Red Residence

[a18lor]

Now up to speed thank you! We have no option but to await developments from MED ..... However it would be interesting to know 1. if there are investors in Red Residence who do not have the rental addendum and 2. how long ago is it since MED sold apartments without the rental addendum. That information could be important to show when MED aborted the plan to operate the building on the terms under which we invested but chose not to make us aware!
The bottom line is that, like many other investors, i was attracted to the development by the terms on which it was to be operated and the potential for significant rental income. Without MED complying fully with all those terms then the property value is far lower and MED must realise there will be a demand for compensation. I suspect the delay in completing the development is more likely to be linked with their legal people assessing what is possible to minimise any compensation/legal action by investors.

 

[jaimeybug]

At least there are three of us now who can get together should it become necessary. We believe there are very few investors in the Rental Programme and they are probably not aware of any problem. We have approached various agents selling Red Residence (resales) and have been told it is a residential building and no mention has been made of the rental programme and there is no rental programme as far as they are concerned. The apartments are being sold as straight forward residential apartments. Obviously when we are approached for the final payment we imagine that MED will have to come clean and anything less than what we bought into we will not be paying. Like you we bought into the hotel concept and are in no way interested in having a residential apartment to rent out in Dubai. We are hoping more investors will come across this forum. We are aware for a fact that many investors in Red Residence have been switched into this development from other non-starter projects of MED and significantly they are not in the rental programme. On MED's own website Red Residence and Kensington Royale are referred to as residential buildings! We will post again if there is any further news.

 

[peter petrou]

Hi All,

Just wanted to put my two penny's worth in.

We have had an absolute nightmare with MED, I could probably fill the next 5 pages but in a nutshell, we were one of the original investors in Arabian Crowne which has had to be transferred to Red Residence much to our protests as we wanted a refund, but to no avail. We actually had a clause inserted that any delay in completion after January 2014 would result in them paying a monthly fine until completion then the guaranteed rental income would kick in.
As the saying goes it would be easier to get blood from a stone, MED are bloody useless and with absolutely no correspondence and no replies to any of my emails.
I have even looked into legal action under Sharia Law but no-one wants to take the case on especially now the completion certificate has been issued.

Peter

 

[jaimeybug]

Thank you for posting on this forum. We have a couple of questions following on from your comments.

Firstly we are unaware of the completion certificate being issued and according to RERA on the land department site the project is still showing only 92.20% completed which it has been for about the last year.

Secondly if you were switched from Arabian Crowne were you given a contract whereby you would receive the guaranteed rental of 8% for the first three years and then switch to a share of the profits from the letting of all the apartments in your type. We know of another investor who was also switched from Arabian Crowne but were not offered the guaranteed 8% etc.

Thirdly we believe that the building has not been built as a hotel as per the original marketing and our contracts but is now going to be just residential apartments and investors will be responsible for finding their own tenants and everything else that goes with it. This has not yet been confirmed to us by MED but we are reasonably sure it is the case.

Have you paid the full amount. We have paid 80% and have not yet been approached for the balance of 20%. We have been told that the usual checks are being carried out by DEWA and the apartments are being measured by surveyors before completion can take place . Once we are asked for the final payment and we have written confirmation from them that our contracts have been breached then we will be taking legal action if we are not refunded our money. It seems inconceivable that they can move so far from the original contracts that most of us have signed. T his was supposed to be a hands off investment with a tidy income but if, as we suspect, it is not now a hotel but rather a block of flats, it presents a totally different concept. This is not what we bought into!!!!

Jaimeybug

 

[peter petrou]

Thank you for posting on this forum. We have a couple of questions following on from your comments.

Firstly we are unaware of the completion certificate being issued and according to RERA on the land department site the project is still showing only 92.20% completed which it has been for about the last year.

My apologies for the misrepresentation but the completion certificate was for the civil defense and not the municipality. This was in the email sent to everyone on the 8th Jan.

Secondly if you were switched from Arabian Crowne were you given a contract whereby you would receive the guaranteed rental of 8% we agreed on 5% for the first three years and then switch to a share of the profits from the letting of all the apartments in your type. We know of another investor who was also switched from Arabian Crowne but were not offered the guaranteed 8% etc.

