It seems the project is 'on hold' and heated accusations in strong language are beginning to fly about from those involved. These are named as the UAQ Real Estate Development Company, established by the UAQ government, Ahmed bin Sulaiman Al Rajhi, a Saudi-based investment group, and Tameer.
This isn't a small project we're talking about, not a tower or two. This is, or was, a Dh30 billion (over US$8 billion) development which, according to the website would be:
...a masterpiece of modern planning and a vision of the way all cities should be.
A city with luxury villas, luxury apartments, malls and shops, restaurants, mosques, schools, hotels, parks and office towers.
A city with cinemas, wide-ranging sports facilities from a golf course to a riding center, cultural and entertainment centers and parks, and a major, international downtown district that is home to one of the largest malls in the UAE.
A city that covers 220 million square feet, that is both much-loved home and busy workplace to over 300,000 people.
It was going to look like this:
So I'd say putting it 'on hold' is a major story. For Umm Al Quwain, for the investors, for the companies involved and for real estate credibility here in general.
EmBiz247 is carrying reports on what's going on, or at least some of what's going on.
They had the original story on Thursday that the development was 'on hold' because, according to a company sales agent:
"There is a water and electricity shortage in UAQ...The government is telling us they don't have enough resources to provide water and electricity for the city. We don't have an idea how long this hold period will go on for.
The government told us they didn't know when the problem is going to be solved."
The head of the customer care section of developer Tameer added:
"We are experiencing delays because of lack of water and power supplies...The Al Salam City project has not been cancelled. The first cluster was expected to be ready in 2009 followed by others in the coming years. But because of lack of water and power there is a major delay."
Oh dear.
But today the Umm Al Quwain government has rejected the claims, in no uncertain terms. This really is very strong stuff, the like of which I've never seen in public before in this region. The statement from the UAQ government is saying the accusations are:
"mere lies that aim to impair the emirate's reputation...The allegations by Tameer are merely an attempt to evade their contractual commitments...The issue of water and electricity taken as an excuse by the other two partners to justify the delay in executing their contractual commitments are in their commitments under the company establishment contract...the other two partners have been slack in executing their commitments, giving weak excuses that are alien to the truth. The real reason behind the delay in executing the project is slackness by the other partners in executing their contractual commitments.
They explain that by revealing details of the contract:
Article 117, Para 4, of the company stipulated that 'the government is not responsible for supplying electric power, sanitary discharge, water, wire and wireless extensions'...
But while this fight is developing, what about the buyers who've poured money into it since it was announced in 2005? It seems there were plenty of them. According to a Tameer sales agent, about 70% of the project has been sold.
That's a whole lotta money.
A report in the same edition tells us that:
"Tameer is offering one of three options to dissatisfied customers who invested in Al Salam City. They can get a full refund, roll over their investment into Al Arjan, a residential project in Dubai, with a 20 per cent discount, or roll over their investment into any other project with a three per cent discount.
But then we get investor reaction that we've seen before in cancelled, altered, postponed or delayed developments:
One investor said prices have gone up so much that he can no longer afford a comparable two-bedroom townhouse in another Tameer project. He said two years ago he paid Dh550 per square foot for a townhouse in Al Salam City, but if he took his money out he would be asked to pay Dh1,200 to Dh1,500 per sq ft for a townhouse in Al Arjan.
We're going to be hearing a lot more about this one. And I wouldn't be surprised if the investors start to involve the international media.
10 comments:
I was also surprised by the 'language' used. But the lack of power in the Northern Emirates is nothing new. RAK is suffering from the same situation. Plus, SEWA isn't able to keep up with the demand - many towers in Sharjah are empty because there has been a delay in supplying power.
Umm Al Quwain truly is "getting ahead of itself". Power outtages are quite regular, as well as severe loss of water pressure. They need to fix the existing supply grid before catering to an additional hundred thousand people. Otherwise they'll just have another "Arabian Ranches" scenario.
It is money laundry for most of the investors. so u don't have to be sorry for them.
Imhotep, It is money laundry for most of the investors. That's another urban myth. A few are laundering money but many, many investors are single individuals buying an apartment to beat the rental price problem or as a holiday/retirement home. Why do you think the mortgage market is so large and growing so quickly?
Isn't it wonderful? I've also been looking at this with eyes wide open in delighted astonishment.
One to watch for sure!
seabee
Half of completed marina apartments are empty , why is that ?
ask any real state agent where the investors comes from?, most of them overseas from Iran , ****stan , Russia which all have suspicious businesses.
I agree with you that some ppl toward to buy properties instead of rent or for holidays, but still few in UAE can effort long time payment .
OK there are some victims & will not get fair compensation so ppl have to realize that the market is unsecured & it is risky to put any money in the real state.
Interesting: naughty of the developers to blame utility supplies. A similar thing happened at Palm Jumeirah. Apparently DEWA weren't invited or were not interested in supplying electricity, water and sewerage. Until about a year ago, when Nakheel met with them. Why can't local developers understand that this infrastruture has to be put in at the same time (if not before) the superstructure?
The simple fact is that all of these mega-developments are unsustainable in terms of energy cost. Oil production has peaked. The UAE is now importing gas. It has no realistic alternative energy strategy. Its all a bloody mess.
An it will get worse.
I think is not normal to launch a project, ask people there hard earned money and then delay the project, without any notice what so ever. At least it is not a decent way to do business or to threat people.
Please see www.alsalamcity.biz for further information. There is also a petition you can sign there!
Imhotep you are true m***** f*****
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