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Kuwaitis seek Sama Dubai arbitration |
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9/11/2008 9:57:44 AM |
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Kuwait's Al Arabiya real estate company is seeking arbitration proceedings against Sama Dubai after the government-linked developer blocked the sale of plots in the Lagoons project to Union National Bank.
The case will come as another blow to the nervous Dubai property market, which is reeling from a spate of high-profile detentions on fraud allegations, many of them from the real estate industry. No end to the corruption probe is in sight.
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Analysts, meanwhile, predict a correction within a couple of years to the booming emirate's house prices, which have brought untold riches to many investors but are squeezing the middle-class expatriate workforce as rents soar.
The Kuwait-based real estate company says it agreed terms of the deal in June with the Abu Dhabi based-bank and with Sama Dubai, which is part of the Dubai Holding conglomerate owned by Sheikh Mohammed bin Rashid Al Maktoum, Dubai's ruler.
Al Arabiya RE has spent about Dh1bn ($272m) on 18 plots it acquired in the summer of 2007 at the Lagoons development in the Ras al-Khor area of Dubai.
Sama Dubai, the master developer of this project and developments in Qatar, Morocco and Oman, last week in a letter, signed by its chairman Farhan Faraidooni, told UNB that it did not give its approval. Sama Dubai also returned payment cheques, which it had held for about three months, to UNB.
Al Arabiya RE and UNB agreed to the transfer months ago and, in any case, people familiar with the matter say the seller does not need Sama's approval. The contract stipulates that the buyer be "credible".
Sama Dubai has refused to explain the reason for the three-month delay. Abdulsalam al-Marri, chief executive of the Lagoons project, is one of four of its staff who were detained in late August on suspicion of fraud by anti-graft investigators.
Mr Faraidooni declined to comment. In a statement, he said commenting on a relationship with an investor would break the contractual agreement.
Since the stand-off began, Al Arabiya RE has been approached by third parties suggesting that an "irregular" payment would speed along the sale, according to two people familiar with the matter. The company had refused, they said.
The Kuwaiti property company has sent notice to Sama Dubai that, in line with the contract, it intends to press ahead with arbitration proceedings at the Dubai International Arbitration Centre in the emirate's chamber of commerce.
UNB is also considering legal action, according to one of the people familiar with the matter.
Al Arabiya RE, which is controlled by the Bukhamseen family and listed on the Kuwait stock exchange, has extensive hospitality interests, including hotels in Kuwait and the UAE. The company hopes to develop eight hospitality plots at the Lagoons project.
An executive at Abu Dhabi-listed UNB, which is controlled by the Abu Dhabi and Dubai governments, said the market for large plots in the scandal-scarred project had frozen over.
"I haven't heard of a sale there for three months since our issue cropped up," he said. "Maybe it has something to do with the arrests there."
An extensive investigation into allegations of fraud and corruption at Dubai Islamic Bank has widened across the emirate and several executives at other government-linked companies have been detained.
These companies include Deyaar, DIB's real estate affiliate, and coastal offshore developer Nakheel.
This week investigators detained Abdullah Nasser Abdullah, deputy chief executive of Tamweel, the Dubai mortgage company, raising further concerns about the property sector.
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Source: Ft.com |
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