Developer sells units at construction cost
In a move that could set precedent for completion of projects in Dubai, a private developer is selling the remaining units in his residential project in Business Bay at just the construction cost, Emirates 24|7 can reveal.
“The developer just wants to finish the project and hand it over so to keep his market reputation intact. We have been advised by him to find a bulk buyer, who will pay the remaining money so the contractor can finish the project,” said the real estate agent, authorised to sell the units.
Both of the parties asked not to be named since they were working on finalising the deal.
According to the agent, the building is almost 65 per cent complete, with the developer now requiring limited funds to complete the project.
“We are not going to pay the contractor directly. Sales agreements for the remaining units (21) will be registered with the Land Department… funds will be transferred to the escrow account from where it will be released to the contractor.”
A number of projects have missed their handover deadline, with numerous developers now using the “force majeure” clause to justify delays in their projects.
“We believe, this is the first time, a developer is selling units, without making any profits, only to complete the project. This allows him to collect the dues from his investors, and rent out the properties which he is likely to repossess from defaulters,” the agent added.
Law No (9) of 2009 Amending Certain Provisions of. Law No (13) of 2008 Regulating the Interim Real Estate Register in Dubai, says where a developer has completed at least 80 per cent of the construction, the purchaser who defaults on payments is liable to lose all the money paid in until that point.
Real Estate Regulatory Agency CEO said last year that 202 projects had been cancelled in Dubai and more projects were likely to be cancelled this year. Property prices in the emirate have plunged in the past three years, with experts now predicting a recovery next year.
The Dubai Land Department has also unveiled the 'Tayseer' initiate to help developers get bank finance to complete their projects. A total of 40 projects within the Dubai Marina, Business Bay, and Jumeirah Lake Towers have been short-listed in the first phase of the programme.
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