Kuwait-based Al Mazaya Holding is still sticking to the payment collection process as stipulated in the sales and purchase agreement for its Queue Point residential project at Liwan in Dubailand despite the project being delayed by eight months, said a senior company executive.
"The payment collection process is running according to the schedule agreed upon in the contracts. Queue Point was scheduled for completion by September 2009 and is now delayed until May 2010," Salwa Malhas, Executive Vice-President of Al Mazaya Holding, told Emirates Business.
Most of the real estate developers in Dubai have shifted to construction milestone payment plans after their projects got delayed.
Al Mazaya Chief Executive Officer Khalid Esbaitah said: "Delays in the handover of land, completion of infrastructure within the Liwan master development and hiring the right contractors for the project are the main reasons for the delay in the completion of Queue Point. However, now all the obstacles have been removed and we are on track to hand over the development by May 2010."
A Tatweer spokesperson said: "We are only responsible for the development of infrastructure at Liwan City; the infrastructure works are progressing on schedule. All land plots have been handed over to the investors. We confirm all infrastructure is in line with the required development plans by the investors and developers."
Last week some Queue Point investors told this newspaper that work had begun on only parts of the project, while most of the site remained undeveloped. "Construction has started only on some buildings but a lot of the project is yet to be developed," said one investor who wished to remain anonymous. "In some places even the fencing has not been put in place. But the developer is constantly asking for payments. When we contacted the developer, it said we had a fixed payment plan and the payments had to be made. We have started paying, but we have been on the site and not a grain of sand has been moved."
But Malhas said construction had started on all the buildings in the Queue Point project. "The payment collection process is running according to the schedule agreed upon in the contracts," she said. "Usually the percentage of completion of a project is not measured by the completion on site, because there are many steps that need to take place before work commences on the site such as design, getting permits and mobilisation. These steps are considered part of the development process and must also be taken into account when considering the percentage completion of a project.
"All the payments collected by Al Mazaya from sales are held in an escrow account, as Al Mazaya is a Rera-certified developer and follows all the applicable regulations. All the plots in Queue Point have been awarded to contractors and are at different stages of construction. The construction status of the development is between 35 per cent and 65 per cent complete."
Esbaitah said: "Dubai has a regulation in place with respect to the collection of payments and we will follow the law. We shall not ask for anything from investors that is outside the law."
According to Al Mazaya's website, the developer has purchased a total of 40 plots at Liwan to build Queue Point. Mizin is the master developer of Liwan.
In March, Al Mazaya Holding said it was looking to consolidate some of its subsidiary companies in the light of the global slowdown in the realty market. "We have a number of subsidiaries that we may consider for merger or consolidation," Malhas said then.
Esbaitah said earlier this year that Al Mazaya would have no problems with buyers failing to pay outstanding amounts as measures had been put in place that ensured strong documentation and contractual obligation would protect the company from market fluctuations.
In May, Al Mazaya Holding reported a net fall in profits of 62 per cent to Dh63.55 million for the first quarter of 2009 compared with Dh168m in the same period last year.
The company's total assets reached Dh4.423 billion, while shareholders' equity reached Dh2.07bn.
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