Overseas investors in off-plan properties in Dubai are turning to the internet to monitor their ventures - and to air their grievances against developers.
Untangling a web of discontent
Overseas investors in off-plan properties in Dubai are turning to the internet to monitor their ventures - and to air their grievances against developers. The proliferation of online property forums is giving foreign homebuyers unprecedented access to fellow investors, as well as to the latest information on their properties. The property blogs are also being used to air grievances, albeit anonymously, with some websites, such as www.dubai7stars.com, geared specifically towards complaints against projects and developers.
The number of web forums created by groups of investors who have shared bad experiences with a particular project is also on the rise. One example is a site set up by investors in the long-delayed Ivory Tower, a 20-storey residential project in Dubai's International media Production Zone, which is being developed by the Saudi Arabian firm Sokook Investment Group. With no sign of the project starting construction three years after it was launched, and with little information from the developer, the site was the only way for home buyers to gauge what was happening with their investment, as well as for those unfamiliar with the Dubai market to exchange knowledge on what their legal rights might be.
"As an isolated investor, the site has been an immense help to me in finding other aggrieved investors, particularly those living in Dubai," said Richard Moore, a UK-based investor in Ivory Tower. "It also allowed us to share legal knowledge and ideas on how to proceed - we have delegated different jobs to different people so we can work as a more effective and collective group. If it wasn't for the website, I would have been completely at the mercy of the developer, as my estate agent had washed his hands of the situation."
But as the blog gathered momentum and attracted the media's attention to the saga, it was mysteriously closed down. Complaints about Ivory Tower posted on www.skyscrapercity.com - a global forum for building enthusiasts - were also culled by the site's mediator, under the premise that "skyscrapercity.com is not the place to vent anger against developers". "I can only suspect that individuals who the content was harming had this done," Mr Moore said.
While the internet has become a crucial means of communication for overseas property buyers, it has also been used to start vendettas against some developers. Kabir Mulchandani, the chairman of the property investment firm Dynasty Zarooni, recently became the online target of an alleged smear campaign when anonymous bloggers accused him of fraudulently selling property in a Dubai project to investors in his home country of India.
The campaign reached such a wide audience that newspapers in India - where Mr Mulchandani was involved in a high-profile case of tax evasion in the late 1990s - reported the story. One newspaper quoted a source at the Dubai Real Estate and Regulatory Authority (Rera) as saying it was going to question Mr Mulchandani about the fraud allegations. Rera later denied giving the newspaper a quote. Still, because of the allegations, Rera examined the case and cleared Mr Mulchandani and his company of any wrongdoing. Mr Mulchandani believes a former employee was behind the online campaign.
"Financially, we have grown very quickly, and when you grow very quickly you make a lot of enemies. This was a clear campaign to damage us," he said. Mr Mulchandani said that his past was also used against him. "I did have some issues in India regarding taxation. I was a very high-profile businessman and had a business that ran into trouble. We went to litigation and won that litigation. I have made mistakes in the past and have paid my dues," he said.
Dynasty Zarooni made the unusual move of responding to the accusations on the website in an effort to defend itself. Mr Mulchandani said: "The people writing on blogs should reveal their identity. I believe if you have something to say then say it with your name on it. If these people were genuine investors they should have contacted us with their problem and we would have solved it. We can't keep responding to them online, it's humanly impossible."
The web accusations were particularly upsetting to Hilal al Zarooni, the local partner and president of Dynasty Zarooni. "My family has been in real estate here for 50 years and we're very well-known people," he said. "It is not good for our company, or for Dubai, for false things to be made on the internet. I think there should be some sort of regulation on this, because today, genuine businesses and a genuine project can be seriously damaged by blogs."
While there are no defamation laws in Dubai specifically governing online content, an online author found guilty of making false accusations against an individual or company faces similar penalties to those charged with defamation using other forms of media. "The penalties for such crimes are imprisonment of between one and six months and/or a fine of up to Dh5,000," said Miriam McGregor, an associate at the law firm Clyde & Co.
Marwan bin Ghalita, the chief executive of Rera, said the authority was not planning to ban online property blogs, but a developer had the right to sue anyone who published false information about it online. "These blogs aren't helping anybody, and most of the information on them aren't true," Mr Ghalita said. "There is freedom of speech and you can't keep people quiet, but if they have a complaint they should go through the proper channels."
Alexander McNabb, a group account director at Spot On Public Relations, said property developers should embrace the internet as a way of communicating with customers and use it to update them on a project's progress. "The trouble with property companies in Dubai is that they've traditionally got away with running hyperbolic advertisements making claims about properties, but never actually having a dialogue to follow it up with the people who have bought in," he said.
"The internet is a symptom of a consumer-driven market, so if you've been criticised online you either fix what you've been criticised for or you get online and take part in that dialogue. You don't just have the site shut down." Mr McNabb said that many investors in property, particularly those who lived overseas, would appreciate online communication with developers. "Property companies have to learn to communicate with their customers," he said.
"Most people online will appreciate the dialogue rather than silence. And if you've got unhappy customers, how long can you afford to simply ignore them? "Developers need to learn about online communities and maybe start up their own online communities where customers can go to a specialised site and monitor the progress of the project." firstname.lastname@example.org