Ten years after it was due to be completed, those who invested in Dubai Lagoon have little hope the development will come to fruition.
Last week, developer Schon Properties had its land plots, property and funds in escrow accounts seized by the Dubai Land Department, leaving investors with more questions than answers.
More than 2,000 UAE residents and investors from Europe and the UK made part-payments on apartments in the off-plan project in the Dubai Investments Park area.
They spent between Dh250,000 and Dh1 million on homes in a community that was billed to include 50 buildings clustered around a swimming pool, school, mosque and shopping centre.
The Dh7 billion development was launched in 2005 and scheduled for completion in 2008. Only the outer structure of a few buildings and some interior work have since been completed.
“I have written it off. I have no hope. It may not seem a big amount to some people but I invested my hard-earned savings in 2006 in what looked like a promising development at the time,” said Ahmed Hassan, who runs an information technology company and paid Dh270,000 towards a one-bedroom apartment and parking space.
After repeated handover deadlines were not met, some investors filed court cases and complained to the land department and the Real Estate Regulatory Agency.
Last week, authorities announced the seizure of Schon's land due to the developer "exploiting" investors by failing to deposit money in the escrow account.
The land department has not responded to emails for more information.
Dejected about the lapse of time, residents are concerned about the funds remaining in the escrow account.
“I’m very disheartened and need clarity on so many things. I want to know how much is in the escrow? When will investors get their money back? Is there a deadline? If there is insufficient money in the escrow, then what action will be taken?” said Taimur, a Canadian businessman, who did not want to give his full name.
He paid about Dh1m as a part-payment for four apartments, plus interest on bank loans.
Both men were among the investors who have visited Schon’s offices over the years, hoping for updates.
“I will be happy if the legal action proves beneficial to investors and we get our money back as soon as possible. We have been waiting for years,” said Dr Shakeel Kamroddin, an anaesthetist who lives in Ireland.
On the advice of friends that Dubai property was a good investment, he paid about Dh340,000 for a one-bedroom apartment – about 55 per cent of the total price.
Last year, Schon Properties announced that to speed up construction it would pass on three of the seven phases of the project to Xanadu Real Estate Development.
Neither Schon nor Xanadu requests for comment.
Before the transfer, investors said they were asked by Schon to pay the full price for their properties beyond the deposit, and offered property in another emirate the developer claimed it had completed work on.
“Schon was trying to renegotiate our payment terms. They wanted us to pay 100 per cent. It was not a delivered project, so why would I invest more money?” Mr Hassan said.
The experience has scarred residents for whom the project was their first investment.
Mr Hassan finally bought a studio apartment in the emirate last year.
“It took me 11 years to invest again, but this time I bought a property that was already delivered.”