Business | Property
Dubai gives ultimatum to Saudi developer
Dubai's Real Estate Regulatory Authority (Rera) has given Saudi developer Sokook until on Tuesday to explain why investors in Ivory Tower were told to stop payments, leading to the termination of contracts.
- By Suzzanne Fenton, Staff Reporter
- Published: 23:25 August 4, 2008
Dubai: Dubai's Real Estate Regulatory Authority (Rera) has given Saudi developer Sokook until on Tuesday to explain why investors in Ivory Tower were told to stop payments, leading to the termination of contracts.
Hundreds of investors had purchased off-plan units in the 20-storey residential unit launched in 2005.
Sokook had promised Rera last month that construction of Ivory Tower would finally begin on November 1 after a dispute over a bank guarantee with Tecom - master developer of International Media Production Zone (IMPZ) - is resolved.
Sokook is still cancelling investor contracts, blaming investors for not paying their monthly installments.
However, in letters to investors dated on about February 19, Sokook wrote that until construction began, "all payments in the meantime are still postponed", contradicting itself.
Furious investors in Sokook's Ivory tower project have now set up an 'investors group' which they hope will force Sokook to reinstate their contracts or refund investments at current market values.
There are currently about 30 investors in the group and they have appointed a lawyer.
Investors are concerned as Sokook had said in letters at the beginning of the year that "future payments" would go into an escrow account. There was no mention of previous payments.
Investors told Gulf News that they want their contracts reinstated or accept refunds on their investments at the current market value.
According to one investor: "They are offering 10 per cent at best and our money back. The price for IMPZ per square foot has tripled since we bought into the project."
One investor bought his apartment for about Dh570 to 580 per square foot over a year ago. The investor estimates it is now worth at least Dh1,200 per square foot.
Sokook is due to explain to Rera today why investors were told to stop payments and why their contracts were terminated.
Similar real estate fiascos have created pockmarks on the face of Dubai's foreign-investor-dependent real estate market.
"If Sokook is approved and treat their customers like this then I hate to think what unapproved developers are like," said an investor. Both the general manager and manager of Sokook were unavailable for comment as they are on vacation.
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