Having enjoyed success in the Dubai market with the International City development, MiNC took the opportunity to invest in the Marina Suites building in Dubai Marina. MiNC bought and sold four blocks of off-plan property in International City, so Marina Suites looked like a good opportunity to meet an increasing global demand for off-plan residential property in Dubai.
After a record-breaking start with respect to speed of sales and demand for furnishing packs, the project then became beset by problems, and is still yet to be completed. During construction, the local authority, without consultation, decided to close the main road to the site. This road improvement would greatly enhance the local area, but for obvious reasons, this severely impaired the construction project.
Because the road closure delayed the project by 9 months, the developer quoted MiNC an extra 50% on top of the existing build costs. This figure seemed too high, but in order for work to continue, MiNC needed to agree a figure with the developer and then raise the additional cash from the project investors and purchasers.
It was during these negotiations that the Dubai market crashed. This caused problems for the developer and also meant it was impossible for MiNC to raise additional finance to complete the project at the time.
I have the greatest sympathy for everyone who has invested in this project. I would like to assure people that Haroon and I are still working hard to try and find a way to restart development. See the current status page for the latest news on the project.
MiNC was one of the first companies in Dubai to invest in Jumeirah Village. After the great sales success of Apex Suites, this looked to be a profitable location for MiNC and its investors, so we took the decision to acquire more sites for development in the village.
Off-plan sales were progressing extremely well in the Prodigy phases of the project, but the development ground to a halt when the market crashed in 2009. The crash meant purchasers of the apartments had lost over 50% in their property value which led to the majority of purchasers no longer being prepared to make the required stage payments to fund construction.
Although there were funds in seven tightly managed escrow accounts for the different developments, and which still remain in the escrow account, the funds were not enough to continue with the development of the apartment blocks. No bank lending was available and the MiNC business was drained of its reserves. In addition to this, the local authorities would not allow the consolidation of the escrow accounts to complete one or two blocks. Even a number of years on from the crash, it is very difficult to raise bank funding or additional investment to restart construction.
We’d like to assure all people who invested in or bought off-plan units in this development that funds are still held in escrow and that there is still every intention of finishing this development. But this requires funding. If we are able to sell the three undeveloped plots of land that we still own in Jumeirah Village, this will be enough to fund the completion of the part-sold developments. These plots have been on the market with a reputable agent since the local market began to recover.
Although there have been some positive signs in the marketplace since the crash of 2009, it certainly hasn’t recovered to the same degree as, for example, London, so it is still extremely difficult for us to sell our Dubai assets and release the funds necessary to restart work.
I would like to apologise on behalf of MiNC for the problems with this project, but I would also like to assure people who bought off-plan units that MiNC has not used this money for any other means. The existence of escrow means it simply isn’t possible for the money to be moved before the completion of the project unless it is approved by an independent 3rd party. Investors can also be assured that the project accounts were independently audited every six months.
See the current status page for the latest news on the development.