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The hearing begins and a few words and papers are exchanged between the judge and the lawyers representing each side.

Within minutes, it is all over. Claimants and defendants are quickly ushered out of the courtroom as their respective lawyers whisper a roughly translated version of the judge’s ruling. Moments later, the next case begins.

Welcome to Dubai’s Property Court, a division of the emirate’s legal system that has been dealing with the fallout of its property crisis since September 2008.

As case files spill out of a room one floor down from the court, officials decline to reveal how many property disputes are under way or pending. A clerk in charge of registering cases hints that the figure may be in the “thousands”.

“We are overwhelmed … it is too much work,” says the clerk, who does not want to be named. “Some cases are small, some are big. People should try and settle with the developer as they will spend more bringing the problem here.”

Just a few months after it opened in 2008, the Property Court had a mammoth challenge on its hands after the property downturn.

The court is a “work in progress”, says Dr Jamal Alsumaiti, the director general of the Dubai Judicial Institute. “You can see there’s movement from the government for regulation and for developing the judicial system as well … it’s a very critical period.”

Ron Oakeley is more than familiar with the Property Court, and the huge investment of money and time that come with a lawsuit.

The British businessman, who has been in Dubai since 1985, is about to attend his 15th hearing in a case filed more than a year ago against Alternative Capital Investment (ACI), a German developer.

Mr Oakeley is trying to recover more than Dh1.2 million (US$327,000) he spent on two offices at ACI’s long-delayed Niki Lauda Twin Towers, one of a trio of projects launched in late 2007.

His efforts, in part, paid off in February when the court rendered his agreement with ACI for one of the units “void” and ordered the company to repay him Dh569,585, plus 5 per cent interest from the date he started proceedings.

The court ruled for Mr Oakeley because ACI had failed to register the property with Dubai’s Land Department, according to court documents. A property contract is valid only when it is registered with the department.

But Mr Oakeley lost the case for the second unit, which cost Dh695,000, because the court found that the property had been registered, although it has since emerged it was under somebody else’s name.

ACI was quick to appeal the decision on the first unit. At yesterday’s hearing, the court decided to appoint an official to check on construction progress at the site, which appears to be at a standstill.

If there is still no conclusion at the next hearing, scheduled for June 23, then the case could go to the Court of Cassation, the final stage in the judicial process.

Mr Oakeley is one of dozens of investors with suits against ACI. He says it has so far cost Dh400,000, including fees and the cost of lawyers. But with the project showing little sign of progressing, he says he has no choice but to fight on.

“It’s the principle … most people can’t afford to keep fighting,” he says. “Unlike elsewhere in the world, you’ve got to spend so much more money to get your rights. There are hundreds of other projects in the same boat but nobody seems to be helping the people.”

Robin Lohmann, the chief executive of ACI, was unavailable for comment in the past two days.

Property disputes are generally filtered through the Dubai Land Department, where the department’s legal team tried to resolve them before they reach a courtroom.

While there is a surge in the number of investors turning to the department after the financial crisis, fewer people are approaching it today, says Mohammed Sultan Thani, the assistant director general of the Land Department.

“We are now seeing a lot of agreements between the buyer and seller,” Mr Thani adds. “There’s been a lot of movement of buyers between a project that hasn’t started to one that has.”

Since the Property Court is costly, it has mainly been used by major investors such as Mr Oakeley, who have the funds to pursue a case.

It costs Dh30,000 to register each case with the court, so if an investor has bought 10 apartments from one developer, simply lodging the dispute will cost Dh300,000.

As well, all cases require a local lawyer, who will charge a commission of up to 5 per cent of what the client is claiming. The proceedings are in Arabic so a claimant would have to pay for the translation of court documents as required.

“For an investor contemplating filing a legal case against a developer, it is advisable to first seek consultation with a lawyer who can advise whether filing a case makes sense based on the circumstances,” says Ludmila Yamalova, a partner at Al Sayyah Advocates and Legal Consultants.

Some cases have been settled out of court, Ms Yamalova adds, with developers agreeing to reimburse claimants in instalments.

With just four judges at the Property Court, cases can be long. But more than 18 months after it was established, steps are being taken to refine the system, says Dr Alsumaiti – a move that will likely boost confidence among investors.

“Four judges are not enough,” he says. “The concept of having a specialised property court isn’t new but the implementation is. The judges need to have the skills and knowledge to understand every single detail of a case. As long has you have provisions to speed up your procedures, you have a very strong legal system.”

agiuffrida@thenational.ae

Grauer Kapitalmarkt grotesk: Eigentlich sollten im Luxushotel “Maritim Dubailand” längst Gäste wohnen. Auf dem Wüstengrundstück befindet sich aber bislang nur eine Baugrube. Deutsche Anleger haben den Hotelflop mitfinanziert. Einem jungen Finanzwirt aus Hamm vertrauten sie Millionen an.

Hamm/Dubai – Drei Kräne, ein paar Baucontainer und eine riesige Baugrube – viel mehr gibt es nicht zu sehen auf dem Grundstück im Hinterland Dubais. Nur wenige Arbeiter sind zu entdecken – sie machen nicht den Eindruck, als wollten sie sich verausgaben.

Was an gleicher Stelle zu dieser Zeit eigentlich geplant war, steht im Emissionsprospekt eines geschlossenen Immobilienfonds, des Hotelfonds Dubai 1000: Ein Luxushotel, ausgestattet mit 1000 Zimmern, 50 so genannten Ownersuiten und – als besonderem Bonbon – dem “Ein-Zimmer-Ein-Auto-Konzept”, bei dem die Übernachtungsgäste eigens bereit gestellte Fahrzeuge kostenlos nutzen können. Schon im Juli dieses Jahres hätte das Haus die ersten Besucher aufnehmen sollen.

Tat es aber nicht. Und auch in nächster Zukunft wird kaum ein Gast im Hotel “Maritim Dubailand” absteigen. Denn im Moment ist kaum absehbar, wann der Bau fertig gestellt wird.

