We're In It Together

It was heartening to hear last week that one property developer in Dubai has held up its hands and admitted that we’re in a mess and we need to work out an amicable solution with our customers.

The announcement from investors involved in the Park Towers development in Dubailand said that they had come to an arrangement with the developer to co-own the land.

 

According to RERA’s own website only 7% of the projects listed are on schedule, as per research conducted by The National.

 

For the other 93% of projects which fall into the delayed, don’t know, will never happen category it leaves all parties in limbo. The investor’s funds are stuck and they have no idea what the developer will do. The developer does not have any money left and is not sure where their next round of financing is coming from. It’s a Russian roulette scenario but fortunately no one has the money to buy any bullets either.

 

So the best and only solution must be to sit down and discuss matters in an amicable manner.

In order to help other projects also find common ground it would be great if either the developer or investors involved in the Park Towers development also share the following information publicly:

It’s a Russian roulette scenario but fortunately no one has the money to buy any bullets either.

·  What is the legal structure of this arrangement? Will the investors own an existing free zone company which may have contingent liability attached to it? Will it be a new free zone company, if so what will be the shareholding structure? Alternatively will it be a trust which owns the land and the investors then own shares in a trust?

·  Whether the land is fully paid up and registered at the Lands Department or whether payments are still due? If payments are still due, is the value of the land being renegotiated? How many more payments will be required to fully pay off the land and who will make these?

·  And crucially will the project ever be developed in its current form, or a new use? How about the master community in Dubailand, anything happening there?

There are dozens of other questions which could be asked and no doubt the developer and investors will be going through these together. Perhaps for everyone’s benefit they can share these once they’ve reached an outcome.

 

In the meantime we should congratulate them on taking such a positive step.