Thirdly we believe that the building has not been built as a hotel as per the original marketing and our contracts but is now going to be just residential apartments and investors will be responsible for finding their own tenants and everything else that goes with it. This has not yet been confirmed to us by MED but we are reasonably sure it is the case. As I said getting any information from them is nigh on impossible. I have no information either way but it would not surprise me if you are correct, because if you look at the description on their website it reads Middle East Development is pleased to present its 22 floor residential luxury tower, called Red Residence in Dubai Sport City

Have you paid the full amount. Yes. Because we paid quite a bit towards Arabian Crowne and were fighting for a full refund we had to reluctantly agree to have a 50% share with another investor in the same situation as us and the outstanding amount of monies returned to us as it was impossible for a full refund. We have paid 80% and have not yet been approached for the balance of 20%. We have been told that the usual checks are being carried out by DEWA and the apartments are being measured by surveyors before completion can take place . Once we are asked for the final payment and we have written confirmation from them that our contracts have been breached then we will be taking legal action if we are not refunded our money. It seems inconceivable that they can move so far from the original contracts that most of us have signed. T his was supposed to be a hands off investment with a tidy income but if, as we suspect, it is not now a hotel but rather a block of flats, it presents a totally different concept. This is not what we bought into!!!! Good luck with that I must of approached every solicitor in Dubai and only had a response from 2, both saying it wasn't a case they wanted to take on. This was probably because I only have a 50% share in a 1 bed apartment (not enough money for them to pursue). You would think though that if everyone was up in arms then something has to be done.

Jaimeybug

I hope this has answered your questions but I am happy to answer any further queries you may have.

 

[jaimeybug]

Hi

I think you should look back through the postings specifically Page 3 where a member Sophielsie has spelt out his correspondence with Iona the Customer Relations Manager at MED. This will give you all the background and the attitude of MED.

What contract have you got with MED. The original investors in Red Residence, of which we are one, had a Sales Purchase Agreement for our unit with an Addendum governing the operation and management of each unit which is a 20 year leaseback. This clearly spells out the intended use of the apartment to be let out and run like a 5 star hotel. Does your contract read this way with the only exception being the 5% and not the 8% guarantee?

If you check the Civil Defence Certificate it actually states the building as being a Residential Building and not a hotel. We were also advised of this as the use by estate agents selling in Dubai. If you read Sophielsie's post you will see it also more or less confirms this.

If you end up with an apartment between the two of you it could create problems with the letting etc. or even if you wish to sell and the other party does not. Are you in touch with the other 50% investor? In January 2014, we would have thought that MED would already have known they were not building a hotel as at that point in time it was very close to completion except for the final certificates. In fact it was not long after this that we were being told by sales agents that it was a purely residential building.

I think it would be an idea for you to thoroughly read all the postings in order for you to see what other investors have discovered and their opinions on the project.

Let me know if you have any queries we can perhaps help you with.
Jaimeybug

 

[peter petrou]

Hi

I think you should look back through the postings specifically Page 3 where a member Sophielsie has spelt out his correspondence with Iona the Customer Relations Manager at MED. This will give you all the background and the attitude of MED.

What contract have you got with MED. The original investors in Red Residence, of which we are one, had a Sales Purchase Agreement for our unit with an Addendum governing the operation and management of each unit which is a 20 year leaseback. This clearly spells out the intended use of the apartment to be let out and run like a 5 star hotel. Does your contract read this way with the only exception being the 5% and not the 8% guarantee? It just states 5% for 3 years with a further 8 years if we want to extend, as was the Arabian Crowne contract

If you check the Civil Defence Certificate it actually states the building as being a Residential Building and not a hotel. We were also advised of this as the use by estate agents selling in Dubai. If you read Sophielsie's post you will see it also more or less confirms this.

If you end up with an apartment between the two of you it could create problems with the letting etc. or even if you wish to sell and the other party does not. Are you in touch with the other 50% investor? Yes but he has more or less given up on the project and not really interested. We both said after the 3 years (if it happens now :smile we would sell it and split the money. In January 2014, we would have thought that MED would already have known they were not building a hotel as at that point in time it was very close to completion except for the final certificates. In fact it was not long after this that we were being told by sales agents that it was a purely residential building.

I think it would be an idea for you to thoroughly read all the postings in order for you to see what other investors have discovered and their opinions on the project.

Let me know if you have any queries we can perhaps help you with.
Jaimeybug

Thank you Jaimeybug I will as I lost touch with this forum ages ago when my old computer broke

 

[Sophielsie]

Demand for Land Register Fee

Hi everyone - assuming you have all seen this demand from MED. I have replied asking them to confirm the name of the hotel operator whom will be running Red Residence - per the rental agreement they signed in 2007 with me:


From: Lawrence Clark
Sent: 27 May 2015 11:20
To: Customer Care
Subject: RE: RED RESIDENCE UPDATE MAY 2015

Please confirm the name of the Hotel Operator that will be managing Red Residence, as per the rental agreement you signed in 2007.

Regards

Lawrence Clark
Technology Industry Leader
Retail, Media & Gaming Customers

Tel/Fax: +44(0) 118 924 7103

From: Customer Care [mailto:[email protected]]
Sent: 27 May 2015 09:41
To: Lawrence Clark
Subject: RED RESIDENCE UPDATE MAY 2015

Dear Valued Clients,


Please be informed that Sunday 10th May 2015, was the first inspection and we are due for the next inspection soon.

