AED1000 charge adds to Dubai Lagoon investor bill
Registration fee adds to woes as Schon peddles new pay scheme
Investors in the Dubai Lagoon project in Dubai Investment Park are to be charged AED1000 to register their off-plan purchases with the interim registry, despite a delay of up to two years on the project that shows little sign of providing compensation.
The so-called Ogood system from the Dubai Land Department aims to register all properties on the AED3 billion project, without which owners will not be able to obtain their title deed later, nor be able to resell or transfer the unit, according to the newsletter to investors.
Sources from the Dubai Lagoon Investment Committee – the investor consortium - have revealed that the charges were not transparent from the beginning as the Interim Registry is a new entity, and that AED4,750 was demanded three months ago. Others argue that property does not have to be registered until it is sold – eliminating the need to pay at the construction stage.
At the same time, Schon Properties, the developer, is to encourage investors to switch to a new instalment plan in which payments will only be made when phases are completed – a move it says will boost transparency but that will give some investors paying in a different system no choice but to comply.
Dubai Lagoon has been severely delayed with greatly uneven development, leading to a lawsuit against the company by a consortium of investors two years ago. Though Zone 1 has all building structures and block works complete, Zones 2 and 4 have completed enabling works, while construction within Zone 3 is only complete up to the second floor slab.
Developments in zones 5, 6 and 7 have ground to a halt, the company has acknowledged.
The new scheme will be overseen by a ‘joint monitoring system’ between the company and the Real Estate Regulatory Agency (RERA) – which has approved the plan along with the Dubai Land Department.
The payments will be structured as 30% as an initial deposit, and 10% upon every completion of enabling works, basement floor slab, ground floor slab, second floor slab, fourth floor slab, and sixth floor slab. A final 10% will be due upon completion and handover.
This is opposed to some investors paying 50% for unit construction and 50% over a seven-year period. These investors will be offered between 10%-20% discount if they change to the new payment system, according to Schon Properties, though this is yet to be finalised.
Sonia Schon, executive director, said all buyers still have the right to stick to their original contract without anyone forcing them to change.
But if investors in units in Zones 5, 6 and 7 are to accept the repatriation to a property in Zones 1, 2, 3 and 4 they will have to abide by the new payment plan.
Further, investors say that specifications for units in zones 1, 2, 3 and 4 are understood to be very different to those in zone 5-7, meaning they will end up purchasing something different to their original intentions.
In an interview with Construction Week, Sonia Schon denied that investors were being forced into the new payments system if they wanted to obtain a property or unit any time soon. However, she added: “Right now our priority is for those who will switch their payment method”.
She acknowledged that any ‘Anticipated completion date’ clause in the original contract signed by investors that promised compensation would be honoured given the length in delay for the project overall. “If there is a compensation clause then there would be an adjustment for them,” she said.
However, this compensation cannot be used by zones 5-7 investors as a down-payment on their new unit in zones 1-4, as the compensation would only be assessed and distributed at the handing-over stage.
Minutes from a meeting with DLIC spokespeople and Schon reveal that the committee members agreed with the idea of a change in payment plan but demanded a greater discount to attract investors.
Full refunds for investors are not an option, she added, and did not think the company would face further legal action.