Zahlreiche deutsche Kapitalanleger kommt das teuer zu stehen. Denn diese haben den Fonds mit reichlich Eigenkapital ausgestattet. Wie viel die Anleger genau zum Investitionsvolumen von insgesamt knapp 143 Millionen Euro beigesteuert haben, ist allerdings offen. Initiator Georg Recker aus Hamm in Westfalen macht dazu keine Angaben. Die 70 Millionen Euro, die laut Markterhebung des Analysten Stefan Loipfinger zusammengekommen sein sollen, werden von Insidern als zu hoch gegriffen angezweifelt.

So oder so steht der Beteiligungsmarkt, in dem Jahr für Jahr zweistellige Milliardensummen eingesammelt werden, damit allen Bestrebungen und Beteuerungen für mehr Transparenz, Professionalität und Seriosität zum Trotz einmal mehr am Rande eines Anlagedesasters größeren Ausmaßes.

Was ist passiert? Am Anfang standen – wie so oft – große Versprechungen. In Hundertschaften hatte Recker vor rund zwei Jahren Anleger und potenzielle Vertriebspartner in Dubai begrüßt. Der Junginitiator – Anfang 30, Typ Dampfplauderer und bis dato vor allem als Steuerexperte und Seminarveranstalter aufgefallen – hämmerte seinen Gästen an zahllosen Wochenenden die Vorzüge seines ersten Beteiligungsangebots ein. Dubai boomt, der Fremdenverkehr ebenso. Was läge da näher als ein Hotel in der Wüste zu bauen?

Das Projektteam löst sich in Luft auf

Aber nicht irgendeine Herberge sollte es sein. Diplom-Finanzwirt Recker wollte das größte Vier-Sterne-Hotel im arabischen Raum, mitten im Herzen des geplanten Mega-Freizeitparks “Dubailand” sollte es stehen. Ein neues Monument der Gigantomanie im an Superlativen ohnehin schon überfrachteten Dubai. Wenn schon, denn schon.

Viele waren auf Anhieb begeistert. Und die wenigen, die Bedenken äußerten, wurden von Recker und seinen Jüngern gnadenlos abgebügelt. Risiken? Gelächter!

Unter jenen, die sich tatsächlich beteiligt haben, herrscht inzwischen Ernüchterung. Von Reckers Versprechungen hat sich noch kaum eine bewahrheitet. Insbesondere die prognostizierten Ausschüttungen von durchschnittlich 10 Prozent pro Jahr sind nicht in Sicht.

Dabei sah das Vorhaben auf dem Papier zunächst wirklich vielversprechend aus. Eine Reihe prominenter Partner hatte Recker mit ins Boot geholt. Vom Edel-Interieur-Designer Bost in Berlin über die Siemens-Tochter SIAT sowie die weltweit renommierte Projektmanagementgesellschaft Drees + Sommer (“Zentrale Deutsche Post, Bonn”, “Aqua City Palace, Moskau”) bis zu Dewan, einem der führenden Architekturbüros im arabischen Raum, reichte die Liste der am Projekt beteiligten Unternehmen. Mit Maritim war auch schon ein namhafter Betreiber gefunden.

Inzwischen ist von Reckers Dreamteam nicht mehr viel übrig. Lediglich Designer Bost hält dem Jungunternehmer aus Hamm uneingeschränkt die Treue. Das Architekturbüro SIAT? Schon vor Monaten aufgelöst. Der Projektmanager Drees + Sommer? Recker kündigte den Vertrag bereits im April 2006 wegen angeblich mangelhafter Leistung.

Der Initiator stellt sich tot

Anfang dieses Jahres sprang mit Bernhard Ilming auch noch Reckers wichtigster Berater in Hotelfragen ab. Und die Maritim-Gruppe? Laut Informationen von Marktbeobachtern war der Vertrag mit der Hotelkette auf ungewöhnliche Weise zustande gekommen. Recker habe die Kooperation direkt mit der Maritim-Zentrale in Bad Salzuflen vereinbart, schreibt der Brancheninformationsdienst “Hottelling”. Der übliche Weg über den Maritim-Auslands-Entwicklungspartner HMS in Köln sei umgangen worden.

Jetzt teilt Maritim auf Anfrage mit, das Thema Dubai 1000 Hotelfonds werde gerade bearbeitet. Zurzeit seien definitive Aussagen dazu nicht möglich. Echte Vorfreude auf eine Hoteleröffnung klingt anders.

Die kann nach Einschätzung von Experten ohnehin frühestens in zwei Jahren aufkommen. Und das auch nur, wenn von nun an mit Hochdruck gearbeitet wird – wovon aber gegenwärtig keine Rede sein kann.

Von Georg Recker war zu alldem keine Stellungnahme zu bekommen. Insbesondere die Fragen, welches Unternehmen zurzeit die Bauarbeiten vor Ort betreibt und wann mit einer Hoteleröffnung zu rechnen ist, blieben unbeantwortet. Zu den offenen Forderungen seiner (Ex-)Geschäftspartner äußerte er sich ebenfalls nicht.

Gegenüber seinen Anlegern zeigt sich der Initiator dagegen wesentlich kommunikativer. Mit seitenlangen Schreiben versucht er sie bei Laune zu halten. Die Verzögerungen von “sicherlich 12 Monaten” seien auf eine verspätete Übergabe der Grundstücke in “Dubailand” zurückzuführen, schreibt Recker da. Er sei aber stolz, bereits einen 500 Meter langen Zaun errichtet sowie mehrere Baucontainer aufgestellt zu haben.

Weiter heißt es: “Die Hotels in Dubai sind mit mehr als 85 Prozent Auslastung voller Besucher von nah und fern. (…) Viele Besucher aus Kuwait und Saudi Arabien machen ihren Jahresurlaub mittlerweile in Dubai und nicht mehr in Europa.”

Wären die Anleger des Dubai 1000 Hotelfonds an einem anderen Hotel in Dubai beteiligt, würden sie sich über diese Informationen sicher sehr freuen.

Authorities in Germany are seeking the arrest of a German national on suspicion of a multimillion-euro fraud in connection with a Dubai hotel project that was never built.

A court in Dortmund issued an arrest warrant in November for the developer Georg Recker, who is in Dubai and has denied any wrongdoing.

Investors are said to have provided about €25 million (Dh123.7m) for Mr Recker’s Dubai 1000 Hotel Fonds towards building a 1,050-room, four-star hotel in Dubailand.

