Red Residence

[jaimeybug]

We are concerned investors in Red Residence Dubai Sports City. We would like to hear from any other investors in this project who may have concerns of any sort. Our concern is the shortage of information for the last 6 years from MED. On a recent visit to Dubai our son-in-law made a site visit by appointment with the Developer who showed him around and in particular showed him our apartment. The project does seem to be reaching a conclusion in terms of structure Our problem now is the information he was given by the developer's representative It appears the way we understand it from him that the way the development will be handled once it is completed and all final payments are made could be contradictory to the Addendum to Sales and Purchase Agreement Briefly In this Addendum it states that there will be a 20 year leaseback to MED who will manage the project at a level of service and quality similar to a 5 star hotel. Similar apartments will be pooled and the rental income shared amongst the owners after costs and expenses being maintenance fees, municipal fees, master development fees and sinking fund. The way we now understand it from the information given to our son-in-law and also confirmed by MED by e mail to us is that the apartments will be let out on a normal term and we are told it should bring AED 65 000 per annum for a 1 bed unit. (Although not guaranteed we were given a figure almost 3 times this when MED compared this project to Arabian Crowne back in 2006 which would have been a decent return) This figure was given to us as a typical rent for a 1 bed apartment in Dubai and we were directed to websites which were letting out normal residential apartments as opposed to those being run similar to a 5 star hotel with nightly rates. MED are going to take a 40% fee after expenses basically for letting out an apartment in a normal way like any other estate agent Whether there will be a restaurant, shops and boutiques referred to in the marketing material is yet to be confirmed and yet the most recent update says the project will be ready end June 2014!! We are currently unable to get any responses to these issues from MED causing us this concern that they are not going to run it in accordance with the contract. We are being ignored. We just get generic updates. Apologies for the length of the post but wanted to get across the concerns we have.

 

[a18lor]

Hi. I have similar concerns but not sure how we can contact other owners.
Like you, I fear the rental terms used to persuade us to invest may not be honoured!

 

[jaimeybug]

Hi

Thank you for posting in response to mine. Can you advise the basis for your thinking on the intentions to change the rental terms. Have you received any communication suggesting this. We are based in the UK and maybe we could correspond by e mail to discuss the matter further. We were given end September for completion but have not received any construction updates for a while now and according to RERA the status of the project is still at 92.20% so it does not look as though this date will be met.

Jaimeybug

 

[Veronica]

Hi

We are based in the UK and maybe we could correspond by e mail to discuss the matter further.
Jaimeybug

The whole point of forums such as this is to encourage discussions openly to give everyone concerned the chance to get involved and be kept up to date on developments.
Please use private messaging only for delicate or confidential matters.

Thank you

 

[a18lor]

We visited the property in March. The lady from MED who was showing us round suggested we should consider renting the property ourselves....she also highlighted the cost of registering the property with Dubai Land Dept is about 6% of the property price and we are liable for that fee!!!
However you will note in the contract the late delivery penalty clause....if MED can be relied upon to honour that clause then it should deliver a substantial rebate AFTER completion and we have made ALL our payments!!!

 

[jaimeybug]

Hi there

In response to your post. Firstly the registration fee at the Dubai Land Department is 4%. I got this direct from the Land Dept. We purchased this apartment for a "hands off" investment. The contract has an addendum which is a 20 year leaseback with 8% guaranteed return for the first three years and then a 60/40 split after that based on pooled revenue from like for like apartments. The building, according to the contract, is to be run similar to a 5 star hotel. We were a first purchaser, that is directly from MED back in 2006 We know that second purchasers may not have the 8% guarantee but we still thought they would be on the 20 year leaseback agreement. When the MED representative (it could have been Ionna who showed our son-in-law around) said to you that you should let your unit out yourself what was your response? In Clause 2 of our Addendum it states that the owner shall not interfere in the day to day operation of the Rental Programme and acknowledge that MED total control of operational activities. Not exactly conducive to letting it out yourself. In our opinion that would be mitigating their liability to give you the 8% for 3 years and would be a breach of the contract. It is unbelievable that she should be advising you to breach your contract, that is if you are on the same basis as us. According to the contract we have, we cannot even sell it without MED continuing to be in control (Clause 8) When the building is complete and we are expected to make the final payment, the apartments would all have to be furnished and the building would have to be in a position for MED to begin letting it out similar to a 5 star hotel. We will not be making our final payment until such time as this is the case. The way we understand what was proposed to our son-in-law about the way the building was to be run is that they would let the apartments out as normal lettings and they would simply be acting as an estate agent but at 40% fee that would be outrageous because that is what the contract reads. Anything else other than similar to a 5 star hotel would be a breach of contract. We think they may be trying to coerce us into agreeing with the way they want to run it but from what they have said to you, they do not want to be involved in the letting at all. Does your contract read like ours and were you a first purchaser? From what they told us about 50% of the building is just normal apartments. We have noticed less and less updates coming through recently. I assume you have not yet made your final payment? If MED actually believe they can get out of their responsibilities as per the Rental Agreement which of course is part of the Sales Purchase Agreement then we do not think there is much chance of getting any penalties for late delivery. They are bound to try to blame the Master Developer where they can. We have not been able to get anything in writing from them as to their intentions (possible breach of contract) but until such time as we have something firm in writing that they will be adhering absolutely to the contract then we will not be making the final payment. As you say we need more people and we were hoping others will see our postings. There could be others already in litigation we cannot know. Where are you based in the UK?

