In a recent interview with Construction Week, Peter Riddoch says
“Something that we’ve been working on pretty hard, particularly during 2009, is what we call our Recovery Programme. We’ve been very committed to the construction and delivery timetable of our projects; in fact we called last year the year of construction.
We’ve been able to speak to some investors who are nervous about the market and have offered them the chance to come out of a project that will be completed much later in the future and move into another project that will be completed, lets say this year or the early part of next year.”
Damac recently wrote to investors to confirm the construction of Palm Springs on the new plot allocated by Nakheel. Without doubt, RERA has rightfully flexed its muscles to ensure that the Palm Springs development has become re-instated. The Palm Springs Group sees the re-instatement as an opportunity for all involved to promote a healthy, transparent, and collaborative environment in the Dubai real estate industry.
“We are delighted that RERA, Nakheel, and Damac are now unanimous in their support of the development and we look forward to working collaboratively with Damac in the successful execution of the project.”
Furthermore, the letter to Damac has asked for details of the re-instated project, including apartment plans and construction timelines, as well as monthly updates through to project completion.
It is heartening to hear the CEO of RERA, Marwan bin Ghalita recently state that “we cannot let people promise and not deliver in Dubai” – this sends out the right signal to investors and developers alike and bodes well for the continued the growth of Dubai real estate industry.
Damac have finally sent written confirmation of the re-instatement of Palm Springs to investors. Whilst the Palm Springs Group is pleased with this development, the communication merely rubber stamps what has already been issued to the press. The main concern now for investors is that Damac confirm in writing details of the project, such as the plan specification, build quality, start and handover dates, and whether it is in keeping with the original contract.
One investor commented, “we will be writing to Nakheel and Damac requesting them to disclose the new plot handover date and details of any planned changes as a matter of urgency” She went on to say that the Group intend to monitor developments to ensure that any changes are compliant with the contract provisions. It is possible that investors may request a meeting with Damac to get clarification of the details and to iron out any concerns.
Barring any nasty surprises contained in the ‘detail’ of the re-location of Palm Springs, it would seem that both investors and Damac will soon be able put their differences behind them and look forward to the dream that was, and hopefully is, Palm Springs. Let’s hope Nakheels’s and RERA’s role in helping to resolve the crisis serves to strengthen the reputation of Dubai real estate.
Tags: Palm Springs
Damac is to proceed with the Palm Springs development at Jebel Ali, and in keeping with the original investor contracts according to a report in Gulfnews today.
Bin Mejrin from Dubai Land Department said “Damac has undertaken to implement and accomplish the project according to the contracts with investors and has shown a keenness to abide by the laws and regulations of the department“.
ArabianBusiness.com reports that Hussain Sajwani, chairman of Damac Properties said in a statement emailed to them, “after extensive discussions, Damac Properties is pleased to announce that the Palm Springs project, located on Palm Jebel Ali has been re-instated and will be delivered to customers”.
As mentioned in an earlier post on this website, let’s hope there’s no ‘devil in the detail’ when Damac issues written confirmation to investors. Most investors, for instance, are of the opinion that the legal action should commence immediately if there is an unreasonable or unacceptable delay in the start of construction of the project.
Palm Springs investors have an expectation from Damac that the re-launched Palm Springs development on the new plot supplied by Nakheel will be of the same or higher standard to the one they originally signed up for. Click here to see a description of a one bed unit in the original Palm Springs design.
Click on plan to enlarge.
A number of Palm Springs investors have had calls from Damac informing them that the ‘cancelled’ Palm Springs project is to be re-instated and will be located on the new plot provided by Nakheel. One UK investor said “I‘ve had a call from Damac informing me that the Palm Springs project will get the go-ahead now, but due to the re-allocated plot, there may be some changes. Damac told me that they will confirm this in writing within the next 10 days.”
The Palm Springs Investors Group is cautiously optimistic that this signals the end to the dispute between investors and Damac, and pending written confirmation of the decision to go ahead with Palm Springs, the Group is will be looking to suspend any further negative publicity against Damac. Let’s hope there is no ‘devil in the detail’ when investors receive official confirmation from Damac.
Some investors, however voiced concern by warning that it is now vitally important that all investors stay united and continue to monitor Damac’s future construction progress of the development.
