Dubai Marina's high-rise dreams deferred

Hugh Naylor

• Last Updated: August 07. 2009 4:57PM UAE / August 7. 2009 12:57PM GMT

Harvans Nagpal and his wife once dreamed of a relaxing retirement in Dubai, enjoying leisurely days beside a sun-drenched swimming pool and unbeatable views from a beautiful, brand new serviced high-rise apartment overlooking the city’s glamorous Marina.

Now the 70-year-old London accountant’s plans are on hold, dogged by uncertainty brought on by delays in the building of the apartment and the prospect of its cost rising beyond his means.

After four decades of working nine-to-five, he expected that, by now, he would be enjoying the fruits of his labour. Instead, he is going back to work as an accountant. “I’m trying to get subcontracted work, but it’s pretty difficult to do at late stages in life,” he says.

People like Mr Nagpal are statistics in the real estate bust, as projects throughout the UAE, especially in Dubai and the northern emirates, have been delayed, slowed down or become insolvent. Today, many of those investors are grappling with the fallout as projects, especially those by smaller developers, languish in crisis.

Mr Nagpal bought off-plan in late 2007, paying a 25 per cent down payment on a Dh1 million (US$272,000) one-bedroom apartment in the 19-floor Harbour Residences.

He was told that his apartment would be ready by early 2010 but, with his first Dh250,000 already paid into the development’s escrow account, the strikingly designed tower remains little more than an artist’s impression and a hole in the ground.

According to an inspection by the Dubai Government’s property regulator, the Real Estate Regulatory Agency (Rera), in April, work is progressing to a Rera-approved “revised schedule”.

“Works have not yet started on site,” says the report on the Rera website, accompanied by photographs showing a cleared site with no aboveground progress. “However preparations are being made to start shortly.”

Harbour Residences is a development by Dheeraj & East Coast, a joint venture between Dheeraj Constructions of India and East Coast LLC of Dubai. The most recent construction update on the company’s website, posted in March, shows a bare pit.

Although the company has allowed Mr Nagpal to suspend his payments, oscillating exchange rates mean that, for him, the goodwill gesture has backfired.

When he bought into the project in 2007, £1 was worth approximately Dh7.5, meaning the Dh1m apartment would have cost him £133,000. Today, £1 is worth a little over Dh6 and, if it stays at that rate, Mr Nagpal’s apartment will cost closer to £166,000 – at least £30,000 more than he bargained for.

As a result, at a time when all he should be worrying about is furnishings, Mr Nagpal has returned to work and fears he will face a cash shortfall.

A survey by The National found at least nine idle sites where work has not progressed above ground; furthermore, the Marina is home to a number of partially built buildings on which work appears to have slowed or halted.

Mr Nagpal is luckier than many – at least his developer has kept in touch with him and other buyers. On several occasions, he says, he has been told that construction was being held up by bureaucracy and would start again shortly, but, at the same time, the company stopped demanding scheduled payments.

He would, however, like to see the developer make further concessions, including a price cut. “The cost of construction has come down,” he says.

“And, as far as we from the UK are concerned, the property has become more expensive for us because of the exchange rate. So they’re in a win-win situation, we are in a lose-lose situation.”

Raman Iyer, the head of marketing at Dheeraj & East Coast, says the delays are beyond the company’s control, the result of unexpected regulatory interventions by Emaar, the master developer of the Marina, and Rera.

Neither Emaar nor Rera could be reached for comment.

While the company is not considering reducing prices, it is keeping “everybody in the loop”, including investors and the local authorities, and in the meantime is not asking for payments from purchasers, says Mr Iyer. It is, he adds, “just a matter of time till we start construction”.

It is a similar story for countless other investors in properties around the Marina. Close to the most northerly of the road bridges across the Marina are two massive craters, both without signs of activity other than security guards sitting in chairs at the entrances to the sites.

One plot is littered with rubbish, but no information is displayed. A hoarding on the other says it is the intended home of My Tower, a 36-storey building first advertised in 2007.

According to Rera’s monitoring report, this project is also “progressing to a Rera-approved revised schedule”.

