excess area charges come from - TOTAL FRAUD and a diversion so owners were to o busy fighting that cause and not noticing the compensation issue and also too tired to fight that as well. I hope, for Dubai's sake Damac are told to get their 'house in order' by the ruler and we can get the quality of apartment we were promised and expected in Dubai

comment: an annoyed investor (Jul 7, 2009)Dubai United Arab Emirates

Peter riddock damac
Damac are technically insolvent, if they operated in Europe thye would have filed for bankruptcy prior to economic crash

Comment: SANDRAJJACOBS (Jul 2, 2009)STAFFORD UK United Kingdom

SIZE VARIATION IN LAKE VIEW jlt dUBAI
Whilst having being notified by Damac of a refund for the above, can anyone please advise why they are not paying it 4 months on, and still no sign of the refund

Comment: navas (May 23, 2009)uk United Kingdom

Fair coverage?
The reporter should do a follow-up interview with a representative of the disgruntled investors to get fair coverage on both sides. Site photos should also show proof of who is really telling the truth. How about it, Mr. Conrad Egbert???

Comment: Neil Roberts (May 22, 2009)Abu Dhbai United Arab Emirates

DAMAC management and interpol
I have heard that interpol have been contacted about alleged fraudulant sales of DAMAC properties does anyone know if this is true?

Comment: Stay Away from Damac (May 21, 2009) Dubai United Arab Emirates

Stay Away from Damac
Peter Riddoch needs to open his dictionary again and read the definition of 'ETHICS'. This company is totally unethical and I am an unfortunate owner of one of the units in the Lake View tower. My advice to investors: Stay away from Damac.

Comment: Nas001 (May 20, 2009) United Kingdom

Lake View Lies!
I have read all the comments by Peter Riddoch who is very economical with the truth. The reality is that DAMAC bullied me into signing my legal rights away by refusing to hand my keys even when I called the police, they have refused to pay me adequate compensation as per my contract, their building is far from complete despite their blatant lies that Lake View was handed over at end of 2008. Perhaps Mr Riddoch can explain why his company sent letters to ALL investors in MARCH 2009 inviting us to take possession then if he claims Lake View was ready in 2008??? The staff have zero customer service skills and are an extention of theie CEO. What a pathetic disgraceful company. I will never do business with this company.

Comment: Joe (May 18, 2009)Kildare Ireland

Lake View
I think damac are a joke, they try to extract as much money out of people as possible for a bad customer service, bad work, late projects, bullyboy tactics, projects that dont represent what was sold to people. They really bring Dubai's reputation. We wouldnt touch damac again and advise everyone else to run a mile from them

Comment: dont invest in damac (May 18, 2009) motherwell, United Kingdom

lake view
Amy1 is right We have a forum on www.skyscrapercity.com if anyone wants to see the 400+ happy customers!The full building is a joke it looks like something out of a council development ready for demolition. Damac Breaking Dreams...........maybe an idea for a new slogan......

read more also  Palm Springs Damac Investors Group

Dubai, Damac Proeprties, investor, complaints, rera dubai

Damac Dubai - UK TV news invetsigation

Dubai

In a report broadcast Monday night in the UK, Channel 4 News spoke to unhappy British investors with property developer Damac who have yet to see a return on their money in the Dubai market.

While some wanted quick returns, others simply wanted an apartment in the sun - not least David Hunter of Oxfordshire who said he had handed over £60,000, so far, for an apartment at Damac’s Lotus development.

Hunter said a Damac representative told him at the time (February 2007) of purchase that construction on the development had already started.

Three months later Hunter found out otherwise when it emerged that the plot was occupied by a UNICEF building. Hunter not surprisingly said he 'should have been told'.

Citing documents, Channel 4 claimed Damac had been selling developments off-plan without having title to the land in the first place - a practice outlawed by the Dubai Government last August.

Another document, dated from ‘late last year’ alleged that almost one quarter of the firm’s projects had been put on hold.

Meanwhile, a Harrow NW London resident who bought off-plan in the Flamingo Heights development 18 months ago, told the broadcaster he had paid three instalments totalling £70,000.

''I asked them in writing what the current state (of the development) was before I made my investment. I was assured that the foundations had been laid and construction was well under way at the site.''

With the Flamingo Heights development showing no evidence of construction when Channel 4 recently visited it Ludmila Yamalova of Al Sayyah Legal Consultants - to whom Channel 4 took the investor’s complaint - said he may have a case as a statement claiming foundations that had been laid when in fact they hadn’t, could amount to misrepresentation.

Erik Pekarski, former VP Customer Relations at Damac said the line being put out to customers was that 'progress is ongoing, development is ongoing and construction is ongoing’.

Customers would continue to scream and yell at you as they should, because they had been put off for months, he added.

Damac has, in some cases, since offered alternative flats either complete, or near completion. However, many investors Channel 4 spoke to said they wanted their money back but, like the Harrow investor, had been informed by Damac that there is a 'no refund' policy.

When asked about the 'no refund' policy an unnamed former manager at Damac said the company took a tough line. David Hunter meanwhile says he has hired a lawyer.

