KPM Tower payment issue irks investors

Some investors in KPM Tower, a residential project in Dubai Marina, have claimed that the developer is asking them for more money although they have paid more than 30 per cent of the value of their units.

"We are tired of waiting for the construction to begin. We have paid up to 50 per cent of the amount to the developer, but they keep calling us to ask for more payments. They claim that there is some construction going on, but when we visit the site there is nothing happening there," an investor, who wished to remain anonymous, told Emirates Business.

A Real Estate Regulatory Agency official confirmed that developers cannot ask for more than 30 per cent payment from investors if there is no construction progress on a development.

Hamzah Abu Zannad, Director, Marketing and Operations, Al Masah International Real Estate, said the tower has been delayed by more than a year and they received a new payment plan in May from the agency, and they "shared this with the customers".

Abu Zannad said the 30 per cent payment collected by the developer is to cover preliminary charges, such as land payments, consultant fees, project management fees, land registration, unit registration, foundation contractor payment, etc.

"If the developer is unable to cover such payments from collection, chances are the project will be delayed indefinitely. Some will not appreciate this rule, and these are speculators. Serious investors and developers have stood side-by-side to weather this storm along with the swift action of the government strengthening these ties," he said.

Investors said they are also concerned about the slow progress on the project while the developer is pushing them for payments.

"They even sent out letters to buyers putting a delayed penalty clause of Dh200 per day to be charged to buyers for payment delays," said another investor. "Some of us have paid more than 50 per cent and the developer is asking us to pay more. Also, we are not seeing any progress on the project then why should we pay more?"

Asked why the project was delayed, Abu Zannad said: "We are committed to accelerate construction to compensate for this delay. The project was initially scheduled to be completed by the end of 2010, however, now we anticipate the project to be delivered in the first quarter of 2011. From now, the anticipated time of delivery of the project is 20 to 22 months."

The developer also cited reasons for the delay and said just next to the location of the plot is a Dubai Electricity and Water Authority substation that feeds the entire Dubai Marina.

"For shoring works on the plot we needed a no-objection certificate from Dewa and we had to acquire the necessary approvals for the designs to ensure safety of shoring works and anchoring procedures. Until we reached the final design approval the process took a long time with a number of back and forth communications with Dewa," he said.

He said the developer will compensate investors with the developer's penalty to its investors for the delay in the handover of the tower.

"In all our issued contracts that are approved by the authorities, there is a penalty clause stating a nine per cent per annum fee on my part as a developer and we will pay this accordingly with respect to how much our project is delayed."

Marina Exclusive, the developer of the project, is a subsidiary of Al Masah.

KPM Tower has an escrow account with Badr Al Islami. In February, the project saw an escrow account adjustment from Amlak Finance to Badr Al Islami.

Abu Zannad said the KPM Tower is 97 per cent sold out and is not on hold and will not be cancelled.

He said the developer has sat with more than 6,000 of its clients and individually sorted out their issues such as delayed payment plans, transfer of funds, downsizing investments, etc.

"The crisis has affected all people in all segments in several industries, and we believe we have offered many creative solutions that suit all parties," said Abu Zannad.

 

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