Palm Springs Investors Group

On 27 March 2008 the well known Gulf News published a report on Damac’s attempt to ‘buy back’ its Palm Springs plot on Palm Jebel Ali, five years after its launch. This reveals the serious nature of Damac’s unethical and, under any decent government, illegal attempt to squirm out of a binding contract. Surely if Damac is so big and successful, it must have ample funds in its coffers to make sure that those who invested their hard earned money with Damac over four years ago are treated fairly and not cheated. If Sajwani, the chairman of Damac Holding is a man of principle and wants the reputation of Damac to flourish, then he needs to ensure that the Palm Springs investors (or any other investors for that matter) are not treated as shabbily as they are now.

The Palm Springs episode brings the true state of the UAE real estate under the spotlight. It is disappointing to hear Marwan Bin Galita, chief executive officer of Dubai’s Real Estate Regulatory Authority (RERA), say “…get legal advice. It’s very easy but people don’t want to spend money. The problem starts with people signing a contract without asking anybody first.“ Many, if not most investors had taken legal advice before signing their contract with Damac four years ago. We hope RERA takes to task unscrupulous developers like Damac and comes to the aid of investors. We request that RERA monitor contracts being used by developers to ensure that these documents are fair, proper and legal, not like the ones used by most developers today, which allow statements like ‘force Majeure’ to cover anything that the developer may think fit.

HH Sheikh Mohammed has done an amazing job of bringing about the transformation of Dubai into a leading tourist destination. In a recent speech made at Berlin he said “Many leaders promise, we deliver.“ The contract between Palm Springs investors and Damac was a promise, a legally binding promise. All the investors ask is that Damac deliver.

Below is the text of the article that was published in the Gulf News on 27 March 2008

Investors in Damac’s Palm Springs project on Palm Jebel Ali are furious at being ‘bought off’ by Damac due to project alteration.Damac is now trying to ‘buy back’ its Palm Springs plot on Palm Jebel Ali five years after its launch.

Damac cannot go ahead and build the development without incurring a significant loss as the master-developer plans have changed.

Hussain Sajwani, chairman of Damac Holding said in a statement, “Damac Properties has been advised that the master development of Palm Jebel Ali has been redesigned and the Palm Springs plot will not be delivered. Due to redevelopment of the plots, the building forming the Palm Springs development cannot be situated on the re-allocated plot and, as a result, the Palm Springs project has been cancelled.

“In view of this, Damac Properties will provide customers an opportunity to release the investment made in Palm Springs and transfer the monies to any other project in the Damac Properties portfolio at a discounted price 15 per cent below current market value. As an alternative, Damac would refund monies paid with interest.”

However, according to investors, Damac is only offering six per cent per annum on the sum invested.

Investors are now considering taking the complaint directly to the Ruler’s Court. Buyers are already furious over repeated project delays, contractual issues and complaints of poor customer service by Damac.

Marwan Bin Galita, chief executive officer of Dubai’s Real Estate Regulatory Authority (Rera), said, “Any investor who has a problem or misunderstanding with a developer, please check our website, or email us or come and see us and we will clarify it for you. Or get legal advice. It’s very easy but people don’t want to spend money. The problem starts with people signing a contract without asking anybody first.”

By Suzanne Fenton, Staff Reporter