In a statement to Channel 4 News the company confirmed it didn’t have a refund policy, except within 'the provisions of the regulatory framework'.

It also denied any allegations of wrongdoing and said investors interviewed by the broadcaster were 'not a representative group'. The company added that it had no intention or policy to mislead customers.

Addressing the allegation that the company had claimed foundations had been laid at the Flamingo Heights development when in fact they hadn’t Damac said: ''It is possible to have a rogue element who communicated information which was inaccurate and not endorsed.''

It added that the Flamingo Heights project tender is due to go out shortly.

source of this report Arabian Business




Damac back in the Headlines - Report about stressed investors

Dubai Property Market - Flippers, skippers, runners, survivors battle it out

source PropertyWeekly

‘Flipping’, ‘skipping’ and ‘running’ are relatively new terms in the argot of Dubai’s property market. Many would know about at least one person who has done one of the three ‘disrespectful’ things, and may even be aware of several more via the city’s thriving rumour mill.

The residents who remain also have a new nomenclature for themselves — the ‘survivors’.

New players experiment with speculation

Flipping was hitherto the activity of buying and selling property instantly, and solely for instant profit. Despite the impression that this dangerous game is a thing of yore and was once the exclusive prerogative of high risk takers, it is not, and has attracted new players.

Flipping was once restricted to incomplete properties, but they are now doing it with credit notes. Also, flippers are not necessarily risk takers; some are trying to recover investments gone awry, while others are desperate for much needed cash.

Offloading multiple units

AR is a classic flipper. In December 2007, he owned three apartments — on paper — at various buildings in Dubai Marina. By September 2008, he had sold two for a cumulative profit of Dh1.23 million, despite the fact that both were not ready for occupation.

“I am lucky that I disposed them of before it was time to start paying my mortgages and before the economic downturn,” he says. “If things get bad, I will move into the one I still own, so no money lost. But, many other people who acted impulsively have done badly. I know some really sad stories and consider myself blessed.”

However, despite his narrow escape from steep losses, AR cannot shed his innate instincts. When questioned, he admits that he has purchased a credit note for 60 per cent of its face value, and is looking for a buyer who will take it off him for a profit.

Skippers caved in

Skippers are other risk takers like AR, but who didn’t have the sense, instincts, or gumption to offload their properties when the market soured. When they could not find buyers and saw alarming drops in prices, they caved.

Faced with the prospect of bounced cheques, rising debts and the threat of unemployment, some of these foolhardy investors just upped and left, or skipped.

Skippers are not available for quotes, but TQ who left the country in the first week of February is believed to have invested in no less than six properties across the country. A feat made possible by two facts: he was the creative director of an advertising agency and had a substantial salary, and he dealt with an Islamic bank that allows customers to have multiple mortgages.

Coincidentally, the day he lost his job is also the day he realised that the next set of payments towards his property portfolio totalled Dh246,000, and also, that there were no prospects of serious buyers on the anvil, for any of them.

Forfeiting down payments

His simple solution was to forfeit the nominal down payments he had made on the said properties, and to head back to his native country to sit out the storm. In his case, he paid off his credit cards, cleared his lesser debts, and told his bank that he was giving up his claim on the many apartments he owned.

Trail of debts

Runners, on the other hand, don’t bother doing any of the latter or the formalities associated with relocating from the country. One minute they are in Dubai, revelling in their enviable status as the owners of several properties, and the next minute, they are simply missing from the country, with only the trail of debts proving they lived here. They could now be anywhere.

Finally, those who have heard the horror stories and heaved heavy sighs say they too need a moniker for not falling into any of the above categories.

Ordinary residents who continue to pay rent on their homes, have strongly resisted the urge to invest in property. Those who actually live in the properties they purchased say they are just holding tight.

BJ owns a modest studio flat at The Greens and his brother MJ rents a one-bedroom apartment at Dubai Marina, and by their own admission, they worry about the appalling state of the world, just as much as they are alarmed about their own job security… or the possible lack of it.

According to MJ, their mission is to put away and save as much money as they can every month just so that they are not taken unawares by any unpleasant surprises — be it falling prices, increased rents, unexpected payments or unplanned debts.

“All those people we hear about have titles that classify them into categories. We believe that the rest of us who live in Dubai and eke out an everyday existence without running, skipping or flipping need one too. Just call us the ‘survivors’,” say the brothers.

And they are not being sardonic.

Flippers now deal in credit notes

• Despite the impression that flipping is a thing of yore and was once the exclusive prerogative of high risk takers, it has attracted new players
• Flipping was once restricted to incomplete properties, but they are now doing it with credit notes
• Also, flippers are not necessarily risk takers; some are trying to recover investments gone awry, while others are desperate for much needed cash
• Skippers are other risk takers, but who didn’t have the sense, instincts, or gumption to offload their properties when the market soured
• Runners simply go missing from the country, leaving behind a huge trail of debts

Dubai - The very special Hand Over Blues Made by DAMAC - Developer asks for extra 5 %

Dubai March 2009 Xpress4Me

Owners of the Lake View building at the Jumeirah Lake Towers by Damac Properties are up in arms after the developer asked them to pay an extra five per cent of their property value weeks before the final handover.

