Business | Property

Dubai real estate investor says she's been cheated

Investor finds her purchase contract for a one-bedroom unit cancelled after paying nearly Dh500,000

By Jay B. Hilotin, Chief Reporter
Published: 00:00 March 25, 2010

Image Credit: xpress/abdel-krim kallouche
Dimple Bhatia, who paid almost half a million dirhams for a one-bedroom unit in Botanica Tower at the Dubai Marina, does not know how to get her money back

DUBAI : An accountant fears losing half a million dirhams she had paid for a Marina tower unit after she skipped three payments while negotiating for a discount from the developer.

Costly penalty

Dimple Bhatia, 29, a US-educated Indian raised in Dubai, said because the construction and hand-over of Botanica Tower was facing delays, she negotiated in August 2009 for a reduced price or payment scheme.

The developer, Select Group, cancelled her contract despite her offers to pay the unpaid instalments.

Till then, she had already paid Dh497,259 to Select Group for the one-bedroom unit, representing 36 per cent of the cash value of the Dh1.38 million property (or 24 per cent of the purchase price of Dh2.07 million based on the payment plan)

Bhatia had bought the unit at Dh2,654 per square foot at the height of the property boom.

Dubai's real estate market saw a freefall for 18 months with property prices falling over 50 per cent from their mid-2008 highs.

Bhatia now wants to withdraw the money. "I have asked for a deferred payment plan or payment relaxation — since Botanica is expected to be delayed by a year-and-a-half," she said.

She said she is clueless how to get her money back. "They cheated me. At one end, they were negotiating and at another end, they cancelled my contract."

Legally speaking

A recent report by Select Group said the core of the 36-storey Botanica Tower was already three floors above ground, with construction in full swing.

Soheyla Dad, Select Group's lawyer, said Bhatia has been in default since June 2009 and sufficient reminders were sent to her by courier and e-mail.

"The purchaser has never offered to settle her account to date," Dad said.

"Unfortunately, the negotiations (if any) proved to be unsuccessful for one reason or another - bearing in mind we are not legally obliged to negotiate where a purchaser is in default of their contractual terms."

Comments (17)

Added 01:16 March 29, 2010

I purchased a one-bedroom apartment in January 2008. This project was delayed for at least for one year without prior communication and explanation to investors. Anyway, I am in Dubai today for first time since I purchased this flat. I visited the construction site and it appears that construction work in going on full swing. Anyone in Dubai can witness this though I am not sure what will happen in the next few months. Apparently completion and handover date is August 2011. I was offered relaxation of payment for six months, about a year ago. The developers should be more transparent and realistic in communication. Does anyone know how we can check status of escrow accounts to find out how much money has been released to developers against the percentage of work done on site?

Farooq, Manchester, United Kingdom

Added 23:16 March 28, 2010

I feel that the authorities should support her. They should ask the developer to either give the cash back to her or at least give her a chance to pay her debts. Half a million dirham is not a small amount. I can imagine how hard she must have worked to earn this big amount of money.

Anonymous, Dubai, United Arab Emirates

Added 22:42 March 28, 2010

Dimple, go to Rera, they will help you. Don’t get bullied by the developer. All you need to see is the price at which you purchased your unit and the price you still want to pay is worth it, as most properties are 50 per cent down. So play smart, we’ve all lost money in this game.

Vijay Bhatia, Dubai, United Arab Emirates

Added 18:38 March 28, 2010

Unfortunately builders and developers are colluding and fleecing poor investors. Many mortgage victims such as me are paying mortgage interest through our nose for properties that have no hope of completing anytime soon. What have the banks got to lose, the builder can delay as much as he likes -- while banks continue to count the interest.

Sqadeer, Dubai, United Arab Emirates

Added 17:37 March 28, 2010

What a case? It is unscrupulous developers who are spoiling the name of Dubai, which I know is a fine city. The authorities should take action against them. The real estate market in most part of the world is in a bad shape and this sort of action by developers will definitely put the zeal of investors at ebb. The poor lady’s money has been grabbed by the developer. Shame on them! The construction cost has come down considerably and these developers are pocketing the money. I know that there are many good developers who helped their investors in bad times. How this developer has taken such action when the world economy is in a very bad shape! They should apologise to the lady and give her money back. If not, the authorities must take action against them.