It is quite possible that the dispute could have dragged on much longer, and most in the Palm Springs Group acknowledge the support that Nakheel and RERA has given in helping to resolve the matter. Let’s hope that Palm Springs investors receive official confirmation from Damac of the decision to build Palm Springs soon, so that the Group can then formally start backing Damac 100%, and publicly share their confidence in RERA, Damac, Nakheel, and indeed Sheikh Mohammed.
ALso read ‘The construction of Palm Spring Jebel Ali to begin soon’ in the Dubai Chronicle, ‘Damac u-turn on Palm Springs project’ in ArabianBusiness.com, and ‘Pressure pays as Damac u-turns on Palm Springs‘ in Kippreport
If Damac was hoping that delaying their response to investors demand for justice would cause the Palm Spring Investors Group to fragment, then the news for Damac is not very good. Inside sources report that the Group has, if anything, become even more united and resolute in their aim to ensure Damac does not short-change investors. It is clear that the Group is not ready to accept anything less than that Damac
provide a like-for-like apartment at same cost and terms and conditions on a new Damac development at Palm Jebel Ali, or
provide financial compensation at current market rates for Dubai Waterfront/Palm Jebel Ali
The overwhelming majority of the Palm Springs Investors Group is of the opinion that Damac is procrastinating unnecessarily, and the legal action should proceed immediately after the deadline of 11 April 2008 as planned. One of the Group’s co-ordinators said “Funding to commence legal proceedings has been place for some time, and we do not intend to let up with our efforts to seek a fair and proper outcome using all means at our disposal.”
Barring a decisive intervention by RERA or Sheikh Mohammed, the campaign by The Palm Springs Group is set to intensify if Damac continues to remain silent – media reports saying that “Damac was not available for comment” will simply no longer do. We can only repeat that resolving this crisis is in the interest of all concerned, investors, Damac, the Dubai real estate industry, and the Dubai authorities.
“We have had a number of representations from investors on the decision to cancel the Palm Springs project. We are looking at various scenarios and will make a statement in due course.“ Niall McLoughlin, senior vice president of corporate communications, Damac.
Source: ArabianBusiness.com, ‘Damac hints at backtrack on Palm Springs axe’, 06 April 2008
“…the situation does need some government intervention before it gets out of hand.”
Naz UK, 1 April at Skyscrapercity.com
I genuinely believe that Peter Riddoch and Hussain Sajwani are honourable and honest people. Continue Reading Recent Comment by an Investor…
Read the latest report at DubaiBusiness.com, published today. We urge readers and investors to leave comments there!
“….the revised masterplan [of Palm Jebel Ali] allowed for significant improvements in the design. It was now the responsibility of Damac to ensure the delivery of any units it has sold within these plots to customers. We are extremely disappointed by this recent development [Damac debacle]”, Al Qamzi, Nakheel
Source: Gulf News
A recent report in the online business journal Kippreport cites Hussain Sajwani, chairman of Damac, speaking in 2006 as saying
“The key to making a successful investment in the property market is to treat the deal as a long-term investment, have patience, buy only quality products in strategic locations, and always go for a quality developer“
In light of the recent ‘cancelling’ of the Palm Springs project by Damac, Sajwani’s investment advice is a serious indictment on his and Damac’s credibility. If Damac do not act decisively to resolve the Palm Springs debacle it is inevitable that the company will suffer long term damage, with ramifications for the whole of the Dubai real estate industry.
Read the full report here
Posted by Lee, Dubai, UAE on 1 April 2008 at 20:10 UAE time
This is getting interesting!! Damac says one thing and now Nakheel has come out and contradicted Damac’s “story”. Hmmmm? Who should we believe??? Continue Reading Comments on Nakheel Questionioning Damac’s Motives…
Nakheel, the Master Developer building three palm-shaped islands off Dubai’s coast said it had informed investors of changes to The Palm Jebel Ali masterplan over 10 months ago. Nakheel also confirmed that it had “positive” correspondence with Damac as recently as February, in which Damac gave no indication that it would be shelving the project.
In a statement, Marwan Al Qamzi, the managing director of Nakheel said
“We are very surprised by the statements made by Damac suggesting that the reasons for the recent cancellation of its Palm Springs project are due to revisions in The Palm Jebel Ali masterplan.”
Our last interaction with Damac took place in February of this year and was one of positive engagement, which left us with the firm view that Damac was proceeding with the project.
From Nakheel’s perspective, Damac’s cancellation of the Palm Springs project must be linked to other development issues specifically related to the project.”
