Business | Property
Investors bank on special court to settle disputes
Property investors hope the new real estate court, designed specifically to deal with disputes, will help clear the few clouds over Dubai's real estate market when it begins operations in September.
- By Suzanne Fenton, Staff Reporter
- Published: 00:02 August 10, 2008
Dubai: Property investors hope the new real estate court, designed specifically to deal with disputes, will help clear the few clouds over Dubai's real estate market when it begins operations in September.
Many people are looking to invest in the Northern Emirates, especially Ras Al Khaimah and Ajman, but may be discouraged by the lack of an escrow account law.
Michael Kortbawi, a partner at Bin Shabib and Associates law firm, said investing in Dubai is not risky if due diligence is observed, and if investors seek legal advice and ensure an escrow account is in place.
"From a legal point of view, the only security for your money is in escrow accounts. In Dubai make sure there is an escrow account. Outside Dubai, you should check the credentials of developers you are buying from. In the absence of an escrow account, you should focus on big investors with enough sustainability to do the construction on time," Kortbawi said.
However, even with escrow account laws in place in Dubai, some developers are taking advantage of investors.
Kortbawi was speaking to Gulf News following the latest real estate dispute involving Saudi developer Sokook.
Sokook had recently gone back on its promise to investors that construction on Ivory Tower would start in November, albeit three years behind schedule. It had written to investors telling them directly to withhold payments until construction began.
In this time, prices rose from about Dh570 back in 2005 to Dh1,200 at today's market rate.
About 40 investors in Sokook's Ivory Tower have formed an action group, with more investors joining every day.
Concrete proof
"These people [Sokook] had issued a letter saying that you can stop paying until we start construction. This letter is valid, it's binding. They cannot issue a letter and then retract it," Kortbawi said.
Sokook's legal adviser spoke with Rera on Tuesday when he promised contracts would be reinstated and construction would start, according to investors who were at Rera's offices.
With nothing signed and no timeframe given, investors are concerned the dispute will continue long into the foreseeable future, with neither construction or refunds in sight.
However, the legal adviser told Gulf News yesterday that the "contracts will definitely be reinstated" once the management has returned from their vacations. He also said construction would go ahead on November 1 as previously promised.
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