Construction Started vs Construction Program

[sk302016]

In my opinion, I feel the term "construction started" is very tricky and Dubai authority must well define what is "construction started" and also "construction progress" together. I strongly recommend Dubai authority use and execute the term "construction program" instead of "construction started".

Nowadays, here are how developers did and think and define about "construction started" (and construction progress). Any of the following items count "Started" (and progress) from the point of view of some developers.

1. project launched in 2005 and tell buyers that they are still evaluating constractor in 2008.
2. project launched in 2005 and tell buyers that they have not received land and permission from the master developer in 2008
3. put fence on the construction site, some site don't even have project board there.
4. put crane and a few of construction material on site but no movement happened for a year. I heard some of the crane are broken, just for show.
5. some workers play sand once a while, just for show
6. workers move tool and machine from here to there on site and did nothing about construction
7. spent years on planning papers after launch. The "Started" (and progress) is those "planning papers".
8. spent years for pile testing
9. spent years to dig a hole on ground

The result of above cause "DELAY". Some of us might already agreed and signed addendum with developers for changing the completion date and long-stop date (and other terms stay the same as shown on the original contract). But, in many cases, it looks like that the developer still can not finish it with new date. So, buyers are either expecting and agree the 2nd addendum (maybe 3rd, 4th...) for changing date again or ask for compensation if you don't agree for changing date from the beginning (but you must make all payment on time from the beginning). I wonder anyone here who already receive compensation from any developer. I look compensation in this way: compensation = discount (deduct from your last payment) = bank interest = you lose rental income (higher than bank interest) = you lose capital gain = stuck your money for a long time. The compensation is just better than zero from investment point of view.

Concerning "construction program", it is more specific with detail work plan, such as when the foundation will be finished, when the 10th floor will be finished, when the last floor will be finished and so on. Every construction project in the world should come with a construction program and time frame/table. It makes sense for everyone including developers. In my country, construction program is a part of contract and developer collect payment (also send photo to buyers as proof) whenever the progress reach there. In Dubai, some developers just drop you "anticipate completion date" then change it later without explanation.

Without a transparent "construction program", in some cases, I personally think that we are either wait for a unkown long time (probably until developer have enough cash to go on) or the developer go bankrupt sooner or later. However, it could take forever to finish it or maybe a never ending story if workers work 2 days and take three days off. It is decision of developer. We have no choice about their decision and plan.

Thanks for reading my post.

All the best,

 

[eyeC]

. We have no choice about their decision and plan.

All the best,

i don't think its true its you who decides to buy or not to buy

i would like to add approved programs at the start of a project change during construction

clients change omit stuff and delay will force the contractor to submit a new program by the time you finish a project you might have three or more revised programs which will not show previous delays in the new program

so its a complicated process

if you don't have a clause in your purchase agreement that states you will be compensated for project delay and the developer is not worried about his business name you are doomed....most developers are new to the business
or with only 2-3 years xp

all purchase agreements are done in favor of developers without the possibility of negotiation

add to it you buy and receive the terms of agreement later months after you pay your money

people didn't ask about purchase agreements since you cant change it and they just want to buy what people are buying

and so on

 

[RERA Official]

i checked on this. we are careful

construction started= foundations finished

each developer is asked to provide us with construction program

 

[escrow_officer]

i checked on this. we are careful

construction started= foundations finished

each developer is asked to provide us with construction program

I personally think that since bank appoints a consultant who verifies all the progress done, all payments should be linked as per his " Construction report " which should be avilable to RERA, developers as well as investors. His construction report should be a base for the next payment and all the outflow from Escrow.

Regards

 

[sk302016]

construction program

i checked on this. we are careful

construction started= foundations finished

each developer is asked to provide us with construction program

Hi Escrow Officer and RERA Official,

Thanks for your attention.

I would like to share some information for your reference.

In my country, developer might own 100% land or co-own partial land with other land owners. Then, developer submit land ownership (deed) with construction program to government for applying construction permission and register the project as well. The process of construction permission and project registeration normally takes 6-12 month if all papers completely meet regulation and requirement. Then, developer start construction with construction permission. This permission is valid for two years which means developer must apply permission again if they don't start construction based on the construction program. Developer must get this permission first, then allow to sell the units. Buyers always examine the sales contract including the construction permission, land ownership (deed),construction program, anticipate completion date (normally count by calendar day such as 1000 working days including national holiday) and compensation (normally 1/1000 of contract value per day).

During construction period, developer does not like to change construction program and sales contract with buyers.

If change construction program (add and delete any item, change design and drawing....),all construction works on site are required to stop, then submit new construction program to government, and wait for new permission (could be 6-12 month). All previous done works on site might have to knock down if the change is very big.

If change sales contract with buyers, buyers either agree or cancel the contract and ask all paid payment back from developer This is one of our consumer laws, apply on all construction projects, does not need to state on the contract, but need to go to court, take about one month. Normally, developer would offer discount (not new payment schedule) to buyers for accepting the changes.

After building is finished, government send engineer to inspect the whole building based on the construction program including design, drawing, material, facility, equipment. After pass, government issue "completion license" to developer, then developer ask buyer to pay the rest payment, then register the unit under buyer's name, then handover the deed, keys and so on. In fact, most of developers in my country finish their projects and handover to buyers before anticipate completion date. That's how developer can make maximum profit instead of paying loan to bank and expensive compensation to buyers

In short, I want point out the following issues for Dubai government and hope they will do better in the future.

1. land ownership: developer and sub-developer must official own the land before launch the project.

2. construction permission: developer should get construction permission before launch the project. The permission must be valided in certain time.

3. construction program: must be required as part of sales contract.

4. payment schedule: must be linked with construction program (progress)

5. completion date: must have law to protect buyers in order to prevent a never ending delay from developers. I personally think both compensation and new payment schedule are not good enough from developer. In my opinion, the best way is "buyers have rights to cancel the contract and get all paid money back" under some condition such as overdue one year than the long-stop date or not agree changes on update contract (addendum). This way could force developer to well plan the project, go on the project, and finish it seriously on time. A slang says: "Don't promise something that you can not promise". In this case, that means the "contract" and "law".

Hi eyeC:

I must admit that I made a mistake on "believe and trust" and also ignored some important issues on the contract when I bought property in Dubai. I believed and trusted the developer would prefer to finish the project as soon as possible and make profit on completion. Now, I just can not image how can a project offical launched in 2005 and not even a hole on the ground in 2009. In fact, the developer is sitting on many buyer's money and doing almost nothing. How can we do?

 

[eyeC]

if he can get 30% on all money collected and return only 70% to the clients who bought

and defaulted he doesn't need to start

why should he care the developer in starting his project

in theory 10-15% profit is what developers make from developing a project and if they are allowed to receive 30% if they delay and people default than it sounds better profit if they never start

in dubai developers made more money but because prices kept going up and bad planning actual profits can be estimated at 15 %

 

[eyeC]

Hi sk302016

its too late now to do anything except wait

or compare with the following

wait till the money will lose its purchasing power with the next or coming

hyperinflation and it will be very costly for the developer to start and he will be truly unable to start the project,,which leads to the same thing no project and your money is worth less

at this stage i guess what ever you can get from the developer is better

 

[Marcopedroso]

Right to get money back?

Dear investors,
I've invested in a project in Dubai, in Jumeriah Village, the project is delayed more than 1 years probably 3 years, there's a law who discipline this kind of situations? Can I get my money back?


Best regards

Marcopedroso