Anonymous, Miami, United States

Added 17:23 March 28, 2010

It is a shameful act on the part of Select Group to tell the press that three floors have been completed. They sold Botanica two years back at very high price and they have delayed work. Rera should take such developers to the task. They have delayed the project while prices have come down more than 50 per cent. Other good developers have given 30 per cent off to their investors or have given them ready properties in lieu of the original ones. But this developer wants to grab investors’ hard-earned money. Such developers have spoiled the good name of other developers too. It is high time that authorities should take action against them.

Anonymous, Dubai, United Arab Emirates

Added 16:02 March 28, 2010

I am in a similar situation with a different developer. They delayed completion without sending any official notification to purchasers. After I paid the full amount for the apartment, they sent me correspondence to inform me of a further delay to the handover of the building after announcing its ‘completion’, with no dates specified. Upon numerous unfruitful enquiries, around December 2009, I went to visit their offices only to be informed that they were charging me for the community service/maintenance/chiller plus penalties for the more than half a year before handover. When I disputed the unfair charges I was insulted and yelled at. All this in light of their delay of over one year from the original completion date! Can someone advise where can I raise the issue to resolve the dispute? I really would appreciate that the authorities publish some sort of guiding booklet/website to help people in such situations. Or is there one I don't know of?

Anonymous, Dubai , United Arab Emirates

Added 15:56 March 28, 2010

I am the victim in the above article. I have been to the Land Department legal affairs and was thoroughly disappointed that they were not willing to help me and would repeatedly say that “only if the developer wishes to we can reinstate the property”. My question here is if the cost of the unit is Dh2,654 per sq ft at its peak in January 2008 and the developers started work late in 2008/early-2009 then they surely have saved more than 50 per cent of the cost to construct. In May 2009 even [well-known] developers reduced unit prices by 30-40 per cent to help the investors. Why would Select Group not want to help me? Why would they not allow me to swap with a ready property? They have malicious intent and even after asking them to re-instate my property they refused to do so. I am not willing to let go of my hard earned money in this manner. I will fight and make them realise that I do not accept any of their ill-intent.

Dimple Bhatia, Dubai, United Arab Emirates

Added 15:32 March 28, 2010

I read this story about the lady named Dimple Bhatia who was cheated in a real estate deal. Well done for writing this and keeping stories like this in the public eye. Fact of the matter is, I and many like me have been swindled and there is no recourse whatsoever! I have tried just about everything I can think of to try and get back the money I paid to a developer and after nearly three years, I have come up with absolutely nothing. To add insult to injury, my bank arbitrarily increased the rates of my mortgage (I am repaying a loan every month on a property that I will never own). I am now locked in a legal dispute with my bank as well and after more than two months we are still waiting for the Central Bank to rule on the legality of the bank’s actions. It seems that banks and real estate developers can operate with complete disregard of the law, business practices or standards of moral decency. In November 2009, the Dubai Land Department announced the introduction of a ‘pro bono’ free legal service to support the masses involved in the real-estate related litigations. Fact of the matter is that it is nearly the end of March 2010 and that service is still not being made available. It seems that there is plenty of positive spin, but no real substance or follow through.

Anonymous, Dubai, United Arab Emirates

Added 10:53 March 28, 2010

Nowadays it is a trend for developers to keep delaying projects whether they have money or not and some of them take advantage of the situation. I’m asking, what happened to the law of escrow account? Why is Rera silent on this matter after claiming that it was making the market more organised? If a developer hasn’t completed even 10 per cent of the construction, it isn’t authorised to take 40 per cent of the unit price as this lady has paid. In my opinion, she should go to Rera and complain. If Rera wants to have an organised market, it will do something – it has to take some action regarding this.

Anonymous, Dubai, United Arab Emirates