Abu Dhabi project delays 'out of developer's control'

The top executive of the developer of a disputed project in Abu Dhabi says problems have been out of the company's control

Delays in a disputed US$7 billion (Dh25.71bn) project on Abu Dhabi's Reem Island are "out of the control" of the developer, the company's top executive says.

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Dozens of buyers in Tameer Towers are demanding refunds after construction on the project stalled this year.

But the development's problems were caused by issues with a contractor and delays in gaining permit approvals from Abu Dhabi, said Federico Tauber, the president of Tameer Holding, in his first public comments on the dispute.

"Before, all these approvals were controlled by master developer," Mr Tauber said. "Later, it was shifted to the different areas of municipality."

Tameer also changed contractors, further delaying the process, he said. In July, hundreds of workers walked off the site after the contractor, Al Rajhi Projects, failed to pay salaries.

"We decided to change the contractor, and this is why it is taking some time to re-tender," Mr Tauber said.

Tameer Towers is a cluster of residential and commercial buildings planned on 3.4 hectares on the Reem Island waterfront. The first apartments were scheduled for handover in June, although contracts typically allowed for a six-month delay.

Tameer plans to restart construction in the first quarter of next year, Mr Tauber said.

But buyers are intent on pursuing their claims, according to Thabit Al Temimi, a lawyer representing buyers in the project.

"The only matter exempting Tameer from the obligation [to deliver] is force majeure," he said.

Mr Tauber declined to say whether the developer would invoke force majeure, the clause in contracts that allows delays for unforeseeable circumstances. Developers in Dubai have been using force majeure to cover a wide range of situations, including contractor delays and the economic crisis.

Tameer will deal with buyers on a case-by-case basis, Mr Tauber said.

"If customer paid 70 per cent and they are [up to date] on their payments, we'll see" about refunds, he said. "But if the customer has defaulted, they don't have a case."

But the law allows buyers to stop making payments if the developer is not fulfilling its end of the contract, Mr Al Temimi argued.

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"Tameer is not building," he said. "Is it infinite that Tameer keeps the money and not build?"

While disputes over delayed projects are common in Dubai, they are a relatively new phenomenon in Abu Dhabi, where most projects were started between 2006 and 2008, at the height of the market.

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