Owners of units in the Lake View building at the Jumeirah Lake Towers received a notice from Damac on February 9 stating that the floor space of their unit has been revised and that they have to pay between Dh30,000 and Dh55,000 extra on their final invoice, otherwise they will be charged a penalty or risk losing their property. The handover is this Sunday.


Ali Mohammad, owner of a two-bedroom unit, said Damac has turned down his request to have his apartment measured by a surveyor.

“They said I would have to pay the additional fees by the handover date. Only then would they reimburse me if any discrepancies were found with the measured size of the apartment,” said Mohammad.

Bank executive Salman Jawaid, who bought an apartment in September, said the fee was “unjustified” as the mortgage deal stipulated that “the first payment was to be made on the day of the handover”.

Roger Fleming, who bought a one-bedroom apartment, said he has been asked to pay Dh35,000 for an extra 54 sq ft.

Land fee

Fleming said he was puzzled by the two per cent shown in his invoice as “land fee”. “I contacted Rera (Real Estate Regulatory Authority) and found out the land fee is one per cent and that it should be paid directly to Rera,” he said.

Niall McLoughlin, Damac Senior Vice-President for Corporate Communications, has urged owners to be patient. He said the interpretation of Article Number 12 of Law 13 has yet to be clarified. “We expect Rera to shortly issue by-laws in relation to area variations. Obviously, we will adhere to any regulations issued by Rera.”

At least 100 jobs go at property giant Damac - Real Estate - ArabianBusiness.com

At least 100 jobs go at property giant Damac - Real Estate - ArabianBusiness.com

At least 100 jobs are thought to have been lost at Dubai-based real estate developer Damac Properties as the global financial crisis continues to hit the region.Arabian Business was contacted by people close to staff at the company saying the jobs had been cut during the past two weeks.

Company chiefs refused to comment on specific numbers but it is understood that dozens of employees from across several departments were let go.

In a statement, Damac Properties CEO Peter Riddoch said: "The continuing global slowdown will inevitably lead companies to review their staffing levels and recruitment requirements. "Damac Properties will continue to review its own position in line with the market and aim to ensure that it right sizes/maintains its staffing levels accordingly."

read more
http://www.arabianbusiness.com/537423-at-least-100-jobs-go-at-property-giant-damac

Damac optimistic, despite negative sentiment - Real Estate - ArabianBusiness.com

Damac optimistic, despite negative sentiment - Real Estate - ArabianBusiness.com: "Damac optimistic, despite negative sentiment"

Investors' concerns over the state of the local real estate market are an over-reaction to the recent global financial turbulence, Peter Riddoch, CEO of Dubai-based developer Damac said on Tuesday.

Speaking at real estate expo Cityscape Dubai, Riddoch told Arabian Business the fundamentals of the real estate market in the region are “strong”, despite global financial turmoil.

“This region can’t be totally immune to what’s happening, but I think people are over-reacting to an extent to what is happening. It’s a case of one negative story leading to another negative story.

“Residential and commercial demand in the Gulf sits well ahead of supply, and will continue to do so in the near future. The economy is sound; you only have to look to the new projects being announced - such as Nakheel’s harbour tower - to see the underlying fundamentals in Dubai are still strong.”

Riddoch said Damac had not noticed a slow down in its property sales, despite investors struggling to gain access to credit globally.

“The world picture is not as gloomy as people think and certainly this region is able to recover strongly from it. We see a lot of opportunities in developing nations, such as the Gulf, Africa and the far East.”

Riddoch also dismissed recent media speculation the developer was planning to list on the Dubai Financial Market (DFM) by early 2009.

“It’s not appropriate for me to respond to what is, in fact, nothing more than market speculation. I have no idea where the story originated from.”

Meanwhile, Riddoch said soil-testing is on the verge of starting on the firm’s Palm Jebel Ali plot, which was cancelled then reinstated earlier this year, and he expected the tender for the contract to go out at the end of this year, or early in 2009.

Secret Life of Hussain Ali Habib Sajwani Owner of DAMAC | by Kippreport

Secret Life of Hussain Ali Habib Sajwani Kippreport:



While building Sajwani’s profile, the Kipp Report invited comments from readers. A majority of those who responded claimed to be angry and disappointed employees of the company.
One wrote, “I have been a Damac employee for four years now. … This company is mismanaged and needs to be restructured. There is a surplus of manpower, with no proper job allocations.”
Another said, “I was promised a senior position [with Damac], but when I joined work, I found myself sitting in a stupid corridor, doing a very junior job in a very unhealthy work environment full of problems.”

Sajwani responds: “It takes time for an organization to be perfect and seek 100 percent satisfaction. I can assure you that the HR practices at Damac are evolving on a daily basis and we certainly aim to offer the best to our employees. Job allocations and responsibilities are two of the basic steps in running a business, and I do not think we would have reached where we are today if we were not implementing simple things like this.”

Another respondent commented that the company has seen high turnover of senior staff, with three vice-presidents resigning without completing a year. Though asked, Sajwani did not respond to this allegation.