The project was planned to be one of the largest hotels in the Middle East and was to have been completed by 2007.

Mr Recker’s property fund was set up in 2005 and was trying to raise €142m. In the prospectus provided to investors, Mr Recker requested a minimum investment of €10,000.

Five years after the project was launched, however, there is nothing but a hole in the ground at the site in Dubailand.

The prosecutor’s office in Dortmund, Germany, confirmed yesterday that a warrant had been issued for Mr Recker’s arrest.

Mr Recker denied there was an arrest warrant for him. He also claimed that work on the hotel project was continuing.

“Everything in Dubailand is delayed,” he said. “There is no infrastructure, no power, no electricity. What we are doing will definitely [continue], but it will take two to three years.”

About 70 of the 900 investors in the fund are also taking legal action against Mr Recker in Germany. KWAG, a law firm based in Hamburg, is representing the investors.

Mr Recker, 36, also denied the existence of the lawsuit.

Lutz Tiedemann, a lawyer at KWAG, asserted that five German bank accounts in Mr Recker’s name, containing a total of about €1m, had been frozen in connection with the claims. Mr Tiedemann added that it might prove difficult to arrest Mr Recker while he was still in Dubai.

“Enforcement in Dubai would be difficult. When he turns back to Europe he would probably be arrested.”

The construction consultancy Drees and Sommer International had been taken on to manage the hotel project, and Dewan Architects and Engineers was providing architectural consultancy services.

“We were working on this project a few years ago,” said Ammar al Assam, the executive director of Dewan. “The client … never paid us for the balance of our work.”

A spokeswoman for Drees and Sommer said her company was no longer involved in the project.

Maritim, the German hotel operator, was signed up to manage the completed property.

“Obviously Georg Recker was not able to win enough investors for the Dubai hotel project,” said Britt Winter, Maritim’s director of public relations. “As far as we are informed, the building is no longer being built, therefore the conclusion is very simple: Maritim cannot run a hotel that doesn’t exist.”

As part of the plans for the property, a Smart car would be provided free for guests who booked a room, according to the prospectus and a press release.

“Picture 1,000 ‘branded’ Smart cars driving around the city of Dubai and you will get a vision of the great brand-building and promotional opportunities within this exciting project,” the statement said.

Dubai’s biggest planned tourist attraction, Dubailand, was designed to help the city achieve its target of attracting 15 million visitors annually by 2015.

Dubailand, a project of the developer Tatweer, was launched in late 2003 with a billing as the Disney World of the Middle East, to be spread over 3 billion square feet.

The plans were that the development, with 45 major projects, would attract 40,000 visitors a day.

But the economic crisis and downturn in property prices has meant that many of the projects exist only on the drawing board.

These include the Universal Studios theme park, Lemnos, which was meant to be a “high luxury world dedicated to women”, and the Aqua Dunya water world, the centrepiece of which would be the world’s largest cruise ship, and the Great Dubai Wheel.

Mr Recker said he was now running a tour company and a German-language publication called Dubai Magazin.

rbundhun@thenational.ae

CRACKS have emerged in the fraud prosecution of two Australian executives in Dubai, raising questions about the claims of their alleged victim, Sunland, the Gold Coast-based developer that alleges it was duped in a property deal.

BusinessDay believes a series of emails will be relied on by the defendants in Dubai and in a civil case in Australia in an attempt to contradict Sunland’s claims that it was kept in the dark and that Matt Joyce and Marcus Lee misled it when they were working for Dubai Waterfront, the world’s biggest waterfront development.

Joyce and Lee spent nine months behind bars in the emirate until they were bailed in October to fight the fraud case, in which Sunland is the key witness for the prosecution. Its claims of being cheated are also central to the civil case it has launched against Joyce and other parties in the Federal Court, where it is trying to recoup millions lost on the venture.

In the Dubai and Federal Court proceedings, Sunland alleges it was misled in two critical ways when it bought Plot D17 in 2007 from the Dubai government-owned master developer Nakheel, parent company of Dubai Waterfront.

First, it says its chief operating officer in Dubai, David Brown, was duped into believing that another Australian company, Prudentia, had rights to buy the plot, so Sunland paid Prudentia a $14 million ”consulting fee” to release the land.

Second, Sunland claims Joyce, as managing director of Dubai Waterfront, failed to disclose a long-term friendship with Prudentia’s director, Angus Reed, with whom he attended Geelong Grammar.

But Brown sent an email to Joyce on August 19, 2007, which is expected to be relied on in Joyce’s defence in the Federal Court. Evidence for the plaintiff and the defence is yet to be heard in the proceedings, where the emails are expected to be presented in their full context.

On its face, Brown appears to acknowledge in the email the status of Plot D17, and that Sunland’s founder and executive director, Soheil Abedian, was informed. At this point, Sunland and Prudentia were negotiating a joint venture on the development plot.

”Thanks Matt,” Brown wrote, ”I got your message and yes Soheil is aware that Prudentia are still in negotiations with Nakheel and have not purchased the site. Jeff [Austin, Nakheel’s director of planning and development] and Anthony [Brearley, a Nakheel lawyer] have also made this clear. The fact they have not purchased D17 yet is better because [it will] allow us and Prudentia to agree to JV terms before we proceed to buy the site.”

In that email, Brown also told Joyce: ”I have informed Soheil of your prior relationship with Prudentia and your desire not to get involved.”

While it did not mention the old-school connection, this email may suggest that Joyce wanted to remain at arm’s length from the deal. Brown wrote that Sunland would instead continue to deal ”with Anthony, Marcus [Lee] and Jeff”.

But 10 days later, on August 29, in a 5.56am email to Joyce, Brown was ”extremely” disappointed to hear that Nakheel was negotiating to sell the plot to a Russian group, ”considering the time and effort that we and our JV partner has put into the purchase of this plot”. Again, this calls into question Sunland’s claim that it did not know Prudentia had secured no rights over the plot.

In Sunland’s statement of claim in the Federal Court, Brown alleges that Joyce told him by phone on the same day as this email that other potential buyers, including Russians, might offer a much bigger price for the plot.

Sunland alleges this was to pressure it to proceed with the purchase.

