The saga of Khoie Properties and the La Hoya Bay project in Ras al Khaimah is now five years old with no end in sight.
Travails of a troubled project
La Hoya Bay, the sprawling development on a man-made island off Ras al Khaimah, was a hot property in 2007.
"There was less and less available and prices were going up and up," says one investor, who asked not to be named. "So I jumped on the bandwagon."
More than 700 buyers, most from the UK, eventually put down more than Dh200 million (US$54.4m) in deposits in the Dh2.5 billion project, which was supposed to represent the next stage in development for the northern emirate.
More than three years later the development has not been built, despite repeated assurances from the developer, Khoie Properties, that the project was ready to move forward.
"We continue to work diligently with one simple aim, and that is to complete La Hoya Bay," says Peter Riddoch, the former Damac Properties chief executive who took over that role at Khoie in December.
Dozens of large developments never materialised in the UAE after the global financial crisis, but few have endured as many twists, turns and false starts as La Hoya.
The drama reached its peak in 2009, when Frank Khoie, the company's founder and chairman, went to jail for bouncing a Dh57m cheque for a land payment to the Ras al Khaimah Investment Authority (Rakia). Rakia took over as custodian of the project, vowing to protect the interests of investors.
Mr Khoie countered by suing Rakia, alleging the agency was trying to take over the project through fraud and extortion. He steadfastly maintained his innocence and said the case should never have been a criminal matter.
"By filing this lawsuit, Frank Khoie of Khoie Properties is acting like he is a victim," Dr Khater Massaad, the chief executive of Rakia, said at the time. "It's very simple, he used cheques that bounced. He received Dh280m in investments and has used only Dh20m to Dh30m. Investors were relieved when Rakia took ownership of the project."
Sentenced to three years, Mr Khoie eventually served 11 months and was released last May.
Today, all Khoie Properties disputes with Rakia have been settled, Mr Riddoch says. "I have to say the relationship between Khoie Properties and the authorities in Ras al Khaimah is excellent."
Rakia officials did not return several calls and e-mails seeking comment. Mr Khoie also refused to be interviewed for this article, citing "inaccurate reporting and irresponsible journalism in the past".
"We have weathered the storm better than many projects," Mr Khoie said in an e-mail. "The majority of our customers have been supportive and accept that real estate has been hit hard by the recent global financial turmoil."
In 2009, Mr Khoie cited the global financial crisis and the lack of infrastructure in the project when he invoked the force majeure clause in buyers' contracts to quash attempts by investors to have their money repaid.
But last year, in a statement released from jail, Mr Khoie said he was willing to return investors' money within 90 days. More than 170 buyers asked for refunds. But nothing happened and Mr Khoie later said the offer was contingent on financing, investors say.
"Offering refunds was patently ludicrous, since there was no funding in place," says Neil Pattison, who helped to organise investors.
Today, Mr Riddoch says there is no money to refund to investors. Their deposits - which Mr Riddoch placed at Dh200m and other reports have placed closer to Dh280m - were spent on buying land, developing the project and marketing, he said.
Investors contacted for this story, most of whom did not wish to be named, expressed their frustration with Mr Khoie's public statements over the years and questioned how the money was spent. In 2009, he said he planned to take the company public and list shares on what is now the Nasdaq Dubai exchange.
"He has promised a great deal and failed to deliver on the expectations," Mr Pattison says. "The reality is that nothing has come of any these ideas or schemes."
But not all the investors are sceptical of Mr Khoie's ability to build the project. Ashley Merry, a buyer who once led the investors' group, now works as the public relations representative for Khoie.
"By working within the Khoie team I am in a better position to represent the customers and be able to show my commitment to the project in a very hands-on way," Ms Merry says. "I have always maintained that failure is not an option'when it comes to making La Hoya Bay happen."
Ms Merry says she does not regret her decision to invest in the project, "despite the challenges we have faced".
Last September, Mr Khoie held a meeting with investors to reassure them the project was on track, citing the July announcement that Arabtec had been hired to start construction.
"My team and I are only too aware of the stress that the construction delays have caused our customers, but we have been blessed with a strong core of investors who have supported and believed in us," Mr Khoie said. "I hope that our more sceptical customers will start to share this belief when Arabtec start on site shortly."
But construction has not resumed, and Mr Riddoch says the company is still searching for financing.
"There is more positive energy than a year ago," said one investor, whose name was supplied by the company. "I'm more optimistic now that they have a CEO who knows what he's doing."
Asked about Mr Khoie's past statements, the investor said: "Frank is the type of person who jumps the gun. He is the type of person who wants to please."
Many investors remain hopeful the project will be built.
"What's the alternative?" one investor asked.