Meanwhile, in accordance with Sajwani’s free-wheeling style, the company continues to dodge authorities’ efforts to regulate its activity. In Dubai, for instance, the government has been cracking down on fly-by-night freelance agents by requiring that all companies and individuals selling property be registered with the emirate’s Real Estate Regulation Authority (RERA).

Yet when a reporter for a local investigative magazine contacted a Damac property consultant posing as an investor’s cousin, he was offered an agent’s cut worth 3 percent to 5 percent – AED 150,000 ($41,000) to AED 375,000 ($102,000) – depending on the millions roped in. The consultant also emailed a single page “individual agent application form” to complete formalities.
When asked about the legality of such an arrangement, the agent replied: “We will register you at Damac Sharjah to avoid RERA regulation.”

“I have done well in achieving what I have,” Sajwani tells Kipp. “I always had the opportunity – the opportunity for good education, the opportunity to exposure – to take initiatives and do things I believe in. I made mistakes, learned from them and carried on.”
Sajwani remains a public figure that is both respected and despised. One might consider, though, that there is no such thing as bad publicity. There is only publicity.

original published: Kippreport

http://www.kippreport.com/kipp/2008/09/22/secret-life-of-hussain-ali-habib-sajwani/3/

Peter Riddoch, CEO Damac Properties, Pt 3/3 | Face to Face

Peter Riddoch, CEO Damac Properties, Pt 3/3 Face to Face

In the final part of our interview with Peter Riddoch, CEO Damac Properties, he discusses why so many real estate developments miss their deadlines, whether the Dubai property boom is a bubble waiting to burst and how the market has changed over the past few years."

Peter Riddoch, CEO Damac Properties, Pt 2/3 | Face to Face

Link Video Interview :http://www.ameinfo.com/161216.html
Peter Riddoch, CEO Damac Properties

In the interview with Peter Riddoch, CEO Damac Properties, we look at its recent controversy surrounding Palm Springs on Jebel Ali and how this has affected the company's reputation, and discuss other on-going projects in Dubai

Damac Dubai - Investigation - Personal data of thousands compromised

original published: Arabian Business
http://www.arabianbusiness.com/521308-damac-clients-information-offered-on-ebay

Dubai 06.June.2008
Damac Properties has launched an investigation into how thousands of its customers personal details ended up for sale on Ebay for 750 pounds ($1,466), a senior company official told ArabianBusiness.com on Thursday.

Ten copies of a database with personal information on over 8,000 of the Dubai-based developer's customers were put on the website on May 28.

According to the posting, the database includes information such as email addresses and phone numbers of "investors, VIPs, agents and high net worth individuals based in Dubai and across the world".

"This database is highly sought after by every financial institution in the region and is worth millions," the posting says.

The posting has since been removed following a flurry of complaints by investors.

Nile McLoughlin, senior vice president of corporate communications at Damac, said the company took customer confidentiality "very seriously" and a "comprehensive investigation" was taking place.

"We are aware of the auction taking place on Ebay and we have had the item removed from the site," McLoughlin said.

"A comprehensive investigation is taking place and the relevant action will be taken as an outcome of this investigation."

The incident comes less than two months after the saga surrounded the high profile cancellation and subsequent reinstatement of Damac's Palm Springs project on the Palm Jebel Ali.

Original offer Ebay was:

Damac Ebay !!!!

---

Some joker is selling on ebay an excel file with all Damac's customers details on!!!!!

http://cgi.ebay.co.uk/DUBAI-PROPERTY...QQcmdZViewItem

'I have the most exclusive database of over 8,000 customers, investors, VIP's, agents and high net worth individuals based in Dubai and across the world who have already invested and want to invest further in the UAE and region properties market.

List includes customers of Damac Properties the middle easts larget private developer!

This database is complete with contact details, email addresses, phone numbers and personal information.

The databse comprises of people who have invested in the properties market in Dubai and middle east.

This database is highly sort after by every financial institution in the region and is worth millions.

This offer is genuine and you will not be dissapointed. I will deliver the complete database in excel format'

Dubai - The purchase of a freehold property does not qualify for a resident visa

original published GulfNews
http://archive.gulfnews.com/business/Real_Estate_Property/10216379.html

Buyers of freehold properties in Dubai are accusing developers of depriving them of 'promised' residence visas - a tool some developers still use to lure investors.

Developers are passing the buck to master developers Nakheel, Emaar and Dubai Properties.
Residents of International City's Riviera District are worried that there is a breach of contract since the residency visas have not been issued as contractually promised over a year ago.

One resident said, "We feel there has been a breach of contract somewhere as we have not been sold what we were told at the outset."

Registration
According to residents, the developer of the Riviera Lakeview Apartments, B&M, has been involved in a dispute with master developer Nakheel over registration, and this has delayed visa proceedings.

However, an official at B&M said that residents must understand that they cannot have residency visas until their units have been officially registered with the Land Department and the title deeds produced.

We have approached the Land Department for the registration. Nakheel says the units have to be registered first and then they will provide the residency visas," Abdul Samad, deputy general manager of B&M, said.