The time of this alleged call is unclear but in Joyce’s reply email to Brown, at 6.58am, he wrote that he doubted ”our guys would negotiate with another party without at least informing you” – unless it was the work of Nakheel Sales without Dubai Waterfront’s knowledge.

Prudentia and Angus Reed, in their defences lodged in the Federal Court, say they never suggested they owned Plot D17 or had sealed an option to buy it.

And they insist Sunland was fully aware of this.

Rather, they argue, Nakheel had merely regarded Prudentia as a ”preferred negotiator”. On August 10, 2007, Nakheel’s Jeff Austin had confirmed in a letter to Reed that it would be happy ”to grant you preliminary development and planning approval”.

”We also confirm that we would be happy to entertain discussions with your joint venture partner provided [they] are a proven developer like Prudentia,” Austin wrote.

Joyce’s defence in the Federal Court says a draft sale agreement had been sent to Prudentia on August 15 and Dubai Waterfront did not want to appear to be involved in ”gazumping” by dealing directly with the ”secondary developer”, Sunland.

In any event, the joint-venture negotiations collapsed and Sunland decided to buy Plot D17 alone.

A document tendered in court in Dubai, dated September 18, 2007, shows its board agreed on the purchase and to enter a memorandum of understanding with Prudentia.

The next day, David Brown and Angus Reed signed the deal, which included a strict confidentiality clause between the two parties. Sunland agreed to pay the consulting fee.

In return, Prudentia handed over its ”right to negotiate” with the master developer.

It has also been alleged that Marcus Lee, who was Dubai Waterfront’s head of commercial operations, had intervened to lower the price of Plot D17 to push the purchase along. Under this deal, it is alleged, Prudentia would take a ”land uplift” fee – the difference between the lower price and the market price.

But an internal Nakheel email on August 27, 2007, appears to clear Lee on this count. Nakheel’s then director of sales and marketing, Manal Shaheen, sent the email to her CEO, and to Joyce and Lee. Shaheen told them that her team had found the price of 125 UAE dirhams ($A37) a square foot was too high. She wrote that Lee’s ”business report should say market price which is 110 and then give me to sign”.

Lee is expected to rely on this exchange to support his consistent position: that he merely did his job according to instructions of his superiors at Nakheel. When he later recommended a price of 120 UAE dirhams a square foot, he will argue that it was approved by his superiors.

Shaheen’s email suggests that Nakheel was informed. Nakheel has not come to the defence of Lee, who says he never gained nor stood to gain from the land sale.

Nor has Nakheel defended Joyce, who says he was paid nothing in connection with the Sunland deal.

Sunland is yet to develop Plot D17. Prudentia and Reed, in their defence in Australia, claim this means it has lost the opportunity to reduce its alleged loss by about 24 million dirhams ($A7.16 million).

Hundreds of property buyers in the long-delayed Ivory Tower project in Dubai fear they will lose their cash after work on the development stopped and consultants were called in to staff its Deira offices.

Ivory Tower, planned in the International Media Production Zone (IMPZ), was fully sold off-plan in 2006 and is now almost two years late.

Mohammed Binghalib, the former director of the developer Sokook Investment Group, said he was “not with the company any more”. The company’s website has also been closed and is to be updated, says a message on the site. Sokook’s office in Deira was manned by a consultant from Homes Real Estate yesterday.

The consultant said the developer had hired his company, based in Dubai, to compile a “feasibility report” on the 700 customers who bought units in the sprawling 20-storey Ivory Tower.

Foundation work began at the site last summer but was stalled recently because most investors had stopped paying, said Khaled Mahmood, the consultant from Homes Real Estate.

“I have to make a report to Sokook to see who is paying them and who isn’t,” he said.

“For people who have paid more than 30 per cent, their money is in safe hands because they won’t pay any more until we start construction again; for those who have paid less but don’t want to pay any more, we will forfeit them. Our construction is on hold because of the people who only paid 10 or 15 per cent.”

Mr Mahmood said the aim of the feasibility report was to find out how many investors were willing to continue with the project. If the development went ahead with, say, half the number of investors, the project would be scaled back by half, he said.

Mr Mahmood added that an option for buyers would be to transfer their investments to other projects in Dubai that were either completed or nearing completion.

This would have to be done through agreements with other developers, he said, as Sokook’s only project in Dubai was the Ivory Tower.

“If there is no trust left in the project, then we can talk with the customer and swap their investment to a developer who is more advanced.” He declined to name any developers with which Sokook had been in talks.

Mr Mahmood’s comments have done little to appease those who have waited almost four years for their homes to be built.

Investors formed an action group in 2008 when it became clear that the building would not be ready by the deadline, the middle of that year.

The original delay was caused by a dispute over the land with TECOM Investments, the master developer of IMPZ. The row was resolved only with the help of the Dubai Land Department in the summer of 2008.

Nigel Collins, an investor from the UK who bought four apartments in Ivory Tower in 2006, said many of the investors had given up the fight.

“It’s a catch-22 situation. I would be open to transferring my investment somewhere else if it means I can rent or sell that property.”

Source: The National

A property investor has been awarded a refund by Dubai Courts for an office unit he bought in a project that is 20 months behind schedule.

The British businessman Ron Oakeley bought two offices in a building in Dubai’s Business Bay that was to be named after the former Formula One racing driver Niki Lauda. The proposed Niki Lauda Twin Towers building was part of a trio of projects launched by Alternative Capital Invest (ACI) Real Estate, a German developer, in late 2007 that were to be named after famous sport stars.

He filed a lawsuit against ACI in March last year to try to recover more than Dh1 million (US$272,000) he had invested in the project, which was due to be completed this year but is about 20 months late.

According to a judgment from Dubai Courts that has been seen by The National, the courts rendered Mr Oakeley’s agreement with ACI for one of the units “void” and ordered the company to pay back Dh569,585, plus 5 per cent interest from the date Mr Oakeley started court proceedings.

The case was won because ACI had failed to register the property with Dubai’s Land Department, according to court documents. A property contract is valid only when it is registered with the department.

Mr Oakeley’s victory was muted, however, as he lost the case for a second unit on which he spent Dh695,000, because it was registered.

