Hydra Properties says it will appeal against a court decision in favour of two property buyers in its troubled Hydra Village development.
Hydra to appeal against buyers' court victory
Hydra Properties says it will appeal against a court decision in favour of two property buyers in its Hydra Celebrity development. The case, brought by two European women, was recently heard through the Court of Appeal in Abu Dhabi, a source close to the couple said. If Hydra loses the appeal, the investors will be refunded the money they have so far paid to the project. "In principle, they have won the case, and through the legal system they should have the money released to them," said the source.
Between 10 and 20 more cases by investors were under way against Hydra, while a further 150 claimants were seeking legal advice, the source said. The cases are being handled by MIO Lawyers and Legal Consultants, based in Abu Dhabi. Ali bin Sulayem, the chief executive of Hydra Properties, said the company would appeal against the decision and it was still open to negotiating with investors out of court.
"I think that anyone, when there is a dispute, has the right to file cases," he said. "This is our right to appeal, we have to use it. But I am sure the door of negotiation is still open. It does not mean that if a case is filed against our company that we cannot still find a way of settling this matter." The legal action is the consequence of a long-running battle between the investors and Hydra over contract changes, price rises on previously sold properties and demands to make payments for homes that are significantly delayed.
Talk of taking the firm to court started in June, when the Hydra Litigation Group was formed among members of the Hydra Investors Group. About 150 out of 350 people joined the litigation group, with about 50 per cent now pursuing the legal route, said Karl Howard, the co-chairman of the group. Many of the investors had hoped to settle their contract issues - which included price hikes for property size increases due to an overhaul of the project's masterplan - amicably with the firm.
But the final straw for most came recently when they received a letter, seen by The National, from Hydra's legal department saying their units would be cancelled and all money kept if they failed to sign the new version of the contract by October 15. "I don't think you can threaten people to sign a contract that's not acceptable," said Graeme Perry, the deputy chairman of the Hydra Investors Group. "It's got to the stage where people are saying 'no' and are lodging court cases."
One investor, who has started legal proceedings and is hoping to recoup Dh450,000 (US$122,515), said: "We were trying to negotiate with Hydra, but then it got to the point when we realised there was no hope." Another investor, who has also started legal proceedings, said: "I've had enough now, it's deeply frustrating. I've paid Dh400,000 and am not paying any more - I'm interested in getting out of this and getting my money back."
More investors are expected to pursue legal action. "We do want to go ahead with it [legal action] as we don't just want to sit back," said Matt O'Hara, who has so far paid Dh250,000 towards a villa at Hydra Village. "But we're just weighing things up at the moment." A lawyer representing the investors at MIO declined to comment. In June, Hydra tried to appease Hydra Village investors by giving those who had paid 50 per cent or more a payment break until the middle of next year, while penalties for late payment for those who had invested less were waived.
The company, which is owned by The Royal Group and at the time was headed up by Sulaiman al Fahim, the new owner of Portsmouth Football Club in England, also assured investors their homes would be built. The project was supposed to be delivered this year, but is now unlikely to be finished until 2011. Hydra is one of dozens of developers that sold off-plan property to a market dominated by speculators during the boom, and which is now struggling to get buyers to keep up their payments. The situation has led to a rise in property disputes in Dubai, with Hydra's being the first major dispute of its kind in Abu Dhabi.
According to Saud Masud, the head of research and senior analyst of real estate at UBS bank, many buyers did not question the fundamentals of their investments. Hydra Village was sold to investors with promises of a five-star hotel, swimming pools, fountains and significant green areas. But none of these features exist in the revised masterplan. "In general, if you look at the amount of investment that flowed two years ago, you can't really argue the case that they were sound investments," Mr Masud said.
"It was about speculation. Investors didn't really question the fundamentals of the company, the portfolio, timelines or finances. We all knew this was a pay-as-you-go model." Mr Masud said projects were being delayed before the fallout from the economic downturn. "The writing was already on the wall, even in 2006. Handovers were delayed significantly." email@example.com firstname.lastname@example.org