Another source said that there had been internal confusion in the Land Department regarding the wording of the registration, which has delayed the entire process.

There was an internal dispute within the Land Department over whether the units should be registered as net area or gross area," he said.

The source said the Land Department finally chose to use the net area, meaning all investors had to be notified again and measurements redone.

There are 221 units in the Riviera Lakeview Apartments, all pending registration. "Upon the purchase of a Nakheel property, we will provide customers the basis for sponsorship, although the grant of a residency visa is still subject to the rules, requirements and procedures of the Immigration and Naturalisation Department," a Nakheel spokesperson said.

Samad said the whole registration process should be resolved in "a matter of months".
A resident of Central Business District 21, also located in International City, is also still waiting for his title deeds and residency visa.

He said, "I don't think they [master developers] had any idea what they were getting themselves into.

A statement from Emaar said, Emaar Properties provides residency visas for Emaar homeowners in line with the rules and regulations of the Dubai Department of Naturalisation and Residency Department."

Officials of the Dubai Naturalisation and Residency Department - the visa issuing authority - were unavailable for comment.


Rules How it works

Freehold ownership in selected areas of Dubai was first introduced in May 2002, sparking the real estate boom.

The law states,
"If the homeowner has no alternative means of sponsorship for a residence visa, the first owner may be sponsored by your master developer [Nakheel, Dubai Properties or Emaar] for residency in Dubai, UAE, subject to the applicable immigration laws of the country."

The purchase of a freehold property apparently does not automatically qualify for a resident visa, officials say.

Mohammad Bin Braik, chief operating of Dubai Properties Group, said, "Resident visas for freehold buyers are subject to conditions which include that you cannot seek employment or run a business and one would assume the buyer has sufficient funds to support himself."

Blair Hagkull, managing director for the Middle East at Jones Lang LaSalle, said people should not rely on the master developer for their residency visas. "
Most people in Dubai are active in the workplace and so have a residency visa through their employer. But there is a select group which is not active.

DUBAI - Delays hit building projects - Only one in five construction projects is likely to finish on time

original published The National

Last Updated: May 24. 2008 10:51PM UAE / May 24. 2008 6:51PM GMT

DUBAI // Only one in five construction projects is likely to finish on time, as shortages of materials and skilled workers – and an overabundance of red tape – take their toll.

Industry experts said few of the 4,000 or so projects currently under way would be handed over to clients on the scheduled date. The emirate is currently undergoing a construction frenzy and as the pace of building quickens, so do the risks of delays.

Residential and commercial developments along with road, bridge and utilities projects are all competing for the same resources, compounding the problem.

The same issues could crop up in Abu Dhabi and the northern emirates of Ras al Khaimah and Ajman, as they launch their own large-scale development plans.

The problem is also beginning to manifest in other Gulf states.Qatar, for example, has had to introduce price escalation clauses into contracts to stem the impact of higher building materials prices.

As a result of the delays, the relationship between builders and clients is starting to sour.

In Dubai, only a handful of projects are being completed to the satisfaction of all parties involved, said Kez Taylor, the managing director of Alec, a local building firm.“Only one in five are being completed on time,” said Mr Taylor. We should be hitting the success factor at a much greater rate than we currently are.”

He said the tensions which this led to had threatened to ripple into delays on other projects.
Successful projects ... are not the norm in this part of the world.

From this, a blame culture develops, relationships break down, people become despondent and don’t want to do repeat business.”

A major factor in delays and its impact on the relationship between builders and developers was the reluctance of clients to make difficult decisions quickly, Mr Taylor said.
Because of bureaucracy, nobody wants to stick their head out and make a decision, he said.

But it is vital that the client takes the lead – it’s their project.

Emil Rademeyer of Proleads, a research firm, said more than 90 per cent of projects in Dubai were on average two months late.

I don’t think I’ve ever heard of a project being handed over early – that’s probably the question ... and I’m pretty certain the response would be very few.

Mr Rademeyer said that late changes in design were a common problem among projects in the region, which led to a complete project overhaul in some cases. The situation was also compounded by a severe shortage in good quality contractors, which impacted on the standard of construction.

While there are the challenges of materials and resources shortages, much of the problem lies with changes to design – I’ve heard of cases when a project has almost been completed but then the owner decides they don’t like it and so they start over,” he said.

And because of the shortage of materials and contractors, clients are sometimes just taking what’s available, which might not be the best quality and is a big threat to the final product.”Developments in Dubai also face severe delays in connecting power, water supplies and telecommunications, with many forced to rely on temporary backups.“

There are internal risks when dealing with partners, but there are also external risks that affect a project,” said Ali Hamdan, the corporate finance manager at Sama Dubai, the developer behind The Lagoons project.

“When it comes to a large-scale project such as The Lagoons, success is dependent on dealing with organisations like the RTA (Roads and Transport Authority), Dewa (Dubai Electricity and Water Authority) and Etisalat – if you don’t connect with the infrastructure on time, you get delayed.

Jubeir Shamte, the executive director of the commercial and contracts department at Dubai Properties, which is developing Business Bay, said that clashes in culture and business practices between foreign and local firms also caused problems.

