Hope for Ivory Tower investors

The developer behind the troubled residential development in Dubai says it will reinstate contracts for all apartments.

Ivory Tower is to be located in the International Media Production Zone in Dubai.

Investors in Dubai's long-delayed Ivory Tower project, who were told earlier this month that their contracts would be cancelled and money returned less a hefty penalty, have been given a glimmer of hope. Sokook Investment Group, the Saudi Arabian developer behind the troubled residential development, told the Dubai Real Estate Regulatory Authority (Rera) that it would reinstate contracts for all the apartments in the building.

Earlier this month, Sokook sent a letter to investors saying that their contracts would be cancelled and 20 per cent of the sale price retained. The home buyers were told the decision had been taken because they were in arrears in instalment payments, despite Sokook allegedly informing them a year ago that no further payment was due until construction began. But a legal representative for Sokook told Rera today that all the contracts would be reinstated.

"We are waiting for written confirmation of this before we can disclose information to investors," said the Rera official, who asked not to be named. Sokook also claimed one of its employees had sent the cancellation letter to investors. "They [Sokook] said they didn't know that one of their employees had sent the letter to investors cancelling their units," said the Rera official. "But legally, this is not acceptable."

The 20-storey Ivory Tower was launched in 2005 and after it sold out early last year, was supposed to be completed last month. However a dispute over a bank guarantee with Tecom - the master developer of International Media Production Zone, where Ivory Tower is to be located - held up the project. That dispute has now been resolved and at the beginning of July Sokook told Rera construction would begin in November.

After the project was delayed, the company gave investors the option of selling the property back with an interest rate of 10 per cent. Originally, the units were sold to investors for up to Dh650 per square foot; at today's market rates, the company could resell apartments for around Dh1,650 per square foot. The Rera official added that Sokook had expressed concern over whether it could afford to build the tower because of the rising cost of construction.

"They say material costs have gone up - but this is not the investors' problem," said the official. "If costs had gone down, would they then give investors a refund?" About 20 per cent of people who bought property in Ivory Tower are involved in an investors group, which was set up to deal with complaints about the project. But according to one buyer from the UK, who has paid about Dh240,000 towards his property, investors have so far failed in their efforts to get any official answers from senior management at Sokook.

"They are refusing to acknowledge any correspondence from the investors by e-mail, fax or phone," said the investor, who asked not to be named. The group has threatened legal action if the matter isn't resolved soon. "We have put on hold meetings with a lawyer until we know whether Sokook is sincere in its commitment to Rera," said another investor. @email:[e-mail]