‘Palm Springs is a Go’, Damac Reportedly Tells Investors

Property Investors who have sold and re-sold their properties in Damac Properties Palm Island development can get ready to breathe a sigh of relief as it looks as though their investment will be safe after all. While nothing is officially confirmed yet, ArabianBusiness.com has reported that, “Damac Properties appears poised to formally announce the reversal of its decision to axe the Palm Springs project, according to investors.”

In an article titled Damac u-turn on Palm Springs project, the website reports

Investors said they received calls earlier this week from Damac informing them the Palm Springs project is to be re-instated, according to a statement on the website of a Palm Springs investors group.

The project will be located on the new plot provided by master developer Nakheel, with some possible changes to building plans, the statement says.

Another blog that claims to belong to the Palm Springs Investors Group , in a post on the Palm Springs saga yesterday quoted one UK investor as saying:

“I‘ve had a call from Damac informing me that the Palm Springs project will get the go-ahead now, but due to the re-allocated plot, there may be some changes. Damac told me that they will confirm this in writing within the next 10 days.”

Still, even if things turn out as reported, it remains to be seen what changes will be made and how investors will react to them.

Damac Properties caused uproar amongst property investors when it decided to cancel the Palm Springs development in favour of a new one. Property investors were offered a 6% return on their deposit monies and the opportunity to invest in the new development with a 15% discount.

The problem is that property investment in Dubai is very, very lucrative across the board, with properties gaining value in double figures year on year. Armed with this knowledge - property investors take advantage of the phenomenal growth in capital values by latching on to new developments very quickly to maximize return on investment.

The buying process with a company like Damac Properties is such that after 28 days a property investor will have paid a 20% deposit on their chosen property investment. Within the UAE this means that the property investor can sell their property investment on to another property investor for a premium, and for the ‘switched on’ property investor this may well achieved within days of handing over the 20% deposit.

Although the initial purchaser is not removed from the legal chain that leads to the ultimate buyer, they may well have received all of their deposit money back and more, and still be locked into greater profit on the day of completion. Now you can see why they didn’t jump up and down with excitement when Damac offered them 6% and a bite of their sandwich.

If you are reading this as a non property investor, you probably have a smug smile on your face as your read with delight that these guys nearly got burnt. On the other hand, if you make your living by flipping properties like this, you probably feel very lucky to be off the hook. Clearly Damac Properties would not be obliged to make good the difference between the price they sold a property for and the price an investor re-sold the property for. However, Damac courts investors, who have flocked to Dubai in droves, and so I would say there is a moral obligation if not a legal one, to look out for their interests.

Why did Damac decide to involve itself in any of this? - I don’t know. Has it enhanced its reputation? - No!

[tags]Palm Springs, Palm Springs Dubai, Damac Properties, Damac, Dubai property, Dubai real estate, off plan property, real estate news[/tags]