Palm Springs Project - Dubai

  • Thread starter OverseasCafe
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OverseasCafe

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Anyone who bought from Damac on the Palm Springs project in the Palm Jebel Ali will probably be interested in the following blog which contains links to a number of pieces on the latest developments (or lack of them) on this site.

The company is trying to cancel the project but investors aren't inclined to let this happen as the compensation they are being offered is somewhat derisory, so they're threatening to take legal action to have the project completed.

It could be a landmark case in this relatively immature market if Damac insist on cancelling the development and its investors do seek legal redress.
 
No sooner was this posted than the problem seems to have been resolved, or at least there is some hope that it will be. The following has been received from the Investor group:

"This statement has come from RERA today, they are the Real Estate Regulatory Authority in the Emirates. Mounting media pressure and evidence against Damac have them under pressure to find a solution on their decision and we await good news!

Should this good news not develop The Palm Springs Investors group will proceed with legal action.

Senior Management from Damac have declared now that they will be in contact with a proposal no later than the 21st of April.
 
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Are the investors not shooting themselves in the foot here? Due to the cancellation they are being offered their money back, with 6 per cent interest per year, but are complaining because they have been led to believe that they are worth a lot more.

The fact that the developers want to cancel the project strongly suggests that the properties are not worth that much and there is not sufficient demand to sell them. If the developers are forced to complete the project, they will probably have huge losses and possibly force them into bankruptcy. Not only that though, the original investors will be left holding properties in a project which will have many unsold units.

I am not sure what kind of outcome the investors realistically expect.

The whole debacle, raises some serious questions about where the demand for all the property being built in Dubai is going to come from.
 
On mature reflection the Investors group have decided that this latest piece of news, which they've not received in writing, is merely a ruse by Damac to stop them protesting until after the launch of a new development by the company on April 13th. Hence, they state that their campaign of awareness raising will continue, until they receive in writing confirmation that Damac are actually re-assessing their position on this matter.
 
Ah ok. This paints a different picture then.

If Damac are continuing to steam ahead with other projects, yet are cancelling this one, then it does look suspect.
 
 
I could be wrong here, but my understanding of the investors problem is that Damac don't want to simply cancel the project because it is not viable, they want to buy out the investors cheaply and then relaunch a more expensive project instead. It looks like they got their figures wrong and simply want to start from scratch again. The investors don't want to allow them to do this as they feel the product they purchased initially should be built as stated on the contract. Damac are claiming 'Force Majeure' but the investors are claiming that no such event has occurred as the plan change by Nakheel on the Palm Jebel Ali has actually enlarged the Damac plot.

If Damac are successful it would call into question the legal basis for much of what is being built in Dubai, which could shake the market very badly. This is not something that the Sheik is likely to be all that enthused about seeing as the whole property industry thing is his baby.
 
It appears that the pressure put on Damac to change their minds about the cancellation of this project has reaped dividends as the company announced today (Thursday April 10th, 2008) that it would build the project as promised, but with some minor changes to the initial plan. A report on this latest development can be found here.
 
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