The Palm Springs Investors Group are hopeful that Damac will come up with a satisfactory resolution to the issue of investor compensation. One investor commented, “The Group does not wish to see the continued escalation of the bad publicity Damac is receiving in the media, we’d rather work with Damac as we have been doing for the last 4 to 5 years.”
In response to ‘Palm Springs investors face millions in losses article
Damac’s action tantamount to FRAUD
Posted by Palm Springs Investor, UK on 1 April 2008 at 04:24 UAE time
“Damac said it understood the situation was serious and unfortunate, but that it was “completely outside Damac Properties control”. Continue Reading More Comments at ArabianBusiness.com…
On 31 March 2008 ArabianBusiness.com published another article on Damac’s shameful tratment of its most loyal investors. Below is a summary of the article. The full article may be viewed here.
Nearly 60 UK-based investors in the project have formed a group to take on Damac, giving the developer until April 11 to reverse its decision or face legal action.
London-based investor Karl Brown told ArabianBusiness.com members of the group were facing average losses on their investment ranging between 300,000-600,000 dirhams ($81,000-$163,000), depending on when they purchased their unit.
Brown said he bought his Palm Springs apartment on resale in March 2006 for 1.5 million dirhams and believes the property is now valued at more than 2.2 million dirhams.
However, he will only receive the original purchase price, estimated at about 1.1 million dirhams, plus 6% interest for each of the five years since the project’s launch.
Damac have told Brown that it was not the developer’s contractual obligation to refund money that was paid on resales.
UK investors’ losses are compounded by the rising value of the British pound against the dirham.
Brown said the group, the Palm Springs Investors Group, was appealing to Dubai’s Real Estate Regulatory Authority (Rera) and Nakheel, master developer of the Palm Jebel Ali, for assistance with the dispute.
There are quite a lot of comments at the bottom of this article published by ArabianBusiness.com, you can also add your comments there.
Damac threatened with lawsuit after project axed
Posted by H L Nagpal, London, United Kingdom on 30 March 2008 at 21:32 UAE time
It is foolish for a company like Damac to back out from a project just because it is going to make a loss. If Damac does not care about its goodwill, the UAE Government should make it honour its obligations as otherwise its effect will be far reaching. Investors in the West are investing heavily in the upcoming real estate of UAE on the understanding there is rule of law. Damac have launched projects at heavily inflated prices which are going to bring bumper profits to the Company. If the company is going to walk away from its contractual obligations, its effect on other projects by other developers will be enormous. One bit of bad news can ruin the whole market. Continue Reading Comments at ArabianBusiness.com…
In the wake of it’s ‘cancelled’ Palm Springs project, Damac held an exclusive product launch of Jumeraih Village South on the 27th March 2007 at the Carlton Hotel in Kinghtsbridge, London. Little did they realise that the Palm Springs Investors Group also had plans to attend the event, not to be sucked in by false promises and glitzy presentations it has to be said, but to make the unsuspecting potential investors aware of Damac’s track record with the Palm Springs episode.
Although given very short notice, quite a few members of the Investors Group managed to be present at the event. One member of the Group told us “I went last night and met Andrew Ellis and a friend of his in the lobby and we managed to get into the presentation and spent about an hour bending the chairman’s ear voicing our complaints. I also stood up and exposed the company to whoever could hear, after a bit of fortification. This resulted in the UK Sales rep coming over to see us and he listened to what we had to say after initially trying to get us removed!“
The Palm Springs investors were also handing out leaflets to publicise the scandal (click here to view). Said another investor “This is only the start, if Riddoch and Sajwani think we are going to take this lying down, then they had better re-think.“ We have to agree with this sentiment; it is in the interest of Damac to resolve this issue quickly and fairly. After all, Palm Springs have been the most loyal supporters of Damac, having been patiently waiting for over 4 years for delivery of their apartments. One Palm Springs investor who is a lawyer by profession said “we’d prefer to be backing Damac 100% as soon as the situation is fairly resolved, just as we have been doing all these years.” We could not have put it any better.
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. Continue Reading Damac’s Buyback Plan Exposed in Gulf News…
Force majeure, French for “greater force”, is a common clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as war, strike, riot, crime, act of nature (e.g., flooding, earthquake, volcano), prevents one or both parties from fulfilling their obligations under the contract.