A lot of foreign companies do not understand the culture here, and when you try and bring in culture from other places such as the UK or America, a lot of problems come with it,” he said.“

For example, the concept of partnering is being treated as a new phenomenon, when it is something that we’ve been doing here for many years.”

agiuffrida@thenational.ae

Damac Haz Tower scandal - Business Bay Dubai

investors are losing confidence in the Land Department ..... ........as they have now had the complaint for over six months

original published GulfNews May 16, 2008, 00:38 By Suzanne FentonS, taff Reporter Published: May 16, 2008, 00:38

Dubai: Confusion over the Haz Tower project in Business Bay may be nearing an end as both Damac and Hilal Al Zarooni will have to sign an agreement by next week, according to Land Department officials. Emad Eldin Farouq, legal counsel for Dubai Land department, said, "There is a settlement agreement that both parties have to sign. They have no choice." The signing has so far been delayed due to a possible second option. The Haz towers project was launched July 8, 2007, after Damac bought it from Dubai Properties before selling it on to Hilal Al Zarooni. The cause for the delay is unclear but Eldin Farouq says it is due to the reservation agreement. "Damac blames Zarooni for breaking the reservation agreement. Zarooni was meant to sell the building after approval." However, Damac had received no authority for the floor plans or marketing of Haz Tower, according to official documents received by Gulf News. "Damac didn't have approval from Zoning Authority for the floor plan and elevations for Plot BB.B.01.040 [Haz tower plot]. "Damac has not taken any approval for marketing any tower on the above plot. Damac, owner of plot BB.B.01.040, has not got any approval to start selling the tower or units in the plot which need bank guarantee first to be provided to Dubai Properties." Last week, a Damac employee said that the Haz towers project is "on hold, according to a statement by the chairman". However, Niall McLoughlin, senior vice-president of corporate communications at Damac, denied this. "Haz towers is going ahead. It would be inappropriate for me to further comment on Haz towers. As you know, it is sub-judice," McLoughlin said in an email to Gulf News. Another Damac employee said any queries should be directed to Hilal Al Zarooni. Investors are becoming increasingly frustrated as there appears to be no reason why the project shouldn't go ahead. Hilal Al Zarooni told Gulf News, "We're waiting for the Land department to give their answer. They said it would be next week." However, investors are losing confidence in the Land Department as they have now had the complaint for over six months. Eldin Farouq said yesterday that "the chapter will be closed next week."

Damac Palm Spring Scandal - Investors are still uniformed about Details

May, 12. 2008

Damac recently wrote to investors to confirm the construction of Palm Springs on the new plot allocated by Nakheel. Without doubt, RERA has rightfully flexed its muscles to ensure that the Palm Springs development has become re-instated. The Palm Springs Group sees the re-instatement as an opportunity for all involved to promote a healthy, transparent, and collaborative environment in the Dubai real estate industry.

“We are delighted that RERA, Nakheel, and Damac are now unanimous in their support of the development and we look forward to working collaboratively with Damac in the successful execution of the project.”

Furthermore, the letter to Damac has asked for details of the re-instated project, including apartment plans and construction timelines, as well as monthly updates through to project completion.

It is heartening to hear the CEO of RERA, Marwan bin Ghalita recently state that “we cannot let people promise and not deliver in Dubai” - this sends out the right signal to investors and developers alike and bodes well for the continued the growth of Dubai real estate industry.

Damac have finally sent written confirmation of the re-instatement of Palm Springs to investors. Whilst the Palm Springs Group is pleased with this development, the communication merely rubber stamps what has already been issued to the press.

The main concern now for investors is that Damac confirm in writing details of the project, such as the plan specification, build quality, start and handover dates, and whether it is in keeping with the original contract.

April 14, 2008
One investor commented, “we will be writing to Nakheel and Damac requesting them to disclose the new plot handover date and details of any planned changes as a matter of urgency” She went on to say that the Group intend to monitor developments to ensure that any changes are compliant with the contract provisions. It is possible that investors may request a meeting with Damac to get clarification of the details and to iron out any concerns.

Barring any nasty surprises contained in the ‘detail’ of the re-location of Palm Springs, it would seem that both investors and Damac will soon be able put their differences behind them and look forward to the dream that was, and hopefully is, Palm Springs. Let’s hope Nakheels’s and RERA’s role in helping to resolve the crisis serves to strengthen the reputation of Dubai real estate.

Dubai property market beset by fraud claims

Malaysia Sun

Claims of scams, fraud, and embezzlement are hitting the real estate market in Dubai.

The multi-billion dollar construction craze which has attracted investors from all over the world, has seemingly brought in unsavoury types who have been preying on the never-ending appetites of locals and foreigners lining up to invest in the market.A UK company which claimed to have acquired a 900-apartment plot in the proposed Jumeriah Village project, has reportedly sold off apartments in the plot, with no prospect of them ever being built.
The company, Strategic Property Investment, and its associates, William Cowe and Mark Emlick, are being investigated by Dubai and UK authorities.

