Investors in Dh7bn Reem Island project get half money back

Investors in the stalled Reem Island development, Tameer Towers, in Abu Dhabi have been offered refunds of 50 per cent.

Investors who bought units on Reem Island's Tameer Towers development have been offered some of their money back.

ABU DHABI // At least a dozen investors in a stalled Reem Island development have accepted partial refunds, while another 35 await the outcome of an arbitration case against the developer.

The investors are set to receive half the money they invested in the Tameer Towers development in installments, more than a year after construction stopped at the Shams Abu Dhabi site.

Frederico Tauber, president of Tameer Holding Investment, the developer, said the move was an effort "to take care of all our customers and their complaints".

"Now, we have our full focus on the Tameer Towers investors," Mr Tauber said. "We are trying to solve on a case-by-case basis their issues. We need to find solutions."

The Dh7billion Tameer Towers project was initially expected to be completed in 2011, but work faced significant delays and then stopped altogether in July 2011 after unpaid workers went on strike.

Tameer announced earlier this year that a new contractor would be named by April and the development would be finished by the end of 2013, but three separate groups of investors have filed cases with the capital's Arbitration Centre in a bid to get a full refund.

A new contractor has not yet been named, but construction on the first phase of the project is expected to begin early next year.

NB, a Dubai investor who paid Dh525,000 for a unit, said he received the first installment of his refund and the rest is expected this week.

"I had almost written off my investment entirely, so I thought I might as well get some of my money back," he said.

Another investor, MR, said he was told he would receive his Dh125,000 refund in nine payments, but it still would not be enough to pay off the mortgage at the bank.

"I am still paying interest every month on this," he said. "But I am still thinking about accepting it, because I just want to close the issue once and for all."

Tameer Towers was initially planned as four buildings of residential and commercial space with sea views and a marina. The first phase, which consists of two towers, remains 21 per cent complete, and the rest of the project is under review. Mr Tauber said Tameer is looking at "what the market will likely require on Reem Island".

Since construction stalled last year, investors said they had been unable to reach Tameer or receive updates on what would happen to the development. At least three court cases have been filed against Tameer; all are in the Court of Appeals.

Haitham Hassan paid Dh530,000 for his unit and led a group of 24 investors in negotiations for refunds with Tameer. He has decided not to accept the rebate.

"How can we accept a 50 percent refund on money Tameer has had for four years?" Mr Hassan said. "We fulfilled our part of the contractual obligations. Why should we accept 50 per cent if Tameer is the one who did not commit to its contractual obligations?"

Several investors said they took the refund before the arbitration case is settled because they do not believe the developer will pay out.

"Who would make them pay?" MR asked. "We need strong laws in Abu Dhabi to protect investors. Right now, there is no law. We are exposed."

Tameer completed Princess Tower, the world's tallest residential tower, earlier this year, and handover of units has begun.

A contractor for the Tameer Towers project will be appointed "very soon", a move Mr Tauber said will resolve some of the issues that plagued the development before construction stopped. The former contractor, Al Rajhi Projects, laid off all its workers at the site last year and refused to pay end-of-service benefits.

Investors will be updated on the status of the new contractor next month, Mr Tauber said.

"We still have some issues we need to sort before we continue with the work," Mr Tauber said. "This is a very big investment, and we have been working since February to appoint a new contractor. We have almost finished that process."