English investors battle Dubai Sports City builders
As English cricket fans focused on the Test match against Pakistan in Dubai Sports City, hundreds of UK investors were battling builders over stalled projects in the surrounding development.
Sports City courted international homebuyers with plans to build a US$4 billion (Dh14.6bn), 4.6 million-square-metre, mixed-use development around a mix of sports complexes including a multi-purpose, 60,000-seat stadium. But so far, the only large project completed is a cricket stadium.
Many of the residential projects are half built, leaving most of the area around the stadium as a construction zone dotted with idle cranes and concrete building shells.
"Obviously it will be a bittersweet moment when England step out to play in Dubai Sports City," said Christian Thorne, whose parents invested more than Dh1.1 million in two Sports City apartment towers that are unfinished.
Several groups of UK buyers are pursuing developers, hoping for refunds or to spur construction of long-delayed projects. Mr Thorne bought apartments in Champions Tower 3 and Oasis 1, which were scheduled to be built by 2009.
"Our projects should have been completed by now," Mr Thorne said. "Instead we're stuck in a battle like hundreds of other English investors to get our money back."
Sports City is one of the centrepieces of Dubailand, a Dh235bn development billed as "the world's most ambitious tourism, leisure and entertainment project". The plan called for amusement parks, the world's largest shopping mall, office towers and residential developments grouped around different themed developments.
In Sports City, sub-developers bought land and launched dozens of individual projects, hoping sports events would attract tourists. Several developers offered buyers hotel-apartment schemes and guaranteed rental income.
"The feeling was that by hosting global sporting events there would be huge demand," said Matthew Green, the head of research for the property firm CB Richard Ellis. "But that hasn't happened."
Sports City has opened an Ernie Els signature golf course and a cricket academy, in addition to the cricket stadium. But construction has been delayed on the 60,000-seat multi-purpose stadium and a 10,000-seat indoor stadium, which were scheduled for completion by the end of 2009.
The two stadiums are being redesigned, said Rajeshree Iyer,the head of marketing for Dubai Sports City.
"We will resume construction thereafter," she said. "We are simultaneously undergoing a research study to ascertain the demand for events in Dubai, which will help us determine the new capacity."
While Sports City reassesses the projects, many buyers in stalled residential developments have abandoned their initial investments, leaving developers to scramble for cash to compete the projects. In some projects, half the buyers have defaulted.
"Many people invested beyond their capacity," said Ahmed Shaikhani, the managing director of Memon Investments, which is building five projects in Sports City, including the Champions towers.
Mr Shaikhani said all the projects would be completed in the next two years. Memon has been offering buyers deals to consolidate their investments and reduced prices if they continue to make their payments.
However, the company recently sent buyers a notice demanding thousands of dirhams in registration and utility connection fees. The company is also refusing to refund money. "Cash back is like committing suicide" for a project that needs financing to continue construction, Mr Shaikhani said. More than 70 per cent of the buyers "understand the current situation", he added.
But other buyers in Sports City are losing faith.
"Sports City was billed as being this great sporting location," said one English investor, part of a group of 70 buyers in the unfinished project called the Cube. "It's basically a building site, and a deserted building site at that."
But not all buyers are trying to recover their money.
"We just want keys to an apartment," said Tony Hynes, who has invested Dh1.1m in two apartments in a development called Bermuda Views.
Part of a group of 175 buyers, he praised the master plan and the concept for the development.
"Nobody can blame anybody for the loss of value," My Hynes said. "Just get in there and build it and we'll take it."
Published: January 20, 2012 04:00 AM