Dubai authorities are also investigating the mysterious Al Areifi Tower being constructed at Dubai Marina. As we reported several weeks ago, Khalid Saud Al-Areifi & Partner Co., of Riyadh Saudi Arabia, sold several hundred apartments in the project off-the-plan some years ago, taking full payment upfront.In recent weeks the owners of the apartments have been receiving telephone calls and faxes from Al Areifi representatives in Saudi Arabia advising them construction on the project had stopped and would not be resumed.

Investors say they have been offered their original cost, plus interest, back. We have sighted one of the letters sent which verifies the investors' claims.When we visited the site two weeks ago we found construction in full swing. We contacted the builder on site who confirmed there had been no disruption to the construction and it was proceeding at 'full steam.'Reports are now circulating that Al Areifi sold the site to the newly-formed, Abu Dhabi-based, Eskan Properties.

A report in Gulf News , however quotes a company spokesman as saying, 'We sold the tower on again a week back.'
Having bought their apartments and paid for them in full, well before construction started, investors are now wondering how 'their' apartments could be on-sold, on two separate occasions since.

Several calls to Emaar Properties, the master developer of Dubai Marina, where the project is sited, have not been returned.

Meantime the investigation into the conduct of the former CEO of Dubai's second largest property developer, Deyaar, has been widened.
According to Dubai's Attorney General, Essam al-Humaidan, a second person, Ganesan Krishna Kumar, 49, has been arrested in connection with the investigation. Kumar, originally from India, was a co-founder, and is managing director, of the Dubai-based advertizing agency, Masterbrand (ME) Ltd.,Two other men have also been detained and questioned, but have since been released. Zack Shahin, Deyaar's ex-CEO is being probed in relation to claims of possible embezzlement. Deyaar has more than 1,600 apartments, as well as retail, and office complexes, under construction in Dubai.

The glitz and glamour of Dubai's red-hot property market must be feeling the heat of the latest troubles, coming on top of the debacle surrounding the Damac project on the Palm Jebel Ali.
Damac, which claims to be the largest private property developer in the Middle East, sold apartments off-the-plan in what it called the Palm Springs project, a luxury apartments and resort project on the Palm at Jebel Ali.

Four years after launching the project, Damac wrote to investors saying it had been abandoned as the master developer of the Palm had changed the plans and the project could not now fit the site.Within days the master developer, Nakheel, announced it was unaware of Damac's claims, and that the changes which Damac referred to had been made ten months earlier, and Damac was happy with them.

A hastily convened meeting by the authorities, involving Damac and Nakheel, resolved the matter, with Damac agreeing to proceed with the project. That action averted a class-action lawsuit against Damac by at least sixty angry investors, most of whom were from the UK

Comments

Comments on this story

By adel, 04-26-08, 02:31 AM
An advice on Duabai real estate marketI want to give a little advice to prospective investors in Dubai. Ignore those fantastic property offerings, with incredibly low prices and very long-term and low-cost finance. Believe me guys, the price of cunstruction material and labour, rents, oil...etc have made such projects unviable. Such projects are not economically viable anymore and the little investor will, at the end, lose his or her investment. Watch out !

By Anonymous, 04-24-08, 10:03 PM

Dubai property market beset by fraud claimsI have an apartment in this project which I bought off the plan and paid for in full. As far as I am concerned I am the owner and here I read my apartment has been sold to somebody else, twice! What is going on here? And what about the mighty Emaar. They are overall responsible. Surely they can’t sell these plots off to fraudsters like this and not even answer the phone???? Investors like me just sit out here and get these scraps of information from the news media (thanks! I’m not having a go at you, without you I wouldn’t even know I was being pick-pocketed). Where are the authorities? They shouldn’t just be investigating Deyaar they should be investigating Al Areifi.

By Anonymous, 04-25-08, 05:07 PM

Dubai should act against scamsWhere there is a lot of money the smarties arrive to scam the punters. This al areifi crowd have really done a number on people. The Dubai government shouldn’t stand back and let them get away with it. Selling all the apartments to individuals and then selling the whole building to somebody else is just straight forward theft and fraud. The Saudi Arabian authorities should act as well because this is a Saudi company. What confidence can people have in these gulf markets when this sort of nonsense goes on?

By Anonymous, 04-25-08, 08:09 PM

Few bad apples doesn't mean you throw out the whole caseYes there are scams and frauds in Dubai, just as there are everywhere. Mostly though I think investment in theis place is safe. The government needs to stamp out the bad guys because it affects how people perceive the market.

By Anonymous, 04-28-08, 01:50 PM

These thugs have to be stopped. Whilst these guys are living the lavish lifestyle, we are repaying our loans to pay for them to do so. I am still pursuing these people and find it a huge disappointment that UAE have no laws against this or protection for people who invest from abroad. It was particualrly enlightening that these guys are residing at one of the sheikhs hotels.. Does that mean he thinks all of this is ok?????

