By Nathalie Gillet www.thenational.ae
Emaar could shelve plans to build 13 high-rise buildings earmarked for the site of the world’s tallest tower in Dubai after investors transferred their down payments to other projects.
The developer of the US$20 billion (Dh73.45bn) Downtown Burj Dubai project has allowed buyers since the start of the year to transfer their down payments on the buildings to other projects on the secondary market after sales dried up.
However, brokers report that buying and selling of credit on the towers has now come to a virtual standstill. Emaar did not say when a decision would be made.
“The Emaar consolidation now is almost over,” said Hakan Goksel Samur, the chief executive of Dubai Emlak Consultancy, a brokerage that has facilitated many deals. “All the big amounts are gone now [on these 13 towers].”
The property downturn has forced Emaar and other developers to put some projects on hold and allow investors who have already paid deposits to transfer them to developments that are set to go ahead as planned.
A thriving trade in property credits has become an unwanted legacy of the off-plan property boom which left thousands of home buyers holding purchase agreements on villas and apartments that may never be built.
“After the financial crisis started, nobody wanted to pay their instalments any more – absolutely nobody,” said Tommy Mokhtari, a sales consultant at the brokerage Smith and Ken. “Credit notes were the only option.”
The Burj Dubai is expected to open its doors to the public for the first time on December 2. The tower is the centrepiece of a 202-hectare development that has become one of the world’s largest construction sites.
“Projects announced by Emaar in Downtown Burj Dubai are in various stages of development,” the company said.
“Emaar has commenced [the] hand over of homes in Burj Views, with more projects to come online in the coming months. End-users have the option of transferring their purchases from projects that will be completed at a later stage to those in the advanced stages of development.”
Brokers have said investors have been able to sell their credits from at least 13 planned towers within Downtown Burj Dubai. They are included within the M-Burj, The Mansions, Burj Place, Grand Boulevard, 18 Boulevard, Burj Park and Claren Phase 2 projects. About 90 per cent of investors have either sold or transferred their credit from these towers to other Emaar developments, according to Mr Mokhtari. Buyers may not be able to recoup their initial cash outlays and may end up paying more for future property rights.
“I had invested in two units within Burj Place and also in 29 Boulevard,” said Wael Abdul, an investor who was allowed to sell his credits six months ago through Dubai Emlak. “I contacted a broker after seeing an advertisement on the web. We signed a contract and I got 65 per cent of my Dh600,000 down payment back from another investor for my Burj Place investment.”
However, Mr Abdul has been unable to sell his second investment because he took out a mortgage.
“I know that they are going to cancel 29 Boulevard because they are already giving the option to people to transfer credits from there to other properties,” he said. “But I cannot sell my credit because of my mortgage.
“The bank has already paid Emaar a large sum and they are threatening to take me to court. Emaar said they can shift me to another project but the property that they offered me is very expensive and I have to pay more.”
Emaar has put the 29 Boulevard tower on hold, according to a senior official who works at Besix, one of the developer’s main contractors.
“We already built a few floors but they asked us to revise the construction and I would say that it is almost stopped now,” said the official, who requested anonymity. “There is no completion deadline any more. Our partners from Samsung also have towers that have been put on hold.”