Hundreds of investors on Dubai’s Palm Jebel Ali have called on developer Nakheel to restart the project.
An estimated 400 to 450 people, most of whom made down payments during Dubai’s boom years between 2004 and 2008, find themselves in financial limbo.
All the units under the Palm Jebel Ali project, including its signature and garden villas and water homes, are “under cancellation”, according to Dubai’s Land Department.
The project is registered with Real Estate Regulatory Agency (Rera) for off-plan sales and Rera “took the necessary action to cancel the project as per law No 6 of 2010” because the construction is yet to start, according to the Land Department.
However Nakheel says the project will be built, eventually.
“Dubai Waterfront and Palm Jebel Ali are long-term projects, which we continue to review in line with our business plan and market conditions,” said a Nakheel spokeswoman last week.
Last December, the Nakheel chairman Ali Rashid Lootah told Al Ittihad that the project would be built, but not in the short term.
The investors paid anywhere between 30 and 50 per cent of the villa prices as down payments that run into millions of dirhams. While many of them poured their life savings into the project, others had taken expensive mortgages during the boom years of Dubai’s real estate sector.
Nakheel had offered to transfer their stakes to its other projects around Dubai such as such as Al Furjan in Jebel Ali and Palm Jumeirah.
Investors interviewed by The National said they were unwilling to move on to these projects as they say the options offered were not attractive. Now, after years of uncertainty they are looking to have their home built.
In November, 74 homeowners wrote to Mohammed Al Shaibani, the head of the Ruler’s Court and Dubai Investment Authority, to look into the matter.
“The lack of certainty as to when our homes will be built has caused, and is causing, tremendous financial and emotional suffering for us and our families, and many of us continue to endure ongoing mortgage and rental costs while we are waiting,” the letter says. “Many of us have invested our life savings into the Palm Jebel Ali.”
With the real estate market picking up in Dubai, the investors are once again pushing Nakheel to restart the project. In the third quarter, Tecom Investments launched the 440-unit Villa Lantana in Al Barsha South between Dh2.3 million and Dh6.1m per unit. In June, Danube Properties launched 171 town houses in Al Furjan starting at Dh2.5m.
“Until 2012 there was not much movement in the market,” said Zubair Shaikh, a Dubai-based real estate investor who had bought five villa plots on the Palm Jebel Ali, including two for his extended family and three as investments, in 2005.
“With all the development going around close to Jebel Ali, people are now hopeful that the project will be launched.”
Nakheel is handing over 600 apartments and town houses as part of the Badrah community close to Jebel Ali golf club and proposed Palm Jebel Ali.
Between 2009 and 2010, Nakheel approached the investors with an offer to return their money in 2015 if they forfeited the plots. It offered to pay 30 per cent of the original prices that constituted the baseline down payment to Nakheel. Those investors, such as Mr Shaikh, who paid a premium of 80 per cent to buy the plots on resale, are still not ready for the offer.
“If the [project] is launched today, I will get more than 100 per cent premium,” he said.
The original prices of a garden villa in the project started at Dh2.8m and five- and six-bedroom villas at Dh5.11m. A water home was launched at Dh2m.
According to the original plan, there were 2,500 villa plots. In 2008, Nakheel extended the fronds to accommodate even more villa plots.