Emaar May Shelve Projects Worth More Than Dh90bFriday, March 06, 2009
Emaar Properties may shelve projects worth more than Dh90 billion as worried investors step up pressure on the Middle East’s biggest property developer to halt projects in the face of collapsing prices. The Emaar Investor Group, made up of approximately 200 individual buyers, last week delivered a petition to the developer requesting the cancellation or postponement of the Warsan Estate, Asmaran and Maysan projects. The group is asking Emaar to refund any money paid to date, to transfer any money invested to other Emaar units, or to provide a credit note for an equal amount. A spokesperson for Emaar, which is building the world’s tallest tower in Dubai, confirmed on Thursday that the company had received the investors’ request and said it “(would) consider their proposals seriously. The spokesperson added that “Emaar is committed to upholding the interests of all our customers and stakeholders, especially given the current economic conditions.
Investors are becoming increasingly nervous as Dubai’s six-year property bonanza comes to an end. In recent months, financing has evaporated, sales have slumped, developers and brokers are cutting jobs and prices in some areas have fallen sharply. The Warsan Estate, Asmaran and Maysan projects are no longer viable,” the The Emaar Investor Group said in its petition, according to Zawya Dow Jones. “There is no demand as many investors have already left the market leaving an oversupply, there is no money available to investors to continue payments, and there is no value in these projects as they are priced far above the market value of similar and better located projects in Dubai. As the property market softens, developers such as Emaar are being forced to review project requirements. Last month, the company said it was putting future real estate projects on hold to stem the oversupply of units in Dubai. The company said it would concentrate on completing all projects it has already started to build but added that new launches would depend on supply and demand. Emaar’s Warsan Estate,
Asmaran and Maysan projects were launched in May and June 2008 at the height of Dubai’s real estate boom. At the time, units sold for more than Dh2,000 per square foot, but since then property prices in some areas of Dubai have slumped by more than half. The Dh90 billion Asmaran project, a joint venture between Emaar and government-owned developer Tatweer’s Bawadi unit, is located in the emirate’s $110 billion Dubailand development.The 70 million square foot development was planned to house 55,000 residents and include a family-orientated theme park. The three block Maysan Towers project was launched within the Asmaran development, while the 3.4 million square foot Warsan Estate was designed for more than 500 luxury villas. Townhouses there sold for an average of Dh5.5 million at launch. Amid the deteriorating conditions in Dubai’s real estate sector, disgruntled investors and buyers are becoming more vocal about their concerns. Many fear that despite making down payments, they see the projects are not being completed. Amid flagging demand in the market, others worry that projects pushed through to competion will only depress property values further. Last month, the Dubai Property Investors Group, made up of more than 300 local and international investors, lawyers and real estate developers, petitioned Dubai’s Real Estate Regulatory Authority to act quickly to avoid a collapse of the sector due to fears about the financial strength of some developers and their ability to deliver more than $1 trillion worth of projects.Source: Khaleej Times