Palm Jebel Ali investors still want project built
Palm Jebel Ali Home Owners Group publish open letter calling on Nakheel chief to honour its contractual obligations
A group of investors in the stalled Palm Jebel Ali island on Wednesday called on Nakheel to publicly confirm that prices, plot sizes and locations will be honoured when the Dubai-based developer eventually relaunches the project.
The Palm Jebel Ali Home Owners Group, in an open letter to Nakheel chairman Ali Rashid Lootah, said that despite the long delays in building the mega project, members remained confident in the company to deliver their homes.
The letter was published in response to comments made by Lootah earlier this week in which he told disgruntled investors that they were given the option to switch their investment to Palm Jumeirah but if they chose to wait until the project is resurrected there was nothing he could do.
Work on the Palm Jebel Ali development began in 2002 but was stalled in the wake of the Dubai property crash, which saw property prices slump by up to 60 percent and around half of projects mothballed indefinitely.
"We would like to respond respectfully to the chairman of Nakheel... and let it be known what Nakheel could do to help us right now," the letter said.
"In brief, we have not accepted the consolidation options offered so far because they would have resulted in us being left holding large losses from having poured our life savings into the project. Specifically, many of us would be left in the position of having to continue to re-pay a mortgage for a home that we never received. We can see no alternative but to wait for the project to be re-started and our contracts to be honoured."
The group said it would like to congratulate the "tremendous achievement" Lootah on turning around Nakheel by launching both stalled and new developments and restoring profitability.
It added: "We continue to believe in Dubai, Nakheel and The Palm Jebel Ali. We are asking Nakheel to give serious consideration to our two very modest and fair requests while we continue to wait patiently for the re-launch of Palm Jebel Ali.
"We would like Nakheel to publicly confirm that our contractual price, built area, plot size and location for our homes will be honoured at the time of re-launch. We have in fact paid far more than the original price for our homes due to premiums, lost rents, lost interest and mortgage payments over the years.
"Nakheel suspended our right to sell our homes on the open market during the 2009 crisis. Since we have learned that Nakheel remains firmly committed to the project, we would like them to now re-open the Transfer Desk for Palm Jebel Ali so that those of us who would like to exit can sell their home on the open market as is normal for any project where investors like us have paid between 30-50 percent to the developer.
"We very much hope that Nakheel recognises that honouring its contractual obligations to home owners who’ve been patiently waiting for many years is essential to support investment confidence for the future."
In November, a letter signed by 74 investors in Nakheel’s Palm Jebel Ali project was sent to the office of Dubai ruler, Sheikh Mohammed bin Rashid Al Maktoum, highlighting the uncertainly and negative impact the delay in delivering the project has had on the group.
Lootah said this week that the project was definitely not cancelled and Nakheel would resurrect it at some time in the future when market conditions make it viable.
“It’s not easy... Palm Jebel Ali is almost seven to eight times the size of Palm Jumeirah... It is very costly, with regards to infrastructure and everything. But we have a commitment to it, and will not cancel the project,” he was quoted as saying in an interview with Gulf Business.
Directly addressing the concerns expressed by investors, he added: “What can I do if they are not happy with anything? We gave them the option to shift to Palm Jumeirah, which was fully developed. Many investors took that call and the price tripled after they moved there.
“A lot of people – not only villa owners, but also people who bought plots for development, hotels or buildings, they moved. And they are happy. Some people also swapped into other properties. But some people just want to wait – what can I do?”
In January, the government-owned developer said it expects to maintain profit growth of 40 percent in 2015 and 2016, as it benefits from diversifying into the retail and hospitality sectors.
It reported a 43.2 percent jump in full-year profit for 2014 to AED3.68 billion ($1 billion), despite a substantial drop in revenue.