Homebuilder CHI Development files suit against Nakheel

A developer in Jumeirah Golf Estates has sued Nakheel, the master developer, for failing to provide infrastructure to the development.
The fourteenth hole of the Earth Course at the Jumeirah Golf Estates in Dubai. Amy Leang/The National
The fourteenth hole of the Earth Course at the Jumeirah Golf Estates in Dubai. Amy Leang/The National

A homebuilder in Jumeirah Golf Estates has filed a Dh309 million (US$84.1m) claim against Nakheel, the project's master developer, over delays in infrastructure construction.

CHI Development Group built Lime Tree Valley, a collection of 121 villas along the golf course designed by Greg Norman, which hosted the Dubai World Championship in November.

Most of the villas were completed almost two years ago, but owners have not been able to move in because there is still no electricity or road access to the homes.

Nakheel declined to comment on the claim.

"The works at site are advancing and the contractors are on site and progressing work on the development," a spokesman said.

Nakheel's failure to provide the infrastructure has caused CHI to "suffer considerable loss and damage", the filing claims.

"Our client has been trying to resolve these issues amicably with Nakheel," said Jonathon Davidson, the lawyer representing CHI. "Proceedings have been filed ahead of the proposed separation of Nakheel from Dubai World to protect CHI Development Group's interests and those of its purchasers."

CHI has been dealing with angry buyers, who have been waiting for years to move into their homes. Some have filed claims demanding their money back, according to the claim.

"It's very frustrating," said Douglas Collins, who paid Dh7m for a villa in the project in 2007.

His family is living in a hotel while they wait for their villa. He has spent about Dh423,000 on accommodation since primary construction on the home was completed.

CHI has been caught in the middle between the buyers and Nakheel, which has repeatedly promised to complete the infrastructure.

Nakheel halted work on many projects in 2009, when it announced plans to restructure $10.5bn of debt.

"We're doing everything we can in our discussions with Nakheel to come up with timelines for delivery," Roger Wakeham, the director of development for CHI, told The National in December.

Lime Tree Valley is the first UAE project for CHI, a group of Irish developers. Villas range from 4,200 square feet to 7,000 sq ft, with prices Dh7m to Dh8m.

CHI bought the land in 2005 and expected the electricity and roads to be completed by the end of 2008, according to the court filing.

Nakheel made the "unfortunate and costly" decision to develop a public-private partnership to provide power to the project, the lawsuit claims. Nakheel bought kilometres of copper cabling for the project, only to find it redundant when the public-private plan was scrapped and Dubai Electricity and Water Association wanted aluminium cabling, according to the filing.

CHI tried to resolve the power and road issues with Nakheel without success, the suit says.

"The parties met numerous times, both on and off site, to discuss possible solutions and outcomes in order to speed up the process but to no avail," the filing says.

The last time Mr Collins visited his property it was still surrounded by earth and an empty construction site.

"It looks like a deserted cowboy and Western film," he said "It's a little surreal - a lovely house just sitting there."

Although Nakheel says work has resumed, there is no clear indication when the infrastructure will be completed. Key agreements are still not in place, including an approval for a road plan from the Road and Transport Authority, the claim alleges.

To Mr Collins, the particulars of the dispute between CHI and Nakheel are less important than any sign his villa will be handed over in the near future.

"Nobody is really interested in [the dispute] when you are haemorrhaging money," he said.


Published: August 26, 2011 04:00 AM


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