An investor facing possible forfeiture of properties he was buying from Emaar at a commercial development in Downtown Dubai has been offered a chance to use the amount he has already paid in another way.
A letter seen by Emirates Business from Emaar to the investor says: "Failure to settle outstanding due installments will result to forfeiture of properties due to default in payments. However, after the forfeiture of the properties you will still be given the option to utilise the amount paid within 12 months from the date of forfeiture, as per the current policy and subject to management approval."
The details of the options are not mentioned in the letter, which continues: "Your request either for a credit note, which can be utilised to purchase any Emaar properties or to cancel the sale of the above subject properties with full refund cannot be accommodated as it does not comply with our current policy and the sales agreement duly signed by you."
An Emaar Properties spokesperson said: "Emaar adheres to the legal requirements as established by Real Estate Regulatory Agency and the company's own internal policies with respect to forfeitures and reinstatement. "Emaar has introduced several customer-oriented policies and initiatives to provide the required support to our customers," the spokesperson added.
The investor, who wishes to remain anonymous, invested in four units in an under-construction tower, Boulevard Plaza T2. He is now unable to fund the purchase and wishes to switch his investment to any other completed Emaar property for which more finance would be available.
The total cost of the units is Dh110m and he has paid 20 per cent. He said the only reason he bought them was because he was promised 70 per cent financing on the project at a profit rate of 6.5 per cent.
However, following the downturn that hit the real estate sector in the third quarter of 2008, Amlak retracted its initial promise to fund 70 per cent. The lender said it would fund only around Dh20m across two of the units because it had stopped lending to commercial customers.
"The only reason why I decided to invest in the project was because of the 70 per cent finance that was available," said the investor.
"In the Emaar office, the sales person said this is a great opportunity and promised my investment will be backed with financing from Amlak. He showed me the sales brochures, which confirmed all this. However, that never happened.
"Now that Amlak says it will only fund Dh20 million, how do I pay the rest of the money? Now, I am looking at all my options, I am inclined to take whatever solutions I can get. However, there is an international practice that if a developer sells on the basis of the finance available at the time the SPA was signed, the deal is automatically cancelled if the developer cannot stick to its initial commitment to provide the finance. If the developer cannot fulfil its commitment, then it is not my fault that I am unable to pay on the project."
The investor further added that he has paid around Dh38,000 towards the evaluation of all the four units in the project in order to avail the loan from Amlak.
"Amlak officials said to process and release the loan I have to pay about Dh38,000 towards fees for the evaluation of all four units. On that understanding I signed the full sales and purchase agreement and paid them the Dh38,000. Unfortunately, they did not release the loan because as we all know the downturn in the real estate sector happened in the third quarter of 2008," he said.
Arif Alharmi, CEO, Amlak Finance, told this paper recently the company had not reduced the limit, since those whose applications were accepted for a particular amount remained the same, "provided their documents matched their applications' submission".
According to the investor, he would not be taking the route of approaching the Property Court as of now because it will take a long time and could prove to be a costly route. "I am in a difficult situation at this time. I am hoping somebody will get convinced from Emaar and act in all fairness." The investor also said Emaar has offered a consolidation
option from four units to two units for the investor. However, should the investor go ahead with all his investments, across four units, Emaar offered a 35 per cent discount on the units to the investor.
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