However, force majeure is not intended to excuse negligence or other malfeasance of a party, as where non-performance is caused by the usual and natural consequences of external forces (e.g., predicted rain stops an outdoor event), or where the intervening circumstances are specifically contemplated.
It is imperative that Dubai’s Real Estate Regulatory Authority make it mandatory for all contracts to include the clause “Any Party asserting Force Majeure as an excuse shall have the burden of proving that reasonable steps were taken (under the circumstances) to minimize delay or damages caused by foreseeable events, that all non-excused obligations were substantially fulfilled, and that the other Party was timely notified of the likelihood or actual occurrence which would justify such an assertion, so that other prudent precautions could be contemplated.”
There’s plenty of behind-the-scenes activity going on by the Palm Springs Investors Group to ensure their rights are protected. We are not at liberty to disclose the strategy of the group at this stage, suffice it to say that it included a number of initiatives which if put into action could have a very damaging effect on DAMAC’s reputation.
The group is hopeful that Damac, taking note of the Group’s grave concern with the cancellation of the project, will act swiftly to deal with the situation by offering a full and fair settlement, or alternatively an equivalent unit in any new plot provided by the master developer. The website will therefore briefly pause it’s activities to help facilitate a resolution to the situation.
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So keep watching this space!
The Damac situation could seriously damage the Dubai market… I can’t believe the UAE government hasn’t done anything about them yet…
…they have come up with a silly offer like this to test the water and hope investors will make a hasty decision of accepting the offert. They did not tell us what would happen after the deadline of 30/3/08 because they are not that sure about the outcome of the first stage of the show. If you look carefully at the accompanying FORM you will clearly see that this form has nothing to do with the content of the cancellation offer. It is merely a REQUEST FORM to initiate cancellation of your purchase. DAMAC is trying to get as many investors as possible to opt out at each stage, like they did when they offered 10% to investors in 2006 to cancel their purchase (which some accepted).
And how are Damac going to feel if in every property show they do and when they launch any new projects there are people distributing leaflets explaining how investors got conned with Palm Springs?
This is the ultimate con by DAMAC – not a matter of delays, lack of compensation, but trying to cancel a project simply because the Palm Jebel Ali has been altered. Nakheel are providing the plot as agreed, which is OUR plot, but DAMAC is trying to rob us of the new plot. They also think they will get away with it, but they seriously did not know the scale of the feeling of investors. Remember that either have been waiting for 4 years, or even worse, paid huge premiums. With the amount of shit that will hit the fan on this one it is going to create some serious ripples.
…..believe me us “Brits” will not take shit lying down. So it is best for all parties to mediate and see sense. All we want is an opportunity to be in PJA as our existing contract states! We have waited four years for this.
we must stay united and fight DAMAC who want to cheat investors; this will be a test for Dubai as a whole and its reputation for outside investors to buy there.
When we win this case, it is will not only be good for Palm Springs investors, but for Dubai as a safe place to invest your money in. If Sheikh Mohammed lets us down then I will definitely never buy in or visit Dubai again, and will strongly advise others to do the same.
Yet more adverse publicity for DAMAC, this time from David McGee’s blog direct from Dubai:
DAMAC’s attempt to ‘buy-back’ its Palm Springs project, Palm Jebel Ali 5 years after its launch will surely go down as one of DUBAI’s greatest disgraces. While Damac is not owned by the Dubai government, it presents itself around the world as ‘Dubai’. What has happened here is that Damac sold out the project 5 years ago, and cannot now build it without incurring a significant loss. It is attempting to buy out all of its customers by offering to pay them a measly 6% per annum on the sum invested. There are other Developers who find themselves in the same position, but are not resorting to these disgraceful tactics. Greedy Damac doesn’t deserve your money. A real case of ‘I will only play this game if it suits me’ and ‘expect me to go home if I am not winning’. Surely Damac are bigger than that ?
Sadly, the answer is no. Damac’s response would seem to be “no sir, we are not interested in honouring contracts given to customers who invested in Palm Springs in good faith, after all we are so big that we not give a damn about those puny people called investors”. And to make all you poor Damac clients feel even more irritated, Damac have either sold the land they were going to build Palm Springs on at a very enormous profit, or they will launch a new project – when things are ‘quieter’. Yes, this is how Damac are. Just not to be trusted. You are not valued by them. You are just an easy profit target, ready to be abandoned when they have your money. You are just potential victims of their equally disgraceful pricing strategies. This is one incident that needs to hit the international newspapers. I am not sure Sheikh Mohammad knows what is going on here. And he would NOT be happy with the damage Damac’s decision will have the hard earned, and deserved, respectable reputation of Dubai. It is time Damac were brought to book.