Jaimeybug

 

[jaimeybug]

I was hoping to receive a reply to my message to you.
Regards
Jaimeybug

 

[jaimeybug]

message for Sadiqunazir
Just to let you know I only have a one bed unit in Red Residence. Our payments are fully up to date Only the final payment due on completion incl. furniture.

 

[a18lor]

Apologies for the delay in responding to your latest post. We appear to be on the same contract and like you have been very disappointed with communication from MED. When we visited the project in March 2014 the anticipated completion was May 2014 Whilst we considered that date as optimistic it is very disappointing we are now in October with still no completion date which we were advised is different from 'hand-over'! The last few updates over the summer have been nothing more than photographs!

Not sure what is happening now but you can message me on {contact details moderated} to discuss options.

* Moderator: Please refrain from adding contact details to posts. If you need to contact the member please do so using the Private Message option.

 

[a18lor]

Not sure how we can exchange private messages.....moderator removed my contact details from my last message!
We were originally purchasing at the Windsor development in City of Arabia and MED contacted us and offered an exchange to Red Residence as the Windsor was on hold and hadn't even been started.
Bottom line is we both appear to be on the same terms but don't know how we make direct contact?

 

[John Alexander]

Does anyone know when the above project is getting ready.

I am not in the rental guarantee program as I had bought in the City Of Arabia project of MED initially in 2005. As they did not start that project they offered me an apartment in Red Residence instead without the hotel concept.

I have asked MED few times about when will they introduce me to the Management company on sight. They have ignored the reply, Then on pressuring them they have said that they will let me know once they have finalised the on sight management.
I would like to clarify that before I bought the apartment MED had informed me that they will have a management firm with an office on sight. This was to manage the individual apartments of the owners as most.

It does not look like that the handover will take place in 2014.

 

[John Alexander]

Does any one know what is going on with Residence project? Whether the project is ready from inside? When is the handover taking place?

Also what is the selling price in DSC for a one bedroom apartment in excess of 1000 sq.ft. Also what would the annual rent be for such apartment at Red residence unfurnished and furnished?

 

[jaimeybug]

Hi there

I noted that the moderator suggested we could use private messaging but when I go in to the Members List to find you it says No match found. I am wondering if you should perhaps try to go into the Members List and do a search for me jaimeybug and if you can get in then click on "EMail" and you should then be able to send me a private message. Give it a go. If you cannot get anywhere with that are you able to give your name and where you are based in the UK and I could try to track it from there There are two new messages from a John Alexander who was also buying in City of Arabia Windsor and he was also offered a unit in Red Residence but not on the rental programme. I was just wondering if you are in the same situation as him? He is very frustrated as he is getting no responses from MED on the various questions he is asking about the Management Company.

Not sure how we can exchange private messages.....moderator removed my contact details from my last message!
We were originally purchasing at the Windsor development in City of Arabia and MED contacted us and offered an exchange to Red Residence as the Windsor was on hold and hadn't even been started.
Bottom line is we both appear to be on the same terms but don't know how we make direct contact?

 

[Sophielsie]

I own at Red Residence too

Hi - I have also bought at Red Residence (1 bed apartment) and share your concerns over MED. The latest update today shows uncompleted parts of the building - despite Ioana stating that it is complete. I have asked for a definitive statement of events and dates for the legal completion and handover once completion received from the authorities - I will post them here. I have paid c50% and the rest is on a Developer Loan - albeit MED tried to get me to pay cash last year and I said No. The Land registration fee is 4% from Oct 2013 (prior was 2%) and is paid 2%/2% between the buyer and the developer - although I expect MED will try and get us to pay for it.

 

[Sophielsie]

I think you need to post 5 Replies (non commercial) to be an Active Member who can send Private Messages...Moderator - is this true ?