The investor is appealing against the second decision through Dubai’s Court of Cassation.

Despite spending thousands of dirhams taking the case to court, and risking losing the judgment on the first unit, Mr Oakeley said he would continue the fight.

“It’s like throwing good money after bad, but having two units makes it worthwhile,” he said.

With most developers grappling with a shortage of cash, Mr Oakeley also has the challenge of getting the court’s order enforced.

Unless a project is officially cancelled by Dubai’s Real Estate Regulatory Agency, cash kept in an escrow account, in which developers must by law deposit all investors’ money, must be used to fund construction, however long that might take.

“It’s all well and good getting a court order to get your money back, but does the developer have the money?” said Duane Keighran, the deputy head of property for the MENA region at the law firm Simmons and Simmons.

“There are a number of developers in town who wouldn’t have enough in the escrow account to refund investors; and money they do have will be used for construction. Investors can go to ACI themselves, with the court order and ask for the money, or the court can do it, but it’s unclear what the recourse would be after that.”

Saqer Engineering and Contracting Enterprises was awarded a contract in late 2008 to build the Niki Lauda project, but has since slowed work.

Mahmoud Younis, the managing partner at Saqer, said the project could take a further 20 months to complete.

“It’s ongoing but it is very slow … because of the cash flow,” he said.

Robin Lohmann, the managing director of ACI, was unavailable for comment yesterday.

Meanwhile, work on two other towers that were to be named after former tennis champion Boris Becker and the F1 driver Michael Schumacher is also behind schedule.

Becker also owns a share in the Boris Becker Beach Resort and Tennis Academy, a Dh3 billion resort planned by ACI on Al Marjan Island in Ras al Khaimah.

Source: The National

In a city of huge projects, the Waterfront was to trump them all.

At a ceremony revealing the plans in 2005, executives from Nakheel, the Dubai World subsidiary that created Dubai’s Palm islands and The World archipelago, described the project that would balloon into a 130 square kilometre piece of land that would one day have enough homes and offices for 1.5 million people. It would be a new city that would unify two other massive projects: the reclaimed Palm Jebel Ali and a 75km waterway through the desert called the Arabian Canal. It would cost Dh100 billion (US$27.22bn).

Not only was the Waterfront Nakheel’s largest project, but it also formed the backbone of the company’s multibillion-dollar financing strategy. Waterfront land valued at Dh7.6bn was used to secure three Islamic bonds issued by Nakheel with a total value of $5.25bn. The sprawling project will play a major part in Dubai World’s restructuring proposal to creditors in the next few months as the conglomerate weighs which phases will be built and which should be scaled back or redesigned in the aftermath of the property decline.

“All details concerning Waterfront are currently being determined as part of the restructuring Nakheel is undergoing,” a Nakheel spokeswoman said.

Proposals for the Waterfront showed everything from an underwater hotel to a “city-within-a-city” on a square island designed by Rem Koolhaas, the renowned Dutch architect and theorist. One building would be shaped like a sphere; others were buildings shaped like asymmetrical stacks of paper.

“It was the creme-de-la-creme project,” said one former chief executive of a property developer with a project at the site. “The mock-up plan for the Waterfront was like a new Manhattan on the sea.”

Five years after the project was announced, construction has ground to a halt, and the patch of desert – a full 65 per cent of Nakheel’s land holdings – has become the object of dozens of disputes and even corruption allegations.

The global downturn sparked a domino effect bringing down economies and megaprojects around the world, and one of the last, and perhaps biggest dominoes in this region, to fall was Nakheel’s Waterfront.

“Now it’s all changed,” said the former chief executive, who did not want to be named. “Customers are suing the developer. The developer is suing the master developer. Cheques are bouncing. Contractors haven’t been paid.”

More than Dh10bn is tied up in land and off-plan apartment sales, according to investors and developers. Nakheel is expected to address these investments in its restructuring proposal. A recent visit to the Waterfront showed sand covering construction equipment and no people except for police officers in a patrol car and a pair of security guards at an entry point – in contrast to the 20,000 workers and 3,000 construction vehicles Nakheel said were on the site in February 2008.

The state of the Waterfront project is in some ways emblematic of the delays and disputes that have proliferated amid the decline of the property sector in Dubai during the global downturn, analysts say. It was the biggest project ever announced by one of Dubai’s biggest state-owned developers, an expression of the emirate’s ambitions. As Nakheel rethinks its largest projects and negotiates with banks over how it will repay money borrowed to finance such developments, much of the Waterfront is in a kind of limbo, Nakheel is struggling through its debt load, developers are in turn hesitant to build awaiting Nakheel’s fate, and investors are suing developers with dimming prospects for their investments.

Nakheel has made progress on two areas of the project, Veneto and Badrah, where the company was building villas. It has nearly finished a large canal that would form a central feature of the first phase, the Madinat al Arab. Individual plots of land facing the sea, where developers have said they would build high-rise luxury towers, are mostly undeveloped.

Investors who put their money with Omniyat Properties, a Dubai-based developer that bought land in the Waterfront and planned a project there, tell a common story. Attracted by Omniyat’s marketing machine – the company spent millions of dirhams advertising apartment buildings there – they poured money in during the run-up to the crisis, betting that Dubai’s soaring property market would keep rising. Now they are locked in a battle with the developer over how much construction it is contractually obliged to complete before demanding any more payments from them.

One of Omniyat’s projects, the Beachfront Living tower, sold more than 200 apartments and collected Dh314.7 million, according to an official review of the project’s escrow account by Caliber Middle East, a consultancy that advises Dubai’s Real Estate Regulatory Authority. Of that money and other funds Omniyat invested in the project, Caliber’s review shows, the company spent Dh237m on land payments and Dh101.6m on marketing expenses. Just Dh738,866 was spent on construction. The project has yet to move past the initial stages.

Omniyat declined to comment.

As if that weren’t enough infighting for one project, two former Waterfront executives, MJ and ML, were arrested in Dubai in January last year on suspicion of fraud relating to the project, and both were formally charged in July. A separate court case is under way in Australia in which Sunland Group, a developer based in the state of Queensland, has alleged that MJ helped engineer a deal under which Sunland paid a Dh44.1m consultancy fee in exchange for receiving below-market prices on land in the Waterfront. The cases are still pending, and MJ’s lawyers in Dubai and Australia did not comment.

