Blame game at Sky Gardens

Sky Gardens

, a medium-rise building next to the Gate building, is at the centre of a major dispute between some of Dubai's biggest names. We wrote about a lawsuit filed by

Taaleem

, the schools company against

National Bonds

and

Deyaar Development

in yesterday's paper:

and

.

The question is why is this a meaningful dispute? Well, as I understand the lawsuit there are still large payments outstanding (on a building bought at more than Dh3,500 per square foot once and partially resold at an even higher rate during the peak of the market) and none of the parties want to take responsibility. But eventually either the courts or an arbitrator will rule that someone is responsible.

Any losses at the companies involved in the dispute could have implications. Deyaar has already paid roughly Dh180m for the property but claims in its financial statements that it is confident it can get the money back, so it has not yet calculated the investment as a loss. If it it ordered to pay, that could mean it would have to account for the money it has spent and possibly more money it would be required to pay.

See Deyaar's first quarter earnings page 2:

National Bonds invests money on behalf of individuals and then redistributes some of the profit to its bond holders through an annual return and weekly lottery draws for prizes up to Dh1 million. If it has to keep sinking money into this project, then it could also be affected. It already

last year and does not disclose its investments, so

.

Then there is

First Dubai Real Estate

, the developer of the building and subsidiary of

Al Mazaya Real Estate

. It has already

. If for some reason it cannot collect the remaining amounts, then it would also have to account for the difference.

And finally there is Taaleem, the private schools company that is partially owned by National Bonds. It claims that it was never supposed to be responsible for the investment in the building, saying that National Bonds was always going to back the investment. Although, National Bonds has sent it a letter "demanding" well over Dh230 million, according to the court documents filed by Taaleem. This could be a serious hit for the company if it was ordered to pay.