Gazumping- A New Way to Force Up Prices

The premium Dubai properties are pushing up sale price after the settlement of the final figure with the buyer. The practice popularly known as “Gazumping” has given way to the price rise of around 15% as reported by real estate agents.

The term was first heard of in UK in 1980s and early 1990 when property prices were jaunty. Gazuming often results in the loss of money, spent on pre-approved mortgages, for the original buyer .It involves a seller withdrawing of an agreed sale after accepting a second higher offer.

"In the last month, we have seen sellers of high-quality units failing to honor their commitments.Eight or nine of our high-value deals have gone sour. In most of the cases the owners randomly increased prices by eight to 15 per cent,” told Parvees Gafur, Executive Vice-President of Sales.

"There have been cases in the past few months where the seller has increased the price by 10 to 15 per cent. But none of our deals have gone bad since we had other listings in the particular area", added Vineet Kumar, Asteco's Head of Sales in Dubai.

Saeed Mirsaeedi, Investment Manager at Sherwoods Independent Property Consultants, said: "We have seen instances where the seller has increased the sale price after listing at a certain price. They have also been removing their listing in order to wait for the market to recover rather than sell at a lower price."

Gafur said, “ There was a shortage of high-quality finished units and as a result sellers were listing their properties with a more than one agent. In most of the cases property owners do not give a written commitment to sell a unit at a particular price.”

"A seller gives a verbal commitment of the price at which he is ready to sell. We then take about three to four days to find a buyer. During this period the seller goes to other agents who may say they can obtain a higher price, and so when we contact him with a buyer, he rejects the offer," said Gafur.

UAE on a path to recovery

Due to the lowering of the prices of the Abu Dhabi property, the UAE economy is on a path to a U-shaped recovery, as told by Sultan Saeed Al Mansouri, the UAE Minister of Economy.

“While economists continue to debate on whether the global financial crisis is over and how long it will continue to play out, we feel that the worst of the crisis is behind us,” Al Mansouri said, in his speech which was read out by Mohammed Ahmed bin Abdul Aziz Al Shhehi, the director general of the ministry, in his absence. Event was held at the Mega Trends Conference organized by Abu Dhabi University to throw some light on the impact of the universal economic crisis on the economies of countries in the GCC.

Al Mansouri’s speech said: “We do not harbour any false illusions that the days ahead will be easy or less difficult. We have all learnt our lessons and it will be hard to forget those easily. The most important lessons from the crisis have been the need for corporate and governmental accountability and transparency.” He said that the government is dedicated to shield the concern of the business community, while it is also paying attention on the economic and social welfare of the people.

Proceeding further in his speech, the minister mentioned that the motto will prolong to be diversification. “We will concentrate on diversifying our revenue streams through focused investments in several high-growth sectors. The country has already recognized and acted upon the importance of diversifying the sources of energy, while oil revenues have been the driver of growth, we set on a course of diversifying our economy, which is reaping rich rewards today.”

Considering the rise in competition for FDI in the region, Al Shhehi said that the UAE has everything that is required to make the nation more enticing to foreign direct investment.

Dubai introduces special property contract

Dubai has planned an introduction of a simplified contract that would become the plans to introduce a simplified contract that would become the custom for all property related purchases in the emirates as reported by the Gulf News. The Dubai Land Department has drawn up the approval of the standard contract, whose approval is awaited and it will clearly set out the terms for both sellers and buyers, said Emmad Eldin Farouq, department’s senior legal advisor. It is believed throughout the department that the standardized contract would make it more difficult for buyers to try to get out of the matter of signed deals or to add some fine prints to existing contracts.

The standard contract, which will be used for all the sales of property in Dubai, has been drawn up by the Dubai Land Department and is waiting for approval, according to Emmad Eldin Farouq, senior legal advisor at the body. The budge would diminish the number of developers and buyers back-tracking on deals which are signed, as the contractors signed deals, as the contracts would be clearer and apparent before signing, he added in a conversation with UAE daily Gulf News. "The contract is ready and we are waiting for directions," said Farouq.