 

[jaimeybug]

We reiterate your concerns from today's update. Can you advise if you have purchased, as we have, on the 20 year leaseback which forms an Addendum to the Sales and Purchase Agreement. Under this agreement there is a 3 year rental guarantee of 8% less expenses. In terms of this Addendum it states that the rental programme will be operated on the same basis as a 5 star hotel, provide the furnishings for the apartment in accordance with the standards of a 5 star hotel among other things but so far there has never been any mention of the apartments being furnished already. (This is their responsibility in terms of the Leaseback contract) MED have to appoint a Management Company for reservation services and in terms of the contract we have no involvement and are not expected to try to interfere with the daily operation of this rental programme. It was mentioned to us that should we put the unit on the open market we could expect to get AED 65 000 per annum less expenses etc. We could not understand why this was being spoken of as we have a 20 year leaseback and it was for this reason that we purchased the unit so that we would have a "hands off" investment. We bought into a concept and that is what we expect to get. We are unable to get any clear answers from MED management. From the updates being sent to us it does not correlate with our contract as it seems they think they are going to hand over the keys to us and tell us to get on with it. In terms of the contract,the collective owners of each apartment type, being 1, 2 or 3 bedroom shall be entitled to 60% less expenses of the income on a collective basis so it would not matter if your particular apartment was let out or not. We suspect MED no longer wish to run the rental programme from the information that has been forthcoming so far and this is our main concern. We will be writing to MED today and it would be good if other investors would do the same and enquire about the issues that are worrying us. If we all do this we may get some answers. As soon as we get any pertinent information we will post on here. I checked today on the Project Tracking Status on the Dubai Land Department site and it remains at 92.20% which it has been for some months now. It could be that this is the last stage while all the Government formalities are completed, no sure. One more thing Schedule D (The Lease not to be confused with the Leaseback Agreement) is referred to in our Sales Purchase Agreement but we do not have it. Do you perhaps have this Schedule if you are on the same contract as us. Can you post your response.

 

[Sophielsie]

Confirmation of Status

Can you advise if you have purchased, as we have, on the 20 year leaseback which forms an Addendum to the Sales and Purchase Agreement. Under this agreement there is a 3 year rental guarantee of 8% less expenses - YES I have

 

[jaimeybug]

Hi again

The Schedule we are referring to is Schedule D which is the actual sample of the Lease which will be signed on completion. Do you have this Schedule?
Jadeybug

 

[Sophielsie]

Hi - I am not at home at the moment - but have just checked my PDF's I have - which may not be all of the docs has the "Addendum to the Sales and Purchase Agreement Governing the Operation and Management of unit xx at Red Residence. You are right that the Schedule D is referred to in the main sales agreement - but the above doc appears to cover the lease - what do you think is missing in the terms in the above agreement ?

 

[jaimeybug]

Hi

The Lease (Schedule D) is the actual ownership Lease which in this case is for 99 years just as you would get for a property you buy here in the UK. The Addendum you refer to is the Leaseback which is for 20 years and has nothing to do with the ownership lease which gives MED control of your unit for that period. Think of the 99 year lease as a Title Deed. The reason we have mentioned this is because it is missing from our documents and when we asked for it we were told that we will get it on completion. The Sales and Purchase Agreement refers to it being subject to Schedule D in several places and without it the contract is not complete. The Sales and Purchase Agreement assumes we have this Lease document and that we have seen it prior to signature but this is not the case. The clauses in the Sales and Purchase Agreement refer to the Lease on Page 4, Clause 1.1.6, Clause 6.6.1(a) and 6.2 and lastly Clause 13.6. We had already paid our deposit before any contracts were presented to us. From the information we have had and from other information we have read on this website, MED are leading investors to be of the impression that they may not wish to run the building in the way it was sold to us and of course, before we make any final payment, we must ensure that the Management Company is in place, there is on site concierge.a reservation system, most important. Originally they stated they were lucky to have Alpha Tours a renowned international tour operator. Also from what we can see the restaurants, shops, boutiques etc. are not in place Without all these services in place how will it ever be let out similar to a 5 star hotel? We have continually requested information and answers to all of these issues, especially the running of the building as a hotel, but MED have never categorically said "yes" but have rather swerved around the question which is why we have these suspicions. You will see that others posting here have similar concerns. The completion date was our major concern since 2006 but now it has become more important as to how the building will be run and if our contracts will be adhered to. Instead of being happy that we are reaching the end of this saga we are stressing out about this now becoming a burden. We have once again written to Ioanna requesting information and will post if we receive anything back. In the meantime let us know if you have a copy of the 99 year lease sample document.