Investors in stalled apartment projects in India say they are encouraged by the start of reimbursements.
Repayment brings hope to Star County investors
DUBAI // Indian expatriates who had invested millions of dirhams in apartment projects back home saw a sliver of hope this week when one of them received a partial refund from the builder of the stalled developments. Others say they have been promised payments later this month.
PK Bhaskaran was the first to recoup part of his investment.
The Dubai resident got a refund of 300,000 rupees (Dh24,800) on June 30. The payment was nearly half his investment in a two-bedroom apartment in Star County, near southern Kochi city, that was promised for handover in 2009 but has shown no sign of nearing completion.
Lawyers who are negotiating the case said Mr Bhaskaran, a 65-year-old secretary, will receive monthly instalments toward the remaining 389,500 rupees he is owed.
"I just want my life savings back," he said. "I have some hope now. I am relieved, but I'm also waiting to see what happens with the rest of the money. I will only believe the promise about the rest of the money being returned to all of us when it actually happens."
Mr Bhaskaran is among more than a dozen investors fighting for their money after work had not proceeded beyond the foundation level for residential apartments that were scheduled to be handed over as early as 2008.
Buyers paid between 600,000 rupees and 2.4 million rupees after viewing presentations of the planned developments at exhibitions that routinely toured the Emirates.
The developer, Star Homes, offered alternatives for returning money to investors after 120-plus clients, including more than 40 buyers from across the Gulf, demanded either money or completed homes.
Investors say the developer has promised to refund their money, along with interest calculated at 9 per cent a year, in four instalments. The first instalment is expected to be paid by mid-July.
As an alternative, Star Homes has pledged to complete the homes for those who are willing to wait.
Star Homes could not be reached for comment yesterday, despite repeated attempts.
"They have informed us they will settle our money in full by the end of October," said Gafoor Ahmed, a sales executive. He paid nearly 1.3m rupees for a three-bedroom flat developed by Star Homes in Star County. The apartment was scheduled to be ready in June last year, but has not materialised.
"The builders have decided on this amicable agreement as they are worried about their reputation being tarnished," he said.
However, investors are still sceptical about whether the builder will deliver on its promise.
"An agreement with the builder on the refund is yet to be drafted and we are hoping it will be done soon," Mr Ahmed said, warning that investors' patience was wearing thin.
Purchasers of these properties have gone on the radio in the UAE to warn others to invest cautiously in property deals. They have also appointed a lawyer to deal with the developer, and they meet regularly in Dubai for updates.
The lawyer for the buyers said he was negotiating with the builder to also bear the legal expenses incurred by the investors.
"There is pressure on the builders to pay back soon," said Hashik TK, a legal consultant with Universal Legal Associates in Dubai. He said another 15 investors had decided to wait for the developer to hand over completed homes, instead of a refund.
Ajay George, the managing director of Star Homes, said in a previous interview that four of the five projects were nearing completion.
"We have also offered them the option of cancelling now and rebooking apartments in the same project, which will be ready by December 2012," he said.
Investors cited media reports for hastening their reimbursals.
Mr Bhaskaran said reports of his shattered retirement plans last month was the catalyst that got him a partial refund of his money.
"After this was published in The National and people read it here and in India, this helped us a great deal," he said. "It certainly helped me."
Anil Kumar, who paid about 700,000 rupees three years ago towards a one-bedroom apartment in Star County that has yet to be built, said, "The articles really helped because this was circulated in the community, so there was more awareness of our situation."
In a separate development, police in India have arrested officials from another developer, Apple A Day, who allegedly took investors' money without building anything.
The developers reportedly used presentations at property shows in the Emirates to tempt expatriates to invest. A police team from Kerala is expected to travel to the Emirates this month to record statements from more than 100 expatriate investors who say Apple a Day duped them.