We await with interest for some response from HH Sheikh Mohammad, and from the Dubai authorities. The Palm Springs Investors Group do not intend to let the matter to rest until fair and proper justice is achieved.
DAMAC does seem to have a history of treating its investors shoddily. This report by Khaleej Times Scrutiny Investigations Team makes interesting reading:
Investors in several of Damac Properties’ residential construction projects are threatening to withhold payments from the company in protest over the firm’s failure to finish buildings on time. Damac, which started life as a catering company but now bills itself as Dubai’s ‘largest private property developer’, is facing an unprecedented backlash from residential property investors who bought ‘off plan’ apartments in advance of construction.
Buyers are furious over repeated delays in construction, contractual wrangling over compensation, complaints over interior finishes and poor customer service. Of the five projects (out of its advertised 15) Damac has started, all are running substantially behind their projected completion schedules.
Continue Reading Damac Investors Lash Out Over Construction Delays…
Another recent news story concerning DAMAC readers might be interested to read:
DAMAC’s Marina Terrace tower has been hit by a second major pipe burst, which caused panic among residents as fire alarms were triggered and water cascaded down the building’s stairwell.
It comes less than three weeks after Construction Week revealed a catalogue of construction problems on the developer’s first tower in Dubai – still in ‘snagging’ 14 months after it was due to be completed.
And it is less than four weeks after another pipe burst set off fire alarms in the middle of the night.
Several apartments received water damage between the ground floor and the 21st floor – where the pressurised mains pipe that supplies the building’s fire sprinkler system, ruptured.
Furious residents are demanding that DAMAC compensate them for water damage caused to their apartments.
One said: “I was unaffected by last night’s catastrophe, but I am extremely sorry for all residents below the 21st floor who I understand have substantial damage from the major water leak last night.
“This is totally unacceptable in a new building.” Another resident said: “It is unacceptable and disgraceful the way things are being handled around here.
“Our other unit was severely damaged along with the others; the preliminary estimate is in the thousands, and this is not what we signed up for.
“Coincidently, our unit had a pipe burst in February and was completely flooded.”
If the Palm Springs project ‘cancellation’ by Damac is anything to go by, then Dubai’s reputation as a premier and safe place to invest in real estate is heading for a nose dive. And it seems that the Dubai government is happy to sit by and watch investors being ripped off. If appropriate action is not taken soon, then contracts written by Dubai businesses will not be worth the paper they are written on!
A group of distressed investors (284 to be precise) are suing Tameer Holdings over its failure to deliver apartments that were supposed to be handed over this year. Investors have rejected an offer of 25% on top of the money they have invested.
In spring 2004 investors signed contracts with Tameer Holdings to purchase apartments in Al Ameera Residential Tower development, Sharjah, expecting to move into their new homes in August 2008. The Al Ameera residential tower was to be the largest of its kind in Sharjah mirroring its counterpart in Dubai, the Princess Tower. But that was then.
In August 2005 the buyers received a letter stating that the Al Ameera Tower project had been delayed due to the lack of a licence, resulting from a delay in the implementation of a new real estate ownership law. It is mind boggling that Tameer were selling real estate with contracts that were relying on a yet un-enacted law! As far as we know the law in Sharjah hasn’t changed since the seventies. By any standards, Tameer have misled investors, and their actions need to be investigated by the Dubai government.
The picture of Dubai real estate that seems to be emerging is one where fraud is being overlooked by the government. It is simply not acceptable for Tameer to claim that Sharjah’s property ownership law stipulates that non-GCC nationals can own a 99-year leasehold but not freehold and therefore foreigners were legally not entitled to buy into Al Ameera. Why sell to foreigners when they knew very well this to be the case?
Tameer recently awarded the Arabian Construction Company with the honour to help materialise the Princess Tower by 2009. The tower, based in Dubai Marina, also announced in 2004, is expected to stand over 380 metres high, which would make it the world’s tallest residential tower.
This summer, Tameer made it clear that the law did not allow expatriate ownership and advised that it would cancel all contracts with non-GCC nationals. What happened with local prospective owners is not clear.
