Friday, November 28, 2008

Follow Dubai business news in The National for Abu Dhabi

New property law amendment would make off plan buyers worse off says The National:
An amendment to a property law in Dubai has brought together a group of angry off-plan buyers who are fearful of losing a third of their investment to developers they believe may not even proceed with construction.

According to the new amendment, off-plan buyers wishing to halt their payments have to cancel their contract and forfeit 30 per cent of the total value of the property, instead of only 30 per cent of the money they have paid.

The investors, who formed their group after an online forum on the issue, have yet to see evidence of construction on their projects and fear losing more of their money to developers in the current global slowdown if they continue their payments – but under the new amendment they could lose a third of their properties’ value if they do not.
Regarding Damac and other developers:
Tameer Holding, a Dubai-based property developer, is the latest company to cut costs, and has told more than half its staff they would be laid off, according to a source close to the company. A total of 180 employees out of a workforce of 350 were notified that they would lose their jobs by Dec 31, the source said yesterday.

Tameer is majority owned by the Al Rajhi Investment Group in Saudi Arabia. It has announced more than 30 projects in the region, including buildings on Reem Island in Abu Dhabi and towers in Dubai Marina and Business Bay in Dubai.

On Monday, Omniyat Holdings in Dubai cut 69 employees from its workforce of 350, it said.

Damac Properties has cut 200 jobs, or about 2.5 per cent of its 8,000-strong workforce, officials said. Damac, Dubai’s largest private property developer, has also frozen plans for projects in India, Pakistan and North Africa because of the global economic meltdown. The company will postpone the launch of all new projects until market conditions improve. The founder and chairman of Damac, Hussain Sajwani, said it was committed to delivering projects already launched in eight markets including Dubai, Abu Dhabi, Qatar, Bahrain, Jordan, Iraq, Egypt and Saudi Arabia.

“We have stopped growing outside of the eight markets where we have already launched projects,” he said, adding that he would review proposed projects in India, Pakistan, Algeria and Morocco in 2010.

Mr Sajwani said the company had almost Dh700 million (US$190m) worth of instalments in escrow accounts to fund the construction of its projects in Dubai, and the company’s total borrowing in the emirate stood at Dh420m.

He said that there had been “zero borrowing” from banks for the construction of projects beyond Dubai, which were being funded by sales.

“The majority of our customers are paying from their sources – yes, a few are having challenges, which we are dealing with.”
"Zero borrowing?" or "Zero lending?" The comments on lending here are informative.


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