Once the completion certificate will be issued, DEWA will install the meter so the electricity will be in the building. It will follow the 45 days commissioning and testing for AC and once completed, another 20 days testing for DEWA.

We believe that the handover will be possible within four months from now, however the exact time will be confirmed to all the clients later on.

We have attached for you the DSC master plan as well the article from the news paper where shows that UAE won the Asian Football Cup bid and most of the games will be played in the stadium opposite to the building.

Please be informed as well that as per the latest rule of Dubai Land Department, the Real Estate Government Authority in Dubai, all the unit owners have to pay the pre registration fee and the registration fee until end of June 2015. Herein attached the article from the newspapers

Please note that the pre-registration fee should be paid in cash to MED, as MED pre registers the unit and 4% out of the original price plus the 20 AED knowledge fee should be a Manager’s cheque in the name of Dubai Land Department.

If you can’t issue a manager cheque, you can pay in cash plus a fee requested by the bank to order manager’s cheque.

Note: Please do not send payments to MED’s Escrow Account because we will not be able to withdraw it and pay to Land Department as money in the escrow account can be used only for payments related to the construction of the building.

If you have already paid the registration fees, please disregard this notice.

Should you need any further assistance please feel free to contact us.



Best regards,

CRM Department

106, 1st Floor Building No: 4,
Emaar square, PO Box 9323
Dubai, UAE
Tel: +971 4 423 0966
Fax: +971 4 423 0927
Email: [email protected]

 

[jaimeybug]

We also received this information which appears to be quoting a newspaper article rather than an official document from the Dubai Land Department. It would not be the first time that mis-information has appeared in Dubai press. If they wish to make this demand it should at least be official from DLD so that we know that this is fact or not. Of course we know about the registration fee and the registration of the unit but that would take place, surely, IF and when we have made our final payment and taken possession The use of the word "sold" can only mean when we are the owner and the sale has completed.

We will not be paying any registration fees as we have good reason to believe our contract has been breached and, far from completing, we will be demanding our money back. Should there be any penalties imposed by DLD then they will be included in any litigation against MED. If this is correct about the registration then maybe between us we need to join in litigation with a common solicitor.

Unfortunately it is likely that you do not get any reply from customer care as they are clearly trying to push us into completion on a contract that has been breached.

Jaimeybug

 

[Sophielsie]

Just got this reply from MED:

From: Lawrence Clark
Sent: 27 May 2015 12:18
To: Customer Care
Subject: RE: RED RESIDENCE UPDATE MAY 2015

Hi – when will the hotel operator be chosen ?

Regards

Lawrence Clark
Technology Industry Leader
Retail, Media & Gaming Customers

Tel/Fax: +44(0) 118 924 7103

From: Customer Care [mailto:[email protected]]
Sent: 27 May 2015 12:18
To: Lawrence Clark
Subject: RE: RED RESIDENCE UPDATE MAY 2015

Dear Mr Clark

Thank you for the email,

Please be informed that there is no Hotel Operator chosen by now.

 

[Sophielsie]

From: Lawrence Clark
Sent: 27 May 2015 12:46
To: Customer Care
Subject: RE: RED RESIDENCE UPDATE MAY 2015

Dear MED,

On the basis that the your obligations under the Rental Agreement you signed with me in 2007, (8% Guaranteed Rental, 30 Days free usage, furnishing to a 5 star standard, etc),is not contingent on you finding a Hotel Operator, as per this clause in our Agreement :

2 APPOINTMENT OF MED
The Owner hereby appoints MED to be and MED shall act as the sole and exclusive manager of the Rental Program, in accordance with this Agreement.
Except as otherwise specifically provided in this Agreement, MED shall have exclusive control and discretion in the operation, direction, marketing, selling, management and supervision of the Rental Program.

I look forward to receiving these benefits:

4.1 Obligations of MED
MED shall:
1 cause the Rental Program to be operated at a level of service and quality similar to the standards of
a 5 Star Hotel;
2 Provide the initial furnishings for the unit in accordance with standards of a 5 Star Hotel;

6.2 3 Year Guarantee
During the first three years of the Initial Term, the Owner is guaranteed by MED that his annual
disbursement will be equal to a minimum of 8% of the original purchase price of the Unit paid to MED.

8.2 Owner’s Right to Use the Unit
The owner will have the right to use the Unit free of additional charges for up to 30 days per Contract Year,
however no Owner usage is permitted during Blackout Periods as outlined below

Please confirm this is the case.

If you are going to materially renegade on our signed agreement – I need to know as soon as possible.