In the meantime, Nakheel has been in negotiations with land owners at the Waterfront to shift them to other projects in the company’s portfolio such as The World islands and the remaining plots on the Palm Jumeirah.

The issue is simple: without sales or financing, Nakheel will have difficulty completing the Waterfront’s infrastructure in the near future. And yet Nakheel wants a solution that does not involve defaulting on its contractual responsibilities and being forced to pay back investors’ deposits.

But some of the development companies have disappeared altogether, leaving even more problems in their wake. One of the biggest Waterfront developers in the early days of the project was Define Properties, which was established in 2008 just as the property boom was subsiding.

The company bought 12 plots of land at the Waterfront and pledged to spend Dh8bn on residential and commercial projects throughout Dubai, according to statements at the time.

“Most of the money came from Russians,” said James Harrington, who worked for the company as a human resources consultant for several months. “They paid the initial payments on the land. The problems started when they couldn’t get enough money to keep up with the land payments.”

Alternative Capital Invest (ACI), another property developer, took over Define’s Niki Lauda Twin Towers after construction stalled and the future of the project became uncertain. ACI had marketed and sold the units in the building, but Define was responsible for building it. ACI declined to comment.

Henceforth, the Waterfront will probably focus on the same section that it started with, the Madinat al Arab, a stretch of beachfront surrounded by a man-made marina in much the same pattern as the nearby Dubai Marina. The first phase of the beachfront was sold out in five days for more than Dh13bn in 2005. However, construction stopped before any buildings took shape.

Damac has allegedly used investments from cancelled property projects to fund the Park Towers, a twin-tower development located in Dubai International Financial Centre, the DIFC courts heard yesterday.

Lawyers representing a German investor, Dr Lothar Ludwig Hardt, said the developer allegedly used the money from other property projects to construct Park Towers, the only development that appears to be ongoing out of the five that Hardt had signed up in February 2007.

“These close links show the other four properties are connected to Park Towers… which should have been finished two years ago,” Ludmila Yamalova, legal consultant and partner at Al Sayyah Advocates and Legal Consultants, told Emirates Business. She said Hardt has invested $9.7 million on five properties which, in addition to Park Towers include the two cancelled projects – Lotus Residences and Wildflower; Ocean Heights, which was scheduled for completion eight months ago; and Water’s Edge, where construction hasn’t been started yet.

The German investor is thus demanding refund of $9.7m and is seeking damages and lost profits caused by the developers’ breach of contract and other violations of the UAE, Dubai and DIFC Courts. Yamalova estimates that damages, loss of profits plus all the legal fees could go up to $140m.

“As of today, defendants have not delivered any of the properties and have not complied with any of the contractual obligations to claimants,” a claim form seen by Emirates Business said.

“Defendants have committed a series of violations of UAE, Dubai and DIFC Laws in connection with properties such as enticement and unfairness, illegal sale, failure to obtain necessary approvals, failure to commence construction timely, failure to timely register developer and obtain necessary license, mismanagement of escrow funds and violation of trust account regulations, unfair contracts of adhesion, fraud and deception… illegal competition, bribery, trickery, breach of trust, cheating in commercial transactions, money laundering and accomplice liability,” said the claim form.

Damac has not submitted a rebuttal on the substantive grounds and instead questioned the jurisdiction of the DIFC courts to hear the case. It has filed a motion to stop the lawsuit from being heard and has also moved to strike the case entirely on the basis of jurisdiction.

Law firm Simmons & Simmons argued that parties concerned have agreed in the contract that any disputes will be governed by Courts of Dubai and therefore Courts of Dubai has exclusive jurisdiction of the case.

Claimants argue that DIFC Courts is one of the Courts of Dubai but defendants say that Courts of Dubai only refers to the local Dubai Court.

“We argue that DIFC courts has jurisdiction over all these properties because it has jurisdiction over Damac LLC and Damac Property LLC is the entity to whom all the payments to all the other projects were made,” Yamalova said. “They use different names but they all own each other. Damac LLC is owned by Damac Investment and so on and so forth.”

Damac has other cases pending in Dubai Courts but this is the first time that a case against it is lodged in DIFC courts.

“It’s a complicated issue of jurisdiction. It is an untested waters. But I think we have a strong case,” Yamalova said.

She said it is more favourable for the defendants to hear the case in Dubai Courts because of the time delaying factor.

“There it’ll take longer and we’ll have to file five separate cases,” she said. “In this case, we need to file 45 different cases and would have to pay Dh30,000 for each and would have to translate everything into English – so that’s additional expense.”

Die Alternative Capital Invest GmbH aus Gütersloh (NRW) hat gar keine Beteiligungs-Fonds mehr, und auch die 300 Millionen Euro Anlegergelder sind komplett in emiratischen Firmen versenkt, dennoch fordern die nun eigentlich arbeitslosen ACI-Chefs Robin Lohmann (34) und Vater Uwe Lohmann (64) in einem Bettelbrief für 2010 und die nächsten Jahre für eine so genannte Liquidationsphase von den Anlegern ein Gehalt von jährlich 1,1 Millionen Euro. Für jeden der vier Ex-Fonds (Kommanditgesellschaften II bis V) genau 266.560 Euro.

Die Anleger würden diese “freiwillige Umlage” kaum spüren, heißt es in dem von Geschäftsführer Uwe Lohmann unterschriebenen Brief vom 17. Dezember 2009. Lediglich 150 Euro seien pro 10.000 Euro Einlage nötig. Die Anleger bräuchten auch nichts zu tun. Das Geld werde automatisch von der ACI immer am 15. Januar eines jeden Jahres gleich für das ganze Jahr im Voraus abgebucht.

Betroffen sind 5.000 Anleger aus Deutschland, Österreich und der Schweiz. Offiziell ist es eine Gesellschafterbeschlussvorlage, über die die Anleger bis zum 17. Januar 2010 per Fax an das Gütersloher Büro der ACI abstimmen sollten. Wie die Abstimmung ausgegangen ist, darüber hüllt sich die ACI-Leitung bis heute in Schweigen.

