Dubai will liquidate scores of cancelled property projects and use the funds to repay investors who lost billions of dollars in the emirate’s real estate market, state news agency WAM reported.
A decree by Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum said a special legal committee would be established to settle disputes related to projects that had been officially cancelled by the Real Estate Regulatory Authority (RERA).
A crash of the emirate’s property market in 2009 and 2010, which more than halved real estate prices, forced developers to shelve or scrap hundreds of projects. Some developers shut down and left Dubai without telling their customers.
Many individuals and corporations had bought properties and handed over the money while the projects were still in the design stage; they never received the properties and were unable to recover their money.
About 217 property projects were cancelled in Dubai between 2009 and 2011, data compiled by RERA showed last year. They included a Tiger Woods-branded golf course and a kilometre-high tower to be built by state-owned developer Nakheel.
Dubai is now recovering from the crisis and property prices have begun to rebound, but the legacy of unpaid debts and unsettled contracts could weigh on the recovery.
The new committee will examine developers’ financial status as well as cash transfers and deposits related to the cancelled projects, WAM reported late on Monday.
“The committee has the right to take actions and issue decisions to guarantee the rights of those who have purchased property that fall into this category,” it said, without elaborating on exactly how committee would ensure payments.
The new committee will supersede all courts in Dubai, including those in the Dubai International Financial Centre; implementation of verdicts issued by the courts on cases handled by the committee will be halted.
Several state-funded mega-projects such as Nakheel’s Palm Deira, Palm Jebel Ali and the World, a complex of man-made islands, were sold to investors but later stalled. They will not be handled by the new committee since they have not been officially scrapped, merely delayed indefinitely.