Mr Chatterjee presented his proposals to approximately 150 investors, over a series of meetings during his two day stay. In summary the proposal is as follows: Innovation SEZ Developer Ltd has taken over the shares in the three development companies responsible for building Eagle Heights, Bermuda Views and Profile Residence. They have declared that they will build out our buildings if they get sufficient numbers of investors to sign up to their proposal, which includes a new payment schedule.

Innovation SEZ Developer Ltd intends to shortly send out an addendum to our current contracts for approval and signing.

Whilst the Dubai Action Group is interested in examining this proposal we cannot recommend it to our members until we have had the opportunity to study the written documentation in detail.

We believe a cautious and measured approach to any proposal containing adjusted payment