Wörtlich heißt es im Schreiben von Geschäftsführer Uwe Lohmann vom 17. Dezember 2009 zu Fonds Nummer II (die Schreiben zu den anderen drei Fonds III, IV und V sind gleichlautend):

Robin Lohmanns Zwillingsschwester
Nadine (34) und Vater Uwe Lohmann (64)
Robin Lohmanns Zwillingsschwester
Nadine (34) und Vater Uwe Lohmann (64)

Zitat:

Honorar der Komplementärin / Kostenerstattung zur Abwicklung während der Liquidationsphase

Da die Geschäftsführung – wie Sie auch – davon ausgegangen war, dass die Liquidationsphase der Gesellschaft angesichts des bereits abgeschlossenen Kaufvertrages mit der Firma YAMA allenfalls bis März/April 2009 anhält, hatte sich die Komplementärin mit einer Pauschalvergütung für die bevorstehende Abwicklung in 2009 in Höhe von 60.000 Euro (zuzüglich Mehrwertsteuer) unter Freistellung der Fondsgesellschaft von weiteren Kosten bereit erklärt.

Da der Kaufvertrag nicht durchgeführt werden kann und nicht abzusehen ist, wie lange die Liquidationsphase noch anhält, ist die Geschäftsgrundlage für diese Vereinbarung entfallen. Die Komplementärin ist nicht in der Lage, ohne entsprechende Honorierung die Geschäftsführung nebst Übernahme der persönlichen Haftung weiterzuführen.

a) Honorar für Geschäftsführung und Haftungsübernahme

Die Geschäftsführung schlägt vor, der Komplementärin für die Zeit ab 1.1.2010 und für die Dauer des weiteren Liquidationsverfahrens ein Honorar von jährlich 120.000 Euro (zuzüglich Mehrwertsteuer), zurzeit also brutto = 142.800,00 Euro pro Jahr zu gewähren, und zwar für die Geschäftsführung und Übernahme der Haftung.

Die Vergütung ist fällig jeweils jährlich im Voraus per 15.01. eines jeden Jahres, erstmals per 15.01.2010. Die vorgeschlagene Gesamtvergütung liegt weit unterhalb des prospektierten Honorars für die Geschäftsführung, obwohl der Arbeitsumfang und das Risiko während der Liquidationsphase erheblich gewachsen sind.

Danach fallen jährlich folgende Kosten für die Komplementärgesellschaft ab 01.01.2010 an:

Honorar für Geschäftsführung und Haftungsübernahme: 120.000 Euro zuzüglich Mehrwertsteuer, zur Zeit somit 142.800 Euro.

b) Der sonstige Aufwand / Auslagen, die von der Gesellschaft an die Geschäftsführung zu erstatten sind,

werden auf mindestens 100.000 Euro pro Jahr kalkuliert. Dazu gehören unter anderem:
Treuhandkosten pro Jahr: 15.000 Euro
Rechtsberatungskosten und Prozesskosten Deutschland: 12.000 Euro
Steuerberatungskosten /Jahresabschlüsse: 40.000 Euro
Rechtsberatungskosten Dubai 10.000 Euro
Rundschreiben / Abstimmungsunterlagen / Protokolle: 10.000 Euro
Kosten von Veranstaltungen / Raumkosten / Gastronom: 3.000 Euro
Anteilige Kosten Gesamtbeirat (inklusive eventuelle Spesen): 1.000 Euro
Notarkosten / Apostillen usw.: 1.000 Euro
Sonstiges: 12.000 Euro
Summe geschätzter sonstiger Aufwand / Auslagen pro Jahr: 104.000 Euro zuzüglich 19 Prozent Mehrwertsteuer 19.760 Euro
Gesamt brutto Aufwand / Auslagen: 123.760 Euro

c) Insgesamt fallen somit jährlich folgende Kosten bei Ihrer Beteiligungsgesellschaft an:

Geschäftsführungshonorar, siehe oben a) ergibt 142.800 Euro
Sonstiger Aufwand / Auslagen, siehe vorstehend b) 123.760 Euro

Insgesamter Kostenaufwand für die Gesellschaft: 266.560 Euro

Insoweit wird vorgeschlagen, zu beschließen, dass die Beteiligungsgesellschaft für die Dauer des Liquidationsverfahrens ab dem 01.01.2010 an die Komplementärin 120.000 Euro und weitere 104.000 Euro an sonstigem Aufwand, jeweils zuzüglich MWST, zahlt, fällig jeweils zum 15.01. des Jahres.

d) Die Geschäftsführung wird versuchen, die vorstehenden Kosten durch eine freiwillige Umlage zu erheben, um die Ausschüttungen nicht zurück fordern zu müssen. Die Umlagebträge belasten den einzelnen Gesellschafter relativ gering (im Verhältnis zur gezeichneten Kommanditeinlage).

Beispiel: Bei einem gezeichneten Netto-Kapitalbetrag von 10.000 Euro und einer jährlichen Umlage von 266.560 Euro macht dies bei der II. Dubai Tower Fonds KG folgende Belastung pro Jahr aus:

(Gesamtkosten) 266.560 Euro: (Fondsvolumen) 17.144.500 Euro = 0,015 Euro x 10.000 Euro = 150 Euro.

Auf je 10.000 Euro Kommanditbeteiligung fallen somit pro Jahr 150 Euro an Vergütung für die gesamte Geschäftsführung (inklusive Drittleistungen und sonstiger Aufwand) an. Den auf Ihre Beteiligung anfallenden Betragsanteil werden wir, damit für Sie kein zusätzlicher Arbeitsaufwand entsteht, je nach Beschlussfassung von Ihrem Konto einziehen.

Es wird vorgeschlagen, entsprechende Beschlüsse zu fassen.

Möglicherweise endete die Abstimmung wieder einmal mit einer Watschen. Denn der Gehaltsbettel-Brief vom 17. Dezember 2009 ist schon der zweite. Der erste Bettelbrief vom September 2009 war am Wiederstand der Vertriebler gescheitert und fiel bei den Anlegern durch. Damals forderte die ACI-Führung einfach die Fortsetzung ihrer Bezahlung in Höhe von rund einer Million Euro pro Fonds, also insgesamt vier Millionen Euro pro Jahr.

