The National reports that some 700 investors in Palm Jebel Ali are unhappy with the alternatives presented under Dubai World's restructuring plan and may hire a law firm to act as advisor.
They seem to be looking to secure the following:
- A firm schedule for completion to ensure a quick handover
- Assurance that quality and design standards won't be compromised to save project costs
- Recalibration of future installments to actual construction progress. The article goes on to say that on average investors have paid in about 30% of the total purchase price.
Personally, I'd be concerned about the effects on maintaining project and building quality in a stop-start project, particularly if there is a constraint to keep the costs within the original pricing. Unless of course costs have come down significantly from then.
As well, it would seem natural that given the economic downturn some of the non residential attractions on the island might be scaled back or eliminated.
Think I might be inclined to take my credit to an existing or almost built project, especially if the credit was against current market value instead of "rack rate".
Perhaps, The Real Nick could weigh in with a comment.
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5 comments:
Happy to oblige.
I agree with you: I'd take the money and run as far as I can away from Nakheel. For ever.
Those who still want to own a piece of the surreal dream that is Nakheel's shrubbery shaped islands should not be unduly worried (one wonders if said investors were ever 'duly worried' about anything at all before handing over large sums of money for 3D images of non existant properties?) about quality and cost. Nakheel never built well; built quality therefore cannot get worse.
(I worked on some extensions / conversions of villas on the Palm Jumeirah. It would have been easier knocking them down and rebuild them.)
On a more serious note, professionally speaking, construction costs have come down a lot since the peak of the boom. Investors in effect hugely overpaid Nakheel. That money's gone down the plughole BUT IF Nakheel manages to claw back funds /extend loans /get new finance they would need in fact less than they had originally borrowed to finance and restart projects today. You could say the 'haircut' was given to investors' heads.
Thanks your response.
Enlightening as usual.
I had been told by someone about 4 or so years ago that most of the projects in Dubai were built for a 12 t0 15 year life span - after which they'd have to be razed.
AA,
I think 10-15 years is a sensationalist exaggeration, although there used to be a directive in Abu DHabi at leats that buildings had to demolished after 25 years. (One might say that that's in order to make way for newer and bigger buildings, and not because of considerations of safety.)
Most buildings here will have a longer life span than 10-15 years. The structure definitely can last much longer than that (given that concrete gets harder /stronger with time).
The main problem is the non existant or extremly poor and incompetent maintenance of the electro mechanical components which in fact ruins buildings. For example, my own 25 year old (rented) villa seems to be held together with sticky tape and bits of silicone mastic. [ small digression: We as medium /large contractors get coconut farmers from Kerala and train them several months as plumbers etc. Small maintenance contractors get coconut farmers from Kerala and give them a wrench.]
It is the usual short term thinking of greedy and unwise landlords who do not pay for proper maintenance and go for quick fix solutions. I daresay the expression 'penny wise pound foolish' was coined by Dubai landlords, not by Scotsmen.
In other words, if you owned and properly maintained a building in Dubai it should live for well 60-80 years.
Too true:
But I would buy. If only they sold just land on the palm JA... 100% ownership / no strings attached / no gardening contract etc etc... and it was sold cheap. Its still the end of the emirate.
But, its in the middle of a marine reserve.
Thanks again for setting me straight again.
A friend of mine had the wall in his 25 or so year old villa cave in because apparently when the place was built they didn't seal a pipe properly.
A "plumber" of origin unknown had wound a bit of cloth around the pipe to "fix" the leak.
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