Regards

Lawrence Clark
Technology Industry Leader
Retail, Media & Gaming Customers

Tel/Fax: +44(0) 118 924 7103

From: Customer Care [mailto:[email protected]]
Sent: 27 May 2015 12:34
To: Lawrence Clark
Subject: RE: RED RESIDENCE UPDATE MAY 2015

Dear Mr Clark

MED is concentrating in getting the completion certificate so we can apply for the approval of DEWA , this is an important aspect of the HO.

 

[a18lor]

This is increasingly worrying! MED are behaving in an unbelievably high handed manner. Even with the unpredictability of Dubai law it is hard to believe MED would not be found in serious breach of contract. They also appear incapable of completing the development with an 'estimated' further four months required for testing etc etc etc! And what about the 4% registration fee payable NOW to Dubai Land Department!!! Has anyone made any progress on this issue?

 

[mike.stewart]

Rr == kr

Dear all,

I am an investor in Kensington Royal (KR) which is on the heels of RR in regards to disappointments, delays and surprising arrogance on part of Iona and others.

We have also consulted with attorneys to seek help with our investment but it has been not really fruitful.

Last week I received the email in regards to the payment of the 4% registration fees.

I like to support a group effort on part of the investors to:
1) pressure MED in responding professionally,
2) providing discounts on purchase prices from 2006-7, and
3) starting to disclose facts and be transparent in regards to the returns on our investments.

Regards
Mike

 

[mike.stewart]

At least there are three of us now who can get together should it become necessary. We believe there are very few investors in the Rental Programme and they are probably not aware of any problem.

We are investors in the Rental Programme.
Please let me know if you are planning to take any action, as we ouls be interested in joining you.

Regards
Mike

 

[mike.stewart]

Is there a way we can share our contact details and trace other investors in red Residence who also have the 'rental agreement' as part of the purchase contract.

We have a rental agreement, 8% return for the first 3 years, and fully furnished 5-start hotel, with one-month owner use in our agreement.
We have been approached to re-vise our contract to concert it to rentals. We have disagreed.

Another thing= We have paid up 50% of the original asking price, with a mortgage agreement for the remaining 50%. Is there anyone here with similar payment agreement?

Mike

 

[Sophielsie]

Hi - yes I have the rental agreement - which also states that they must furnish the property - and I also have the developer mortgage of 50%. They have not formally asked told me they want to cancel the rental agreement or not materially fulfill their obligations under the agreement. I have asked them many times to formally confirm their intentions and they wont. Once they do that we be the catalyst to initiate legal proceedings. Lawrence Clark

 

[jaimeybug]

Hi All

We will definitely be joining with Sophielsie and A18or and it would be nice to have you, Mike, along as well if it is possible for a solicitor to work with both developments At least that would make 4 of us. Red Residence cannot be deemed to have been "sold" until such time as we have accepted that the terms and conditions of our contracts have been fully met and nothing else. We have no intention of paying this 4% now because our unit is not sold to us at this point in time and if it is as we suspect we will not be completing on it and will demand a refund of our money through legal action, if necessary. It is interesting that you (Mike) have been approached with a revised contract and it may well be that we will be offered the same. Is it possible for you to copy and paste the pertinent terms of it.

Jaimeybug

 

[jaimeybug]

Hi All

is anyone contemplating paying the 4%.

Jaimeybug

 

[jaimeybug]

Hi All

I have just spoken with the Dubai Tourism Authority and they have confirmed that Red Residence is not a Hotel but is an apartment building.

Jaimeybug

 

[Sophielsie]

Red Residence - Hotel ?

I am not sure if the classification can impact the rental agreement, as per the agreement, MED are the manager of the rental program and we appointed them to rent it out:

APPOINTMENT OF MED
The Owner hereby appoints MED to be and MED shall act as the sole and exclusive manager of the Rental Program, in accordance with this Agreement.
Except as otherwise specifically provided in this Agreement, MED shall have exclusive control and discretion in the operation, direction, marketing, selling, management and supervision of the Rental Program. The Owner shall not interfere in the day-to-day operation of the Rental Program and acknowledges MED’s total control of operational activities.

and the obligations are "..to be operated at a level of service and quality SIMILAR to the standards of a 5 star Hotel'

OPERATION OF RENTAL PROGRAM
4.1 Obligations of MED
MED shall:
1 cause the Rental Program to be operated at a level of service and quality similar to the standards of a 5 Star Hotel;
2 Provide the initial furnishings for the unit in accordance with standards of a 5 Star Hotel;
3 Perform its duties and responsibilities under this Agreement diligently and faithfully;
4 Perform such services as are in MED’s reasonable opinion necessary for the efficient supervision,
direction and control of the operation of the Rental Program; and
5 Use reasonable endeavours to optimize the yield of the Rental Program.