Investors in the delayed Dubai Lagoon project - a Dh3 billion (US$816.8 million) housing development by Schön Properties in Dubai Investment Park (DIP) - are sceptical that their homes will be built, despite the Dubai Real Estate Regulatory Authority (Rera) pledging yesterday that the project will go ahead. Marwan bin Ghalita, the agency's chief executive officer, assured investors that Rera would closely monitor the project's progress, while appointing an auditor to assess the developer's accounts.
"An appraiser shall be appointed to examine construction works," he said. "The project, which was initiated before the launch of Rera, saw some delays. Rera, in its monitoring responsibility, had to respond to investors' complaints and safeguard their rights and interests." Home buyers have waited since 2005 to see any real progress on the project, which has mainly been held up by changes in design due to a road planned by the Dubai Roads and Transport Authority through DIP.
The project will now include 48 buildings of around eight storeys, as opposed to the original 51, along with a shopping centre, school and mosque. Although Powerline Gulf, a Thai construction firm, was hired as the main contractor, the company stopped work on the site in May of this year while it renegotiated its contract with Schön to cover the surge in construction costs during the period the project was delayed. Construction is yet to resume.
Schön said earlier this week that Powerline's contract is now limited to building just two out of the seven zones planned for the project, and that it was finalising talks with other contractors for the remaining zones. Schön also blamed the failure of a joint venture deal between contractors for the delay. The company said that it would inform investors of the new construction schedule once the additional contractors have been hired.
Meanwhile, only those who purchased homes in the eight buildings that make up zone one will be given full refunds, prompting fury among scores of others who have sought their money back since construction stopped. One investor claims that Schön has been "in negotiations" with other contractors since Oct 2007. "Zones one and two will include 12 buildings, but what about the others? I bought in zone two and have been told I can't get a refund, or have my payments stopped until construction restarts. Every month since October last year the company has said it's "in negotiations" with other contractors, but we have seen no action," said the investor, who has paid around Dh150,000 towards the property so far. "There is no delivery schedule yet [but] Schön is still collecting our money."
The investor bought a property in zone two and was expecting to move in by December of this year. "I was supposed to have an apartment this year; I've so far spent the majority of my savings to buy a modest property, which is not materialising at all." A construction consultant expressed concern over the viability of sourcing contractors in the current climate, particularly if the work is divided.
"Contractors tend to like working on an entire project. They also don't like to finish what other contractors have started." Schön said that it was now meeting investors and is working with Rera to guarantee a fair solution for all. "While there have been certain investors who are understandably frustrated and upset by the delays and who have been vociferous in protesting the delays in delivery, the vast majority of our investors have demonstrated great understanding and patience and have expressed confidence in Schön Properties and support for the Dubai Lagoon project," the company said in a statement.
"We are dedicated to ensuring that our customers are treated fairly, ethically and with transparency, and we will be making a joint statement with Rera regarding the current status of the Dubai Lagoon project." At least 500 people are believed to have invested in Dubai Lagoon. Schön, a Pakistani company, is also building Schön Business Park, also in DIP, and The Signet, a residential tower close to Jebel Ali Free Zone.