“It’s not delayed,” insists Rasul Azim, a customer-relations employee at Almasah International Real Estate, which is marketing the project for its development arm, Marina Breeze. “They’re working on piling, but, to be honest, most of the construction won’t start until the end of this year.”

In February, Abou Taleb Talebi, the chairman of Dubai-based Almasah, said five contractors had been appointed to start work on the foundations of 10 of its developments, including My Tower.

“Our main objective is to move ahead with our projects,” he said at the time. “We have rescheduled payment plans on these projects for our clients’ benefit, helping them during these times of crisis and working alongside them for the benefit of all.” The National was unable to contact Mr Talebi for an update.

On some sites, progress has been halted, with skeletal foundations left exposed to the atmosphere. On others, work even appears to have gone backwards.

Shahla Tower, a planned 39-storey residence, occupies a prime site by the water. The new Marina Mall is a five-minute walk across the road bridge that runs alongside the plot, the beach and the seaside shops and restaurants of The Walk are even closer.

Launched in 2006, the tower was due for completion by mid-2008. Yet, for months now, the only sign of activity at the site has been the drone of generators driving water pumps 24 hours a day to keep the half-finished foundations dry. The status of the project has yet to be categorised by Rera.

The hired prefabricated two-storey building that served as the development’s site office was recently dismantled and taken away.

Luai Khader, an engineer with Khatib and Alami, an engineering consultancy, said the firm had recently parted company with the developer because of “management issues”. The project, he said, “could start next month, or next year. Nobody knows in this situation”.

A spokesman for the developer, the Khalil Abdul Wahab Group, a consortium of investors from other GCC countries, said piling and shoring had begun in August last year.

There had been a delay of five months on the project, he said, but he said construction was now under way again. No units had been sold yet, he said.

Another site echoing only to the sound of generators is that of the Eden Blue tower, a pit of protruding metal foundations that has seen little activity for six months except for the pumping of water.

Nearby, more pumps, and little else, are at work on the foundations of the Dubai Marina Star development, a project initiated by Al Seef Investments, a Dubai investment company, and since taken over by the UK Capital Investments Group (UKCIG).

When the 24-floor building was launched in the spring of 2006, an expected completion date of November 2008 was given.

A year ago, UKCIG said completion was now not expected before the first quarter of 2011, but Abdul Murad, sales administrator at the company, told The National it was now “sometime in 2011” and work was about to begin in earnest.

Construction had been held up, he said, because the company was “waiting for documents from Rera to be approved”.

The site is yet another crater with only skeletal foundations apparent. Brackish water from the pumps oozes over the Marina promenade, leaving behind a slippery green film.

This is not an uncommon sight around the Marina’s walkway, interrupted in several places by unfinished building projects and fringed by numerous isolated and empty commercial units.

It is not only frustrated purchasers, waiting for signs of life from their investments, who are suffering because of the delay as projects are dragged out long beyond their normal schedules.

“Many people complain that there is too much noise because of construction, even at night,” says Jolly Dhomas, a finance manager at Arad Real Estate and Investment Development, which rents out eight two-bedroom flats in the Westside Marina property, close to the Yacht Club.

The low-rise block is flanked on three sides by building sites. After several of his tenants asked to terminate rental agreements because of the noise, his company dropped the rent three months ago, from Dh160,000 to Dh115,000.

Like many who live or work in the Marina, Anwar Kosimov, 37, the manager of Uzbegim, an Uzbek restaurant in the base of the Marina Hotel and Apartments, is enthusiastic about the Marina’s prospects.

“I think it will be good here. No, not good – the best,” he says.

In the meantime, however, he is struggling to cope with sluggish business.

The main problem, he says, is the dusty plot of land next to his building, expected to become a car park.

“If you’re coming to a restaurant and you see it’s dirty on the outside, you’re going to look somewhere else to eat,” says Mr Kosimov, who has bridged the dirty path outside his business with wooden planks. “You will go to the clean place.”

Mr Nagpal, meanwhile, searching for work in London, is not likely to be among Mr Kosimov’s customers any time soon.

“I was planning to spend this part of my life in some good sunshine,” he says. “It’s all ruined now.”

hnaylor@thenational.ae