How safe is your Investment?

“We have now been advised officially by the Master Developer that the Palm Jebel Ali Master Development has been re-designed and that the Plot will not be delivered. As a result of this official confirmation, we now regret to advise you that the Palm Springs project has been cancelled.

Your attention is drawn to the Force Majeure clause of the Sale and Purchase Agreement which specifically deals with this event. While under no contractual liability to do so, and in recognition of the disappointment which this notice will undoubtedly cause, we are willing to make the following offer to you:

Either transfer to Unit(s) of your choice on another Damac development of your choice at a discounted price 15% below current market.

Or repayment of monies paid by you with 6% interest calculated from the date of each instalment payment.”

The above is an extract from a letter issued recently by Damac, one of the biggest players in Real Estate in the UAE, to investors who had bought units in the Palm Springs development at Palm Jebel Ali. Most had purchased their units well over 4 years ago, and were waiting patiently for the construction to begin, and for the eventual handover. It seems that Purchase & Sale Agreement is used as a licence for many developers to defraud their global customers. An don't be surprised if the UAE government does not come to your aid and you are left to fend for yourself.

The situation in Ras Al Khaimah is no different - infact some of the safeguards such as the use of escrow accounts now making headway in Dubai are not even being talked about in RAK. So for those waiting for delivery of their dream apartment or villa the question we ask is, how safe is your investment? What’s to stop your developer from issuing a similar letter 2 years from now, or saying that those promised balconies or parking spaces are no longer going to be part of the design? How many investors have actually read their contracts?

It would be prudent if investors in the Al Hamra Village were to check their Sale & Purchase Agreement and raise issues of concern sooner rather than later. We are firmly of the opinion that Al Hamra Estates is not immune from the possibility of letting down their investors. Their lack of cutomer care speaks volumes on the ethical code under which they operate. So go on, don't just sit back and dream the dream, take active steps to ensure your dream does not turn into a nightmare.