Dubai: Buying a property when a project is more than 90 per cent complete is no guarantee investors are going to get delivery of their homes at the earliest. For some investors at a Dubai development, it’s definitely turning into one long wait.
Hussein Ghannaj bought his unit at Damac Hills’ Gold Promenade cluster in early 2019, at a time when the project’s construction was well above the 90 per cent mark, according to the Dubai Land Department’s website. It was the same build status that prompted Ahmed to pick up a unit at the Celestia in Al Barsha South.
“I had purchased the property on their firm assurance given back in March 2019 that the project is ready for handover as of April 2019,” said Ahmed. “That’s as per the SPA (sales and purchase agreement). Subsequently, and on checking with the Land Department website, it showed the handover by August 2019.
“Till date, I have not received my apartment… and what’s worse is that I have to l stay in a rented accommodation while Damac keeps changing the handover date every other month without a proper reason. As for a project that the Land Department says was completed in August 2019.”
Delays are commonplace, and yet...
Project delays, as any developer and property owner will tell you, are part of parcel of the buying and selling experience. Most buyers now factor in a few months of delays for the handover process to start.
But for the delay to stretch past a year and then some is what’s troubling Ghannaj. “I was called in to go over the snagging process, which is standard practice ahead of the formal handover,” he said. “That process was completed and the impression given to me – and other investors in the area – was that the delivery process would commence soon.” (Snagging refers to the going over a newly completed home or building for minor faults that will then be rectified. Property owners are expected to go through the process before signing off.)
That’ not the only worry Ghannaj is having to deal with right now. “The bank that’s issued me a mortgage has already released all the funds to the developer,” said Ghannaj. “As a result, I am now paying mortgage installments to the bank – but there’s been no title deed received from the developer.
“Bank rules are pretty strict about this – the property owner has to submit the title deed to the bank once the mortgage funds are released. I am caught in a situation where I am meeting the monthly mortgage payments. But without a title deed being issued, the bank says the transaction could be deemed null and void.”
When will the handover happen?
Ghannaj and Ahmed and some other buyers in these projects have been told that they can now expect handover in the first-half of 2021. The developer’s customer representatives have also told them that in writing.
“As per the agreement DAMAC can reserve the right to extend the completion date by 24 months,” states a communication a developer representative had with Ahmed. “Based on the original anticipated completion date was April 2019… we can extend up to 2021.
“Kindly refer back to the possession and risk clause and the default termination clause.”
Ghassan says such clauses are there… but he’s got a counter question.
“If my property (which is a townhouse) and others near by wasn’t ready, why was I called in to go over the snagging details,” he asks. “Being asked to do the snagging means the property is technically ready.
“Delays in the handover are proving costly for me… the last thing I need is for the bank to take action against me for not submitting the title deed.”
Better off, relatively
Ahmed is in a much better place on the payment side, having used his own funds for the Dh700,000 one-bedroom apartment. There are more than 970 units in the project.
But he does not want to see a situation where these property values come under severe strain in the secondary market by the time the handovers start next year.
“The secondary market continues to be impacted and that’s a big worry,” he added. “My building has been ready for handover since March 2019. All unit owners are affected and only waiting for the handover to begin.”
The secondary market is indeed going through some volatility. Buyer demand is yet to recover anywhere near the pre-COVID-19 levels, and developers are more intent on completion of existing projects than launches.
Another 20,000-30,000 units will be handed over this year, even factoring in delays caused by the pandemic.
Ahmed and Ghannaj are hoping their units will eventually end up in the handover slot before this year is out. They won’t be the only ones.