Thursday, 25 June 2009

Investors form action group against Dubai developer

From 25 June 09

A group of investors are locked in a dispute with Dubai developer ACW Holdings after significant delays to its projects. Investors, some of whom have paid up to 80 percent of installment payments on units, have written to Dubai property watchdog RERA (the Real Estate Regulatory Authority) demanding a refund and cancellation of ACW’s projects over fears they may not be completed.
Around 85 property buyers have formed an action group called ACW Investors.
Some have refused to sign contracts, which they consider to be unfairly drafted in favour of the developer.
One such investor is UK-based Chandra Kumar, who bought at ACW’s Hanover Square project in November 2007 and has paid 70 percent of installments. He said: “To date I have paid nearly 70 percent of the purchase price with nothing to show in return. The project is little more than a hole in the ground.” "The contract is unreasonable. They are holding money and demanding money. I’ll see no return on my investment for three years- I want my money back,” he added.
Although the developer has insisted its payment plans have been changed and are now linked to construction progress, some investors complain they are still being instructed to pay date-based installments.
Only excavation work and no formal construction has started at five of ACW’s projects in the Arjan and Jumeirah Village districts in Dubai. (A photo taken earlier this month of the site is shown.)
A sixth project called Platinum Two is severely delayed due to a proposed road through the site by the Roads and Transport Authority (RTA).
“In the present economic climate it is easy for investors to feel nervous about their investment in Dubai. We as a company made the decision to focus all of our resources on construction,” the company said in an emailed statement to Arabian Business.
”We are in the business of building, and that is precisely what we are doing,” the statement added.
The developer blamed the late handover of plots from master developer Nakheel for the delay on its Jumeirah Village projects, which include residential schemes Kensington Manor and Knightsbridge Court together with Hanover Square, a serviced apartment project.
Scott Richards, director of client services at ACW said that apart from Platinum Two, the bulk of the company’s projects will come online by the middle of 2010, although the developer’s website states most schemes will be completed in the first quarter of 2010.
Hanover Square was originally scheduled for delivery in May 2009, according a Sales and Purchase Agreement seen by Arabian Business. But clause 2.4 of the contract states: “The Handover Date may be extended by the Seller for any Period or periods up to a maximum of one year.” In an email to one ACW investor in May, Essa Saeed Al Mansoori, head of the trust accounts section at RERA, said ACW’s projects were undergoing a "technical audit".
A spokesman for RERA said: “ACW is a registered developer and has five projects in Dubai and escrow accounts set up for each one and through which funding for all these projects is financed.
”ACW was established in 2004 and has two UK offices in London and Leeds as well as its Dubai operations in Emaar Business Park and Jebel Ali.
The company has launched seven freehold developments since 2006 with an asset value of AED5bn, according to its website.

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