Mirdiff Hills investors receive 100% refund

Dubai Investments Real Estate Company (DIRC), the real estate arm of Dubai Investments, is giving a 100-per cent refund to its investors on the Mirdiff Hills project, which it has put on hold due to unavailability of mortgage financing.

The Mirdiff Hills project, located in Mirdif, is a Dh2 billion mixed-use development comprising 680 apartments, 380 offices and 129 retail outlets. The project was launched in July last year with completion scheduled for 2010.

"We have put the Mirdiff Hills project on hold because of a lack of availability of mortgage financing on the project. Investors have got back to us saying they cannot pay up for their units," Khaled Kalban, Managing Director and CEO, Dubai Investments, told Emirates Business in an exclusive interview. He said refunds of initial down payments on the project have been made to the investors.

"We have started to repay the investors' down payments in the project. There are many who would have wanted to remain invested and have taken the cheques from us reluctantly," he said.

DIRC would continue with the project should the lending scenario improve in Dubai, he said. "The Mirdiff Hills project is a product with a lot of potential as there is good demand for such properties."

Meanwhile, Dubai Investments' Fujairah-based partner, Al Taif Investments, will also be cancelling one of its projects – The Market, a mixed-use development with offices and a hospitality segment launched in March last year.

In June 2007, Dubai Investments partnered with the Fujairah Investment Establishment (FIE), the investment arm of the Fujairah Government, to launch Al Taif Investments, a Dh500 million joint-venture investment house for real estate and industry projects. Dubai Investments acquired a stake of 60 per cent in the joint venture, with the remaining 40 per cent owned by FIE.

"Al Taif Investments launched the Fujairah Business Park and The Market at the same time. Since we are expanding the business tower in the Fujairah Business Park, we decided to cancel The Market project. Our market research showed a high-end project is unlikely to work out in current market conditions," said Kalban.

According to Dubai Investments, The Market was built to be leased out, and so no investors have bought into the project. "No sale was made on the retail front and it was to be sold only when the project was completed," said Kalban. The Fujairah Business Park comprises two towers, a 44-storey office tower and a 31-storey tower comprising 424 hotel rooms and apartment units. The hotel tower will also feature a two-level shopping mall spread over more than 300,000 sq ft of retail area.

"We have floated a tender for a construction contractor on the project," he said.

Meanwhile, DIRC also said it will begin handing over the first phase of its residential project Ritaj in Dubai Investments Park. Ritaj was launched in October 2006, and the handover of the first phase of the project, comprising 900 residential units, is expected soon. Its second phase, comprising 1,200 units, will be delivered in the first quarter of 2010.

Kalban said the real estate sector in Dubai is not showing any immediate signs of recovery but there are signs of stabilisation in prices. "The decline in prices have almost stopped," he said.

Kalban also said Dubai's real estate sector is set to witness the emergence of long-term "opportunistic investors" looking to take advantage of the good property prices. "There are indications of the existence of many opportunistic investors trying to buy on the basis of prices that have now come down to reasonable levels. They can afford these investments based on the assumption the return would be about eight to 10 per cent per annum. They are not speculators but long-term investors, who will absorb a lot of the existing properties in Dubai," he said.

Dubai banks had started to drop deposit rates, he added. "Investors with cash will have to utilise it in one way or another, by either buying into stocks and shares or by buying into the real estate sector," said Kalban.

Speaking about the subsidiary Emicool, he said Dubai Investments is finalising a partner to take over Union Properties' stake in it. "Dubai Investments has a 50 per cent stake in Emicool and since our partner Union Properties said they intend selling their stake, we are seeing a few potential investors who desire to take over Union Properties' stake," said Kalban.

"Dubai Investments would like to bring in a strategic investor who has the knowledge of the industry. We are trying to sell the stake to a French company specialised in district cooling. However, because of the global crisis, the idea is on hold. We are in the evaluation stage and will go with the deal if the price is right," he said. Kalban did not divulge the name of the company or the price involved in the negotiations.

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