Lawyer Michael Lunjevich, partner at Hadef and Partners, commented: "The standard contract is for finished properties between the buyer and the sellers. So it will have standard terms in line with market norms and then any changes will go to a separate segment to make it fair," Although signing one fundamental contract will undoubtedly make verve less complicated for developers and buyers, it will also cut the number of quarrels in the marketplace.

Despite the thinning up of contracts related to Dubai property, the land department and Dubai's RERA ( Real Estate Regulatory Authority) say that the burden rests with the buyer to ensure they go through the contract precisely before signing.

UAE nuclear energy plant seen ready in 2015: International Atomic Energy Agency

The united Arab Emirates, Dubai has informed the International Atomic Energy Agency, that it plans to have the first nuclear power plant to be functional in 2015, according to an IAEA official, while the organization believes that it is optimistic.

‘The UAE government told us that the plant would be ready and generating power by 2015,’ Ali Boussaha, a director at the IAEA, told Reuters on the sidelines of a conference in Dubai. I think this is optimistic because it generally takes 10-15 years to get people trained and infrastructure in place.The Gulf Arab state was on a fast-track plan to develop nuclear power and was taking technical advice from the IAEA,’ Boussaha said.

2017 is the latest date estimated by the industry for setting up such a plant in the UAE. Barack Obama, the President of US gave an approval on Wednesday for a nuclear energy deal with the UAE worth billions of dollars to US energy companies. The UAE, ranks at the third position for being the largest oil exporter, and now is planning to create several nuclear reactors to meet the need for an extra demand of 40,000 megawatts of electricity by the year 2017.

GE and Westinghouse Electric Co, a subsidiary of Toshiba Corp, the US builders of nuclear reactor, stand to hold a big share of the much expected $40 billion market if the deal is approved by Congress. Suez, France’s Total, Suez, and state nuclear reactor maker Areva said previous year they had made a plan to create two third-generation nuclear reactors in the UAE. The UAE has said it plans to launch an agency worth $100 million to get involved into the development of nuclear energy to appease the rapidly rising demand for electricity with the growth of industry. The Gulf Cooperation Council (GCC), a unfastened congregation of Arab states comprising the UAE, said it was studying developing a combined nuclear energy programme in 2006.

Hydra Village Investors Served Legal Threats

Legal notices have been issued by Abu Dhabi-based Hydra Properties to some investors in the Hydra Village project informing them that their property will be re-possessed by the developer and the price paid to store the elements by the investors will be forfeited if they would not be able to pay their outstanding dues. This year, Hydra Village was due to be finished with its construction but somehow the date of delivery has been delayed by two years. A document was sent to some investors by electronic mail and it said: ”The unit/s allotment… stands cancelled and Hydra Properties has absolute and unfettered right over the said unit/s, including but not limited to re-sale of the said unit/s to any third party."

It says: "…your purchase reservation agreement stands terminated" and "the reservation amount and installments paid… are deemed forfeited to Hydra Properties".

The newly formed Hydra Investors Group, that was joined by an investor lately, and he on the condition of being anonymous told Emirates Business: ” I was called by a Hydra executive last week and asked to pay the dues in the next few days or else they would take away my unit. The first time I received a call from Hydra was last year, but last week I was called twice. First they asked me about my situation and the next time they called to ask me to pay 50 per cent of the contract value or else they would cancel my unit. I never had any contract with them or any other communication about the project's progress. Now they ask me to sign a contract with clauses that are totally in favor of the developer. They are even not offering me time to review the contract."

Ahmed Khalil, Hydra's Commercial Director, confirmed that his company has sent legal notices to a few investors who had defaulted. "We are ready to help them and they can meet us by making appointments. We will be handling their issues on an individual basis. We have offered them revised payment plans and are even helping them to get finance from banks," he said.

Asked why the project was delayed by almost two years, Khalil said the master plan had undergone changes and as a result the timeframe for completion changed to the fourth quarter of 2011.