April 12 (Bloomberg) -- Silvia Turrin paid two-thirds of the $520,000 purchase price of her Dubai apartment, only to learn that it won’t be finished until 2012, two years late. When she stopped payments to Emaar Properties PJSC, the developer hit her with late fees.
“We feel hopeless and we’re running out of options,” said Turrin, one of about 400 buyers in two nonexistent towers called 29 Boulevard. “It’s almost like we don’t have any rights.”
Developers in Dubai are demanding that buyers like Turrin keep paying for homes that in some cases haven’t even been started. Builders in the emirate have delayed or canceled projects worth about $330 billion, Dubai-based market researcher Proleads estimates. The best performing real estate market in the world collapsed in 2008 after credit dried up, sparking defaults and forcing writedowns of land and property values.
New buyers in Dubai won’t be forced to choose between unfinished developments because companies built more properties than they could sell in the last several years. Off-plan sales accounted for the majority of transactions after the property market was opened to foreigners in 2002, Asteco CEO Jones said.
Today, off-plan buying is “effectively dead” and isn’t likely to be revived anytime soon, Riley said.
After finding that they own unfinished properties that are worth less than they owe on mortgages, many buyers just want to get out, RERA’s Bin Ghalita said. While the regulator can protect buyers’ rights, “people have to take responsibility for their investment decisions,” he said.
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