Buyers of units in the Sun and Sky towers on Abu Dhabi's Reem Island are starting to apply for interest payments on their deposits as the developer continues to delay handing over apartments.
Several owners have a clause in their contracts with the developer, Sorouh, calling for payments if the project missed its completion date or "extended the completion date", agents say. Sun and Sky was originally scheduled for completion in November 2009.
Philipp Haenle, who bought an apartment in the Sky Tower in 2008, has already applied for the interest payment on the Dh700,000 (US$190,580) he has paid towards buying his property. The "extended completion date" expired last May, he says.
Based on the language in the contract, Mr Haenle calculates he is owed about Dh7,000. A Sorouh sales representative encouraged him to apply for the interest payment, he said.
"It is to be seen whether they will honour it, but I believe they will," Mr Haenle said. Sorouh declined to comment on the payment.
It is unclear how many buyers in the Sun and Sky towers were offered the interest clause. Other owners contacted by The National said they did not have such a provision in their contracts.
The interest clause is "very, very unusual, especially in this market", said Billy Rautenbach, the managing director of The Property Store.
One local agent familiar with the sales agreements, who declined to be identified, said the interest clause varied in contracts and usually called for payments only 18 months after the scheduled completion date.
Sun and Sky marks the first large-scale freehold development open to non-UAE residents to own property on Reem Island. Sky is one of the tallest towers in Abu Dhabi at 74 storeys; Sun is 65 storeys. The two towers include a total of 1,150 apartments.
Primary construction on the two towers was completed in July and owners of more than 1,000 units have gone through their pre-handover inspection. But Sorouh still has not started turning over apartments.
The developer has blamed the delays on licensing and off-site infrastructure issues. The company has not announced when the project will open.
The delays have frustrated owners. Many of them took out financing to buy apartments and are eager to generate revenue by renting them.
"You can't do anything about it," said Ahmed Nawab, the chief executive of Trust City Real Estate, who bought several apartments in the project. "It's a bit of a nightmare."
Sorouh said it expected to begin handovers in the first quarter of this year, but declined to offer any details. Owners say they have heard nothing official from the developer about the cause of the delays. One owner was told there was a problem with fire alarms and the civil defence wiring systems in the buildings, which could not be confirmed.
"I know nothing is done until the keys are in hand," said Kashif Mohammad Ali, who bought an apartment in the Sun tower.
To help woo and keep buyers in the downturn, the developer began offering a variety of deals last year, including mortgages with a 4.99 per cent interest rate for the first two years. "They were 100 per cent offering different terms" to buyers, Ms Rautenbach said. "They wanted to be flexible."
Last year, Sorouh management acknowledged it had launched an aggressive "default avoidance" programme to avoid the cancellation issues that have plagued many developments in the UAE. The developer expects about 5 to 8 per cent of buyers to cancel, its chief operating officer Gurjit Singh said last year. "There has been a minimal incidents of buyers trying to back out," Mr Singh said at the time.
Last week, Alembic HC Securities cut the target price for Sorouh's stock, citing the possibility of "higher impairments" because of the delays in handing over Sun and Sky units.
EDITOR'S PICK: Internet speeds to increase as du eyes 4G partner.