Representatives of a group of 380 real estate investors are to meet with lawyers to discuss legal action against Dubai’s Emaar Properties after delays to two major developments worth a total of $760m.
They are set to meet with a group of lawyers on 1 April. The dispute is over delays to the completion of the AED900m ($245m) Claren One and AED1.9bn Burj 29 Boulevard developments, both located close to the Burj Khalifa tower in Emaar’s new Downtown district.
The projects were both launched in 2007 with Emaar funding them by selling properties on an off-plan basis, where individual apartments and blocks of properties are sold before they are built. Individual and institutional investors made payments in instalments during the construction process, effectively funding the projects.
Claren One, a 25-storey residential tower, was originally scheduled for completion in February. However, investors were informed in January that the project will not be finished until May 2011.
The Burj Boulevard development, which is to consist of two 45-storey residential towers, was originally scheduled to open in March. Emaar notified investors in February that the project will not be completed until two years after the original completion date.
The majority of the 380 investors have paid 65 per cent of the total cost of their properties, with some having paid up to 70 per cent, says a source close to the representatives.
The investors were offered the opportunity to swap their properties in the two projects for those in another Emaar development in late 2009 but the representatives say that the terms offered would have represented a substantial devaluation of their investments.
Investors were scheduled meet with senior Emaar executives on 30 March to discuss the projects but Emaar cancelled the appointment the evening before they were due to meet, says one source close to the matter.
“This is the second time that a meeting with Emaar has been cancelled,” says another source close to the investors. “We were told by Emaar that they would be in touch the next day to arrange another appointment but we didn’t hear anything.”
Emaar was not available for comment at the time of going to press.