# Delays in delivering apartments 'must be compensated'



## Krazy (Apr 27, 2004)

*Delays in delivering apartments 'must be compensated'*









Unfortunately for Dubai's real estate market, a combination of escalating material costs and a shortage of skilled contractors is putting huge pressure on developers to meet completion dates.

Dubai: Penalising developers with hefty compensation for delays in delivering properties will lift investor confidence in Dubai's softening real estate market, officials said.

Currently, developers are not legally bound to pay compensation to property buyers in case of delay. Any compensation arrangements are at the discretion of developers rather than being enforced by law.

Analysts say this situation dents consumer confidence and should be addressed by Dubai's authorities.

"If Dubai instills more confidence by ensuring there are fixed penalties for delays, this will add much greater value to the market," said Sudhir Kumar, executive director for the property division of Dubai-based Morison Consulting.

Kumar called for a fixed penalty of one to 1.5 per cent of the total unit value per month of delay.

Alexis Waller at legal specialists Clyde&Co's Middle East branch, said developers should either offer consumers their money back if the completion date and grace period have passed or encourage investors to stick with a project by paying a monthly compensation fee.

"I think it's very important that official regulation is introduced in this area," she said.

Unfortunately for Dubai's real estate market, a combination of escalating material costs and a shortage of skilled contractors is putting huge pressure on developers to meet completion dates.

Damac Properties took matters into its own hands when two of its projects, Marina Terrace and The Waves, were delivered beyond the scheduled date due to circumstances "out of the company's control".

Damac CEO Peter Riddoch said, "We would welcome any legislation that introduces a level playing field [regarding compensation] for all developers."

The move, others suggest, should be delayed by at least five years. "Dubai's property market is immature. It is unreasonable for the developer to take the heat when many of the delays are caused by contractors or market conditions," said Hashim Al Dabal, chief executive of Dubai Properties.

Purchase contracts dictate payments

- Property developers in Dubai are not legally bound to pay compensation

- Currently purchase contracts dictate compensation

- Several freehold property buyers were hit by construction delays

- More than 13,000 families have moved to freehold homes already

- A number of projects, including Palm Jumeirah, Jumeirah Beach--Residence and parts of Inter-national City have been delayed

*Send your comments here *


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## dubaiflo (Jan 3, 2005)

ok 1,5% per month u can get an Ocean height apartment for free now 

seriously that is too much, of course i am on the buyers side here, but u have to see there are things which developers could not control (shortgage of material, concrete ,cranes etc) but on the other hand, there are agents claiming completion dates which are unreasonable in the first place.. 

but a lot of companies already struggling because of rising construction costs will get into serious problems if they approve this.


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## malec (Apr 17, 2005)

If I were the developer and I was building a tower I'd tell people the completion date is 1 to 2 years later than it should be, then I'd surprise the investors by finishing the tower 1 year in advance.


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## dubaiflo (Jan 3, 2005)

u probably wouldn't have that many investors though.


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