Red tape delays Reem Island home deliveries
The much-anticipated delivery of homes on Reem Island has been pushed back as officials struggle to certify buildings for completion, the project's two top developers say.
Sorouh Real Estate and Tamouh Investments, two of the three master developers of the island, had originally said they would begin to hand over the keys to apartment buyers starting on July 1, but they have informed some customers that those plans have been delayed.
Sorouh is now aiming to hand over units by next February, while Tamouh says it is planning to start next month, executives said.
"We are working very closely with the Government authorities and leaving no stone unturned," said Gurjit Singh, the chief operating officer of Sorouh.
"As one of the first high-rise properties to be completed in Abu Dhabi, there is a complicated certification process."
The delays are significant for home buyers because many are renting alternative accommodations while they wait for their apartments to be completed.
Investors who bought the units to make a return can only sell the units after they have been finished because of the abrupt drop in demand for off-plan - or incomplete - homes.
Sorouh has finished building its Sun and Sky towers, which together will add 1,147 apartments and 800,000 square feet of office space to the market.
Tamouh is delivering 3,440 apartments in a series of towers on the end of the island facing Abu Dhabi's main island.
Tamouh said that halfway through this month, the company would invite investors for a tour of their buildings and they would be able to start moving into their homes next month.
"We have been ready to deliver for a long time now," the company said.
"Marina Square construction was completed many months ago.
However, we had to spend extra time and efforts to comply with the additional requirements of various authorities."
The certification process for a new building includes ensuring all of the equipment is working correctly and fire safety precautions are in place.
Reem Island has emerged as a focal point of Abu Dhabi's property woes after a downturn brought about by the global financial crisis.
As prices dropped by more than 50 per cent from their peak in the capital, sub-developers that bought land from companies such as Sorouh have had difficulty getting their projects off the ground.
Of the about 50 plots in the Shams Abu Dhabi project by Sorouh, around the Sun and Sky towers, only 10 are proceeding with construction.
The others have paid an average of 62 per cent of their payments for the land and have been having trouble meeting their obligations on time.
Sorouh has responded by assisting these developers in meeting with banks to find additional financing, but those efforts have not resulted in a broad success in fund-raising.
Sorouh has said it would eventually have to take back any land from developers that could not move forward with projects, but it has not yet foreclosed on anyone.
The property consultancy Jones Lang LaSalle said in a report the crisis had "forced developers to reassess their schemes, scale back more ambitious projects, seek alternative means of funding and plan products more aligned to the end-user".
The projects announced in 2008 are likely to be cut by about 60 per cent.
Updated: November 4, 2010 04:00 AM