Wall Street Journal - Scandals in Dubai Cast a Cloud

original published Wall Street Journal http://online.wsj.com/article/SB120941603017750659.html
and
http://www.zawya.com/story.cfm/sidDN20080428017680/lok233629080428?weeklynewsletter&zawyaemailmarketing


Some Problem Deals In Real Estate May Dent Trust
By MARGARET COKERApril 29, 2008; Page C2

DUBAI, United Arab Emirates -- This city-state's real-estate market is booming. Massive building projects scrape the sky. Sales and rental prices appear buoyant as investments flow in from other oil-rich Persian Gulf states, the former Soviet Union, India and Iran.

But a series of legal tussles and property-related scandals could dent foreign-investor confidence and tarnish the business-friendly reputation the government has tried so hard to burnish.
Earlier this month, the chief executive of one of Dubai's largest publicly traded developers was jailed. And two disputes involving European and U.S. investors have raised concerns about Dubai's regulatory and legal safeguards.
Foreigner-Friendly

The U.A.E., a collection of seven, semiautonomous emirates, was the first of the Arab Gulf states to allow foreign-property ownership. The country, a major oil producer, remains at the center of the Gulf region's construction surge. More than a third of the estimated $1.2 trillion in projects under way in the region are in the oil-rich U.A.E., according to a report by the London-based Middle East Economic Digest, which tracks building projects.

While Dubai lacks the big oil reserves of its neighbor Abu Dhabi, it has diversified away from petroleum, building a reputation as a hub for tourism, business and transportation. Crucial to that strategy are its development projects.
Dubai has regaled tourists and investors alike with megaprojects such as the construction of Burj Dubai, the world's tallest building, and the planned Palm developments, three separate man-made island clusters in the shape of palm trees.

"The perception of Dubai is based on the Burj, the Palm trilogy and sunshine 365 days a year. So far, you could call it a successful marketing campaign," said Martin Kohlhase, a senior analyst in Dubai for Moody's Investors Service, the credit-rating company. "There is so much at stake."
Marwan bin Ghalita, chief executive of Dubai's Real Estate Regulatory Agency, said he has worked hard over the past few months to improve rule making and enforcement among Dubai's 742 licensed developers. "We are doing a very good job, but there are still lots of things to do to achieve awareness about the rules and procedures here," said Mr. bin Ghalita.

Deyaar Development PJSC said earlier this month that its former chief executive, Zack Shahin, had left the company and was being held by Dubai police. The company, listed on the local stock exchange, disclosed the moves after the Zawya Dow Jones wire service reported the arrest.
Mr. Shahin, a U.S. citizen, is being held as part of an investigation into alleged financial wrongdoing at the company. In a jail-house interview, he told the wire service he was innocent.

Mystery has shrouded the case, raising concerns about the extent of its repercussions on the company, one of Dubai's biggest developers. A Deyaar spokeswoman declined to comment.
Another project -- on the Palm Jebel Ali archipelago, one of the three clusters -- also recently became a battleground between a Dubai developer and disgruntled investors.
In 2003, Damac Properties, one of Dubai's largest private developers, sold apartments in a 25-story building, known as Palm Springs. The company targeted British investors, eager to snap up retirement or rental properties.

Last month, Damac sent letters to those investors, saying the project had been canceled, giving few details. When investors pressed, they were told Palm Jebel Ali's government-controlled master developer, Nakheel PJSC, hadn't given Damac suitable land on which to build.
'Out of the Blue'

Damac promised to return investors' money, plus 6% interest, or give discounts on another Damac property. The Palm Springs apartments were sold for about $220 a square foot, according to investors. Current market prices in the same area are as much as $890 a square foot.
"It came out of the blue," said Colin Murray, who lives southwest of London and bought two Palm Springs apartments.

Mr. Murray helped band together 80 investors in the United Kingdom. They filed a formal complaint with Dubai's Real Estate Regulatory Agency. Nakheel denied it had caused the project cancellation, and regulatory officials launched talks between Nakheel and Damac. Damac then told investors that the project was back on.

The agency's Mr. bin Ghalita said Dubai law gives Damac six months to start construction. He said he "would be keeping my eye" on the situation.

The controversy over Palm Springs was just the most prominent in a series of property-investor complaints. The local English-language press has reported stories of middle-class families being bilked by unlicensed brokers or unscrupulous developers who have taken large deposits and failed to deliver. And then there are delays in finishing construction. Damac has completed only 18% of its $30 billion real-estate portfolio.
Financiers in Tussle

It isn't only small investors getting ensnared. U.S. private-equity firm Capital Partners, a real-estate-development arm of McKinley Reserve, of Wisconsin, is in a $1 billion legal dispute with Tecom Investments, a subsidiary of Dubai Holding, which is owned by Dubai's ruler, Sheik Mohammed bin Rashid Al Maktoum.

In 2005, Capital Partners and Tecom signed a contract allowing the Americans to develop a 15-hectare site called Riverwalk. Months later, however, the deal had turned sour. Capital Partners accused Tecom of selling it land that it didn't own, specifically, almost a hectare that was a designated archaeological site.

With $10 million already sunk into the project, Capital Partners refused to make a scheduled second payment to Tecom until the ownership issues had been worked out. Tecom said that missed payment was grounds to terminate the contract. The case is before the Dubai International Arbitration Center, an independent tribunal.