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Desperate Property Developers In Dubai Legal Wrangles
April 22, 2009Article by Ray Withers
The once booming Dubai property market has imploded in to dozens of desperate legal wrangles between developers, banks and investors trying to cut their losses.
The plan for Dubai was to build a world leading property investment market – but the global recession has shown the best plans had their foundations in shifting desert sands.Everyone was so greedy to cut themselves a slice of the profits in Dubai real estate, hastily drafted contracts were signed and cash handed over to start the work.
Then came the recession.
More than half of the projects scheduled for the next three years have been suspended or cancelled as funding has dried up.Some Dubai builders face bankruptcy, claiming millions they are owed by developers with links to the state’s leading families”Anything that is not completed I think would be under some form of negotiation. It depends, of course, which developer you are talking about…” Ashley Painter, a partner at a Middle East law firm told Reuters Islamic Banking and Finance Summit in Dubai.
“They are renegotiating the payment terms with the borrower. We are dealing with numbers of them, dozens.”The Dubai government claims all outstanding development debts have been settled. Malaysian engineering firm WCT and Dubai’s Arabtec Holding are seeking at least $460 million compensation after contracts to build a racecourse were cancelled.Most of Dubai’s major developers are entirely or partly owned by the government or ruler, smaller contractors are holding back on their claims because they fear losing future work.
“If you decide to sue the government here you have to take the view that it is worthwhile doing so and that perhaps you don’t want to do any more business in the Gulf,” said Painter.UK consultancy Property Frontiers, who have one current Dubai development on their books – The Cube that is intended to be one of the most upmarket hotel destinations in Dubai’s new sport city – five square kilometres of sporting playground with a Formula One circuit to modern stadia for athletics, cricket and football.Best advice? Until the litigation is sorted out, it’s probably best to consult a Dubai property expert like Property Frontiers before putting any money in to a Dubai project.