Dubai: Some of the 180 odd projects that the Dubai Courts have now formally adjudged as being ‘cancelled’ could still have their uses.
Investors are sounding out the possibility of acquiring those cancelled projects, which stand a better chance of being revived by virtue of being in a desirable location or do not have substantial payment issues assigned to them.
“As many as 20-25 per cent of these can be revived if the right investor support levels can be found ... and they are present,” said Samir Munshi, Managing Director at Silver Heights Real Estate. “As a company, we are currently involved in reviving three such projects.”
But for that to happen, the new investors will have to clear certain guidelines set by Tanmia, the dedicated division within the Real Estate Regulatory Agency (Rera) handling distressed projects in Dubai.
According to Munshi, these would require the new investor/developer putting up 20 per cent of the total cost of development in the form of cash or a bank guarantee, and the contractor placing a performance guarantee amounting to 10 per cent of the revised project’s cost.
“In certain instances, there are contractors who are taking it upon themselves to take the project forward towards completion,” said Munshi.
Hot spots
“Many of the cancelled projects are located in Sports City or Jumeirah Village Circle, both of which are witnessing major development activity and becoming residential hot spots. This has made reviving and completing a cancelled project just that much easier. Being located in an established location immediately scales up a project’s chances.”
On whether it was possible for a new investor to suggest changes to the original project — in keeping with current market realities — Munshi said, “Where there are better efficiencies to be realised from those changes, I don’t think an investor would face a problem.”
Turnaround process
According to market feedback, Dubai’s realty agencies are putting their full weight behind the turnaround process.
“There are a few negotiations taking place with prospective investors locally and those from the Gulf — even institutional names — to see what they can do on the cancelled projects,” said Aakarshan Kathuria, Co-founder of EstateUp, a recently set up realty services firm.
“Much will depend, obviously, on the extent of liabilities stacked up against the cancelled ventures.
“How much of the original records — detailing the transactions by the developer with the original buyers — remain is the moot point. It could be that paperwork may not exist that can give a full picture of the extent of a cancelled project’s liabilities. Those are the grey areas that need to be cleared at the regulator’s level.”
