Developers lease troubled investors' property

Property developers in Dubai have started to rent out units of buyers, who are unable to pay their final instalment due on handover, and are adjusting the money received against the remaining amount, sources told Emirates Business.

"A handover is not possible if the final instalment is not paid. Hence, we have worked out a solution for a few of our investors whereby we lease their apartments after getting instructions from them, collect the rent and adjust it with the due payment," a senior executive of a major private real estate company said on condition on anonymity.

"Generally, the final instalment ranges between 10 and 20 per cent, and if the owner agrees then we lease their apartments and adjust the rent with their final payment," he said.

He added that "as soon as rent cheques are cashed and the full amount is received, we then proceed with completing the documentation for handover".

Another developer said they were also working with their investors for leasing their units so that the rent clears the outstanding payments.

Asked if the deal was a "win-win" situation, Blair Hagkull, Managing Director of Jones Lang LaSalle, said: "It is important for any evolution in the developer and purchaser relationship to be reflected in legal agreements to ensure the integrity of the overall process."

Matthew Green, Head of Research and Consultancy UAE, CB Richard Ellis Middle East, said: "The solution suits both parties with liabilities on either side largely mitigated."

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