A property investor has been awarded a refund by Dubai Courts for an office unit he bought in a project that is 20 months behind schedule. The British businessman Ron Oakeley bought two offices in a building in Dubai's Business Bay that was to be named after the former Formula One racing driver Niki Lauda. The proposed Niki Lauda Twin Towers building was part of a trio of projects launched by Alternative Capital Invest (ACI) Real Estate, a German developer, in late 2007 that were to be named after famous sport stars.
He filed a lawsuit against ACI in March last year to try to recover more than Dh1 million (US$272,000) he had invested in the project, which was due to be completed this year but is about 20 months late. According to a judgment from Dubai Courts that has been seen by The National, the courts rendered Mr Oakeley's agreement with ACI for one of the units "void" and ordered the company to pay back Dh569,585, plus 5 per cent interest from the date Mr Oakeley started court proceedings.
The case was won because ACI had failed to register the property with Dubai's Land Department, according to court documents. A property contract is valid only when it is registered with the department. Mr Oakeley's victory was muted, however, as he lost the case for a second unit on which he spent Dh695,000, because it was registered. The investor is appealing against the second decision through Dubai's Court of Cassation.
Despite spending thousands of dirhams taking the case to court, and risking losing the judgment on the first unit, Mr Oakeley said he would continue the fight. "It's like throwing good money after bad, but having two units makes it worthwhile," he said. With most developers grappling with a shortage of cash, Mr Oakeley also has the challenge of getting the court's order enforced. Unless a project is officially cancelled by Dubai's Real Estate Regulatory Agency, cash kept in an escrow account, in which developers must by law deposit all investors' money, must be used to fund construction, however long that might take.
"It's all well and good getting a court order to get your money back, but does the developer have the money?" said Duane Keighran, the deputy head of property for the MENA region at the law firm Simmons and Simmons. "There are a number of developers in town who wouldn't have enough in the escrow account to refund investors; and money they do have will be used for construction. Investors can go to ACI themselves, with the court order and ask for the money, or the court can do it, but it's unclear what the recourse would be after that."
Saqer Engineering and Contracting Enterprises was awarded a contract in late 2008 to build the Niki Lauda project, but has since slowed work. Mahmoud Younis, the managing partner at Saqer, said the project could take a further 20 months to complete. "It's ongoing but it is very slow - because of the cash flow," he said. Robin Lohmann, the managing director of ACI, was unavailable for comment yesterday.
Meanwhile, work on two other towers that were to be named after former tennis champion Boris Becker and the F1 driver Michael Schumacher is also behind schedule. Becker also owns a share in the Boris Becker Beach Resort and Tennis Academy, a Dh3 billion resort planned by ACI on Al Marjan Island in Ras al Khaimah. firstname.lastname@example.org