Thursday, June 11, 2009

Investors choose to walk-out of Ivory Tower project

Foundation work on the long-delayed Ivory Tower in Dubai, which had resumed work six months back, has once again come to a standstill. Several buyers are seen walking away from their investment in the Sukook Group's project, which is already three years overdue.

One of the investor, who spoke to The National clearly said "Why should we pay for an imaginary tower?"

This is another property development in Dubai that focuses on the problems associated with sale of off-plan properties, as buyers are refusing to pay for something that they have already lost faith in, while the developers have no cash to continue construction.

The Director of Sokook Investment Group, Mohammed Binghalib, agreed that he has not drawn a salary for the past nine months. He also agreed the company has trimmed staff and other overheads at the firm, to compensate for limited cash flow.

The company is now trying to get investors to pay 30 percent to cover the cost of foundations work, while the rest can be paid inline with construction. This is as per the new payment plan drawn together with Dubai's RERA this year.

Binghalib says "There are few people who are genuine buyers and make payments regularly, but there are others without property finances, earning may be Dh.10,000 per month, and have bought six apartments. They are now fighting us."

Few purchasers are refusing to abide by the new payment plan, and say that with construction languishing for more than three years, they fear that Ivory Tower will never be built.

According to Binghalib, the delay has been caused by a dispute over land with TECOM, where Ivory Tower is located. The dispute was resolved with the help of Dubai Land Department last summer.

The company's announcement early last year, saying that the contracts with buyers would be cancelled, with 20 percent of sale price retained, took buyers by shock. The buyers even suspected that Sokook was trying to take back the apartments that were sold for up to Dh.650 per sq. ft. to sell them for more.

So far more than 100 buyers are believed to have defaulted on payments, preferring to cut their losses.

Binghalib said that the company requires its customers to fulfil their obligations towards completion of the building, which is now scheduled towards end of 2011.

According to Binghalib, all money collected for the project had been deposited in an escrow account and invested only in the project. The company now aims to try and collect 30 percent from buyers prior to construction.

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