Text size:

  • Small
  • Normal
  • Large

Dubai struggles to break housing deadlock

Dubai Land Department officials mediate between buyers of Beachfront Living and developer.

The Dubai Land Department has stepped in to broker a deal between investors and the developer of a stalled housing project, as the emirate's property regulators move to break the deadlock in the distressed offplan development market. The department acted on March 1 to make a new offer to buyers at Beachfront Living on behalf of Omniyat Properties, one of Dubai's larger developers. A group of buyers had been lobbying for the project to be cancelled.

The offer, which has a deadline of March 20, included a reduction in the price to Dh2,100 (US$579.95) per square foot and an increase in the size of apartments. Some of the apartments were sold in June 2008 for more than Dh4,400 per sq ft. Buyers also have to pay an additional 20 per cent instalment on the purchase price. Ludmila Yamalova, an American lawyer who has advised several buyers on their options, said the offer was "absurd" because the project's future was uncertain. The plot of land where Beachfront Living would be built is located in the Waterfront, the sprawling Nakheel master-planned area near the Palm Jebel Ali in the south of Dubai that has stalled.

The Waterfront is officially on hold while Nakheel's parent company, Dubai World, attempts to restructure $26 billion of debt. Last month, all that could be seen at the Beachfront Living site was a fenced-off piece of flattened land and there was no indication of any construction work taking place. "Most of the buyers want this project cancelled," Ms Yamalova said. "This is a one-sided offer. The Land Department is acting for the developer, not the buyers. That's not the way they are supposed to be acting."

Ms Yamalova also questioned the Dh2,100 per sq ft figure as not accurately reflecting the market for homes in the area. "You can buy a finished apartment on the Palm for Dh700 per square foot," she said. Omniyat Properties said its "commitment to Beachfront Living remains strong" and it had "no plans to cancel the project". "Work continues on site," a spokeswoman said. "Initial excavation is complete. Omniyat obtained a [notification of construction] for shoring work from Nakheel in October 2009 and shoring work is currently under way.

"We have written confirmation from the master developer, Nakheel, that all necessary infrastructure will be provided in line with the development programme." Omniyat said it was "working closely with the Real Estate Regulatory Authority and Dubai Land Department to offer every customer a solution tailored to his or her needs, while considering our responsibility to clients whose commitment and ability to pay out their investment remains as strong as our own".

About 15 per cent of buyers have taken deals to shift their investments to other Omniyat projects that are further along in construction, the company said. Beachfront Living was never officially launched for sales, but the company sold more than 200 apartments in a "pre-sale" and collected Dh314.7 million, according to an official review of the project's escrow account by Caliber Middle East, an accounting firm that works with the property regulators.

Of that money and other funds Omniyat invested in the project, the company spent Dh237m on land payments and Dh101.6m on marketing expenses, according to the Caliber review. Just Dh738,866 was spent on construction. bhope@thenational.ae

Back to the top

More articles


Editor's Picks

 Marina Square apartments Reem Island: Q1 2% rise. Studio - Dh65-68,000. 1BR - Dh75-95,000. 2BR - Dh110-145,000. 3BR - Dh170-190,000. Q1 2013-Q1 2014 no change. Sammy Dallal / The National

In pictures: Where Abu Dhabi rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Abu Dhabi have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 A Brabus Mercedes 6x6 Sports Utility Vehicle is readied for display during Auto China 2014 in Beijing, on April 20. Adrian Bradshaw / EPA

In pictures: Auto China 2014 exhibition

Leading automakers have gathered in Beijing for the kickoff of China’s biggest car show, but lacklustre growth and environmental restrictions in the world’s largest car market have thrown uncertainty into the mix. More than 1,100 vehicles are being showcased.

 The New York Stock Exchange. Rising interest rates will shift momentum away from bonds and back towards risk assets such as stocks. Richard Drew / AP Photo

Plan ahead for rising interest rates

It is now over five years since the majory central banks slashed interest rates to record low but that is all about to change. So, how will rising interest rates affect you?

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National