Aber damit sich das nicht wiederholt, haben die ACI-Chefs Druck aufgebaut. Sie drohen den Anlegern im neuen Schreiben unverhohlen mit Insolvenz und mit horrenden Zahlungen, die die Anleger als Gesellschafter der Fonds-Kommanditgesellschaften dann zu leisten hätten.

Und die 300 Millionen Euro, die die Anleger insgesamt eingezahlt hätten, seien im Insolvenzfall für immer verloren. Zur Bekräftigung veröffentlichten die Lohmanns auf der ACI-Webseite einen Brief eines Wirtschaftsanalysten, der mal eben klar stellte, dass es zwecklos sei, in Dubai versickertes Geld zurückholen zu wollen.

DUBAI // As an amateur photographer and property investor, Imre Solt found himself visiting construction sites throughout Dubai to document the progress of the rising skyline of Dubai on a daily basis. Now he is lucky to find a significant change at a project once a month.

“Sometimes I don’t take any photos at all because there is no progress,” says the Hungarian-born Mr Solt, who has captured the city’s growth in what he estimates are 100,000 pictures taken from the tops of tall buildings, helicopters and even a biplane. “There are a few buildings that have made very good progress, but I think more projects are on hold than before. Sometimes, there are just a few workers there.”

The numbers bear him out. More than a fifth of construction projects in Dubai have been put on hold or cancelled in the past year, with the remainder severely delayed, said Proleads, a construction information provider. Proleads also estimates that the number of construction workers in Dubai has declined 45 per cent from the peak of the property boom in 2008 to last month, a further sign of the city’s post-boom state.

The problems are not isolated to Dubai, with projects in Abu Dhabi, Ras al Khaimah and Ajman similarly stalled.

“You have this stalemate,” says Andrew Charlesworth, the head of capital markets at the property consultancy Jones Lang LaSalle. “We are not seeing any distressed sales come through. Banks are reluctant to foreclose. Buyers can’t make payments and developers can’t build.”

A prime example of the problems is Pier 8, a debris-strewn 16-storey concrete skeleton in the middle of the bustling Dubai Marina. A piece of twisted wire clamps together the site’s red-and-white gates. They have been closed since last March.

“The construction has slowed down because of the crisis, but we will be continuing the development of Pier 8 by the end of the first quarter or the second quarter,” says a spokesman for Abyaar Real Estate Development, the Kuwaiti developer of the project. “We already have an agreement with one of the local banks in Kuwait regarding financing the remaining floors.”

It would be easy to simplify the plight of Dubai’s developers as the natural aftermath of a boom. Property prices are estimated to have declined by as much as 50 per cent since reaching peaks in 2008, a period when quick resales of apartments and even whole buildings provided a lucrative business for speculators. Now, it would appear, they are paying the price.

The reality, of course, is more complicated. The number of projects that are stalled is dwarfed by the hundreds of projects that are going forward, albeit at a much slower pace in many cases. Many more were completed before the market went awry.

Other sites are bustling. A 10-minute walk from Pier 8, the twisting Infinity Tower by Cayan Investment and Development is rising rapidly. In a sign of accelerated construction plans, contractors are putting up the glass on lower floors, while workers pour concrete for new floors above.

In Dubai Marina, 18 projects are either delayed or on hold, according to an analysis by The National. Only five of those projects are more than three storeys high. The vast majority are either sandlots or foundations for buildings. In contrast, 36 projects in the Marina are actively under construction.

While the Marina may not show how Dubai developers are coping elsewhere with the downturn, it reveals the outlines of what industry analysts say is a clear trend: developers are working hard to complete projects that are well underway, but waiting until economic conditions improve to finish those that have not started.

In that sense, Abyaar’s Pier 8 tower, its rusty steel reinforcement bars covered by a green mesh for preservation, is an exception. The company’s project across the street is probably a better sign of the trend.

The Ice Tower, a planned 30-floor tower that was launched in 2008, is “on hold for sure”, the Abyaar spokesman says. That project’s site is nothing more than a fenced-off patch of sand.

“Everyone knows we have delayed,” the spokesman says. “The projects have been delayed because of the financing situation. To convince a bank to offer you money for something in Dubai, it’s not very easy.”

As the statistics show, there are many projects in Dubai that also are in limbo, such as Pier 8 or The Pad, a Zaha Hadid-designed apartment tower at Business Bay that the developer, Omniyat Properties, describes as being in the shape of an iPod. The Pad is a few floors high, but Omniyat has put it on hold.

Omniyat’s problem has been the knock-on effect of Dubai’s debt crisis. Dubai is estimated to owe more than US$80 billion (Dh293.84bn) to local and international creditors, much of which it used to build the roads, bridges, power lines and other infrastructure to service projects such as Omniyat’s. With credit markets still largely closed and construction delayed, however, stalled roads and services are forcing a rethink for some developers.

“The new completion dates will be dependent upon and consistent with the master developer’s permanent infrastructure delivery dates,” the Omniyat spokeswoman says. Business Bay’s master developer is Dubai Properties, an arm of the Dubai Government-owned group, Dubai Holding.

Haroon Mahmood, the chief executive of MiNC Property Enterprises, said that his company’s 16-floor, serviced apartment building, Marina Suites, had been marooned on a concrete island.

“We were under construction and one day the contractors arrived at work to find there was no road there,” says Mr Mahmood, whose company bought the project from Sheffield Real Estate and sold it to investors. “We had no forewarning and when we talked to them they said come back in two-and-a-half years’ time.”

The site is now accessible, but the delay has eaten through most of the money invested in the project and the original contractor is suing for damages. Still, Mr Mahmood says he expects the complex to be built. Despite all the delays, he says the developer and investors could still make a profit on it.

“I think it will have to go forward at some point, because there’s so much riding on it,” he says. “I can’t imagine everyone walking away from something they’ve invested so much money and time in.”

Dubai’s project delays might have taken their greatest toll on investors and home buyers, rather than developers. A chorus of disgruntled investors has made waves in recent months, complaining about delays and attempts by developers to press them for more cash to get projects back on track. Back in the Marina, there are several brewing disputes, including at projects located just steps from Pier 8.