Angry investors in the coveniently ‘cancelled’ flagship Palm Springs project are planning to distribute leaflets at property exhibitions hosted by Damac, or exhibitions where Damac is participating. Also being considered are protests and distribution of leaflets at Damac investor meetings to highlight the unethical and possibly illegal attempt by Damac to cancel the Palm Springs project. Some investors have already been in contact with the BBC, Channel 4, and other media to alert them of the dangers of dealing with Damac.
Unconfirmed reports suggest that a number of investors are on their way to Dubai to personally put their case to HH Sheikh Mohammed, ruler of Dubai.
It is our opinion that Damac need to take swift action to prevent damaging their reputation and their desire to become a leading global Real Estate player.
Damac should be aware that investors may adopt the following plan of action:
- Try mediation with Damac to resolve grievances
- Complain to Nahkeel
- Complain to Trading Standards, London where Damac’s head office is based
- Complain to UK Chamber of Commerce with a paid advert in UK Press
- Write to HH Sheikh Mohammed asking him to intervene
- Take group legal action in UAE court for consequential loss.
The possible solutions are either pay investors at current market prices, swap like for like. or for Nahkeel to build it for investors.
Investors are urged to contact Peter Riddoch directly on firstname.lastname@example.org and direct number 00971504549430
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DAMAC Properties is the property arm of DAMAC Holding, a global business conglomerate with over 6000 employees in 18 countries. Established in 1996 and headquartered in Dubai, the total value of DAMAC Properties’ portfolio currently stands at US$4 billion. Furthermore, DAMAC Properties recently won three prestigious awards at the CNBC Arabian Property Awards 2006. Property developer bagged the best development award for ‘Oceanscape’, best architecture award for ‘Ocean Heights 2′ and the best website award for the company’s website – http://www.damacproperties.com. In December 2006, the company also won the IREF ME award for the best residential development in the UAE. In 2005, the company was honored with three prestigious Bentley International Awards in the categories of – Best UAE Development for Marina Terrace, Best Architecture for Ocean Heights-1 and Best Developer website at a ceremony in London
Back in 2002/2003 Damac announced an exciting project called Palm Springs to be developed at The Palm, Jebel Ali. Damac described the project as
Enviably located in a prime location on the Palm Jebel Ali’s Crescent, Palm Springs is the apex of aspirational living. Having commissioned award-winning architects, we have created an architectural tour de force. Palm Springs offer uninterrupted sea and water views.Situated elegantly between the Two world class hotels, our building, which is managed by a prestigious international hotel chain, boasts a wealth of superlative amenities. A unique and exclusive residential property on Jebel Ali, Palm Springs is the Zenith of desire.
Naturally there were plenty of investors who were happy to invest in this dream project, especially as the project was by a well know player.
Fast forward to 2008 and meet the smiling face of Hussain Sajwani, Chairman and Founder of DAMAC Holding. Ask him about the Palm Springs project and he will refer you to this letter recently issued by his company, which tells customers
“We have now been advised officially by the Master Developer that the Palm Jebel Ali Master Development has been re-designed and that the Plot will not be delivered. As a result of this official confirmation, we now regret to advise you that the Palm Springs project has been cancelled.“
And what of compensating customers who are not to blame for this ‘cancellation’? If history is anything to go by, then Damac has a track record of trying to betray customers when it issued a letter in September 2006 offering 10% interest on monies invested if they were willing to pull out of the project. In their recent letter they have offered either 15% discount if investing in another Damac development, or 6% interest on money paid. So much for Damac being a leading real estate player in Dubai, and all the awards being heaped on them. The message, loud and clear from Sajwani would appear to be “no sir, we are not interested in honouring contracts given to customers who invested in Palm Springs in good faith, after all we are so big that we not give a damn about those puny people called investors”.
(more to follow)
Palm Springs was a property launch during the early, formative years of the real estate market in Dubai. The success of Palm Springs was a foundation stone on which Damac was able to build substantial sales growth through several subsequent successful property launches. The Palm Springs investors placed trust and confidence in Damac in these early years. These investors whom Damac are now seeking to penalise, are the very individuals on which Damac’s success is based. Any Damac intent to cancel the Palm Springs project is morally reprehensible.
I am still in shock with the news, and along with I guess like minded people who waited several years extremely angry
Well, A corrupt company will take your money from you and if the property goes up ,they will give your money back and sell it back at a higher price ,but if it goes down they will build it for you ,basically head you lose ,tail you lose. The winners are damac.
