Ajman's largest residential property project will go ahead at just a fraction of its original size, after the developer cancelled more than 180 towers in response to a downturn in investor demand. Marmooka City, the largest planned community along Emirates Road in Ajman, has been scaled back from 206 towers to just 20 buildings.
From the dozen developments that have been launched over the past two years along the highway, Marmooka City is the first one that has revised deals with sub-developers to adapt to the market downturn. The fate of the remaining projects along the highway, which have yet to start construction, is unclear. Marmooka City, planned as a luxury suburban development with 206 residential and commercial buildings, was meant to house the tallest tower in the emirate, along with a school, clinics, a large shopping mall and five-star hotels.
The project was originally due for completion next year, but instead has become one of the biggest casualties of a property slump which has seen the cancellation of developments worth billions of dollars across the Emirates. Now Marmooka City has been scaled back to just 20 plots, according to a senior official at Real Estate Investment Establishment (REIE), the master developer. "We have cancelled 170 contracts," said the official who declined to be named. "As for the remaining plots, some of them had not been sold and were vacant, and the others belong to developers who are either in prison or have left the country. Maybe we will take them to the court, or we might register a case. We will see."
Manara Ajman, intended to be the tallest tower in Ajman, with 95 floors, was to be built by Al Barakah, the property developer. But the chief executive of the company is in jail in Dubai for allegedly bouncing cheques to investors. The owner of another development company, Casamia Star, has disappeared and investors have recently filed complaints with the police and the Ajman Real Estate Regulatory Authority (ARRA).
The REIE official said the plots of developers who intended to go ahead with their projects had been relocated into phase one. The remaining plots would be resold, he said. Developers have paid more than Dh1 billion (US$272 million) so far for land within the planned Marmooka project, but will not be fully refunded for projects that have been scrapped. They will get back only part of what they have paid for projects that they have cancelled and nothing in cash.
"We will deduct a 30 per cent penalty of what developers have paid until May 1 and give back all their post-dated cheques," Ghaleb Jaber, the general manager of REIE, said recently. "With the remaining 70 per cent of their investment they can buy a flat under construction or a flat that is completed." According to several developers, however, the price of property offered in exchange for cancelled projects by REIE, at about Dh650 per sq ft, is about double the current market price in Ajman.
Developers could also transfer their credit into one of the projects that are going ahead in Marmooka city. "We merged with three other developers into one tower," said Muzaffar Soofi, a developer on the project. Brian Pepper, another developer, said: "There have been massive mergers going around. We kept two towers out of three, after we merged two smaller towers into one." The remaining developers on the project include Memon Real Estate, Rufi, CBI Properties, Kings Group and Midas.
The new design of Marmooka City is yet to be released but REIE has already started work on the parts of the project that remain from the original masterplan. Although the project has been shrunk down to 20 plots, it is possible that not all of them will be developed, according to one developer who did not want to be named. He said that his company has merged five of its plots into two. "But we have not yet made the decision to continue or not because we don't know how many investors are willing to pay," he said.
The fate of hundreds of investors who have bought off-plan properties from the Marmooka City developers remains unclear. The head of the ARRA said he welcomed mergers between developers as long as investors' interests were protected. @Email:firstname.lastname@example.org