SHAME ON YOU DAMAC. YOU HAVE NO HONOUR OR INTEGRITY SPECIALLY IN A COUNTRY WHEN HONOUR IS EVERYTHING
Dishonest, Arrogant, Money-Grabbing, and Corrupt
Damac are a waste of time and they need a kick up the arse with regards to this Palm Springs project. They are liars and I am sure that Nakheel do not even know about what Damac are doing and telling there customers. This is a scam and there is more to it then what we are seeing!
We all have very severe doubts about Damac’s capability of completing any of its projects. Even if they do eventually start building and delivering finished properties, goodness knows when this will happen.
I also think that Damac will have looked at the phenomenal success of the Palm Jumeirah, realised just how valuable the real estate on Palm Jebel-Ali is likely to be soon, and decided to build something much bigger (i.e. much more lucrative) on its plot with starting prices no doubt in the 3,500 – 4,000 AED range.
This leaves it with a problem. “What are we going to do about the fact that investors in Palm Springs actually own that space now? Hmnnn. I know, let’s just get rid of them for a song.”
I will be very surprised to see Ocean Heights completed after 4 years of delays,the cost to build this project must have went through the roof and we could be next to see a letter drop the door. I rue the day I took anything to do with Damac and there shoody business practices.
We, the investors are gutted to hear that you have decided to cancel the Palm Springs project. It is quite clear to us that the reason given for cancelling the project is groundless, and merely an excuse to wriggle out of your contractual obligations. This is unethical and very bad news for Dubai real estate industry. It will only tarnish the reputation of Dubai as a safe place to invest, and will have a damaging effect on the image of Dubai his Royal Highness Sheikh Mohammed of Dubai has been trying to build and promote over recent years.
The force majeure clause you refer to in your letter only deals with non-completion of the Palm Jebel Ali or non-delivery of the plot; none of these things has happened or is expected to happen in future. The changes to the plot and redesign of Master plan by Master Developer that you refer to as the reason for cancelation is well within the provisions of clause 13 of the sales contract of Palm Springs and by the virtue of the same clause Damac as the seller has sole discretion to make any changes, vary or modify the plans which includes architectural, structural, landscaping etc.
In June 2004 you informed investors that you had purchased the plot from the Master Developer and waived your right of automatic laps of sales contract accordingly, if the changes to the location of plot as a result of redesign of Palm Jebel Ali are outside the scope of your purchase contract with Master Developer, then it is between you and them rather than between you and the investors. We see no reason why you are no able to make any necessary changes to the plans of Palm Springs project to adapt to the new plot being delivered by Master Developer, and I am sure you will have the support of all investors in this.
Your decision to cancel the Palm Springs project is not only extremely disappointing, but means large financial loss for us. The only fair outcome is either delivery of our apartments in the new plot, or full and fair compensation based on current market value.
We do not accept your apparent ‘cancelation’ of the Palm Springs development, and reject your offer of 10 March 2008. We intend to use all available means to protect our interest in this investment.
However, should you re-considered your decision, we will only be too happy to lend you our full support in every aspect of this project in every way possible.
“Honesty is the road to success. He who lies only believes himself”, Sheikh Mohammed, Ruler of Dubai
- Do you believe in honesty, integrity and fair practice in business?
- Do you believe in the law of contract? Are not the investors who purchased their units from you the legal owners?
- Is the Dubai government aware of your actions? (they soon will be).
- Did you sign a contract with Nakheel in 2003 setting out the terms of the purchase of land at The Palm, Jebel Ali from Nakheel?
- Please provide a copy of the contract signed with Nakheel
- Did you (Damac) have any input in the re-design of Palm, Jebel Ali, and if so did you make any representation on behalf of your investors?
- Have Nakheel failed to abide by their contract?
- If Nakheel have failed to deliver according to the contract, why are you not taking legal action Nakheel in order to fulfil your obligations to your investors?
- Why has it taken you so long to inform investors of the ‘cancelation of the Palm Springs project?
- Are in cahoots with Nakheel to defraud investors in an attempt to pocket profit that rightly belongs to investors?
- What other projects have you cancelled, and are planning to cancel in the near future?
- What is the offer of 6% interest (or 15% discount) based on? Are you not aware of the true current market value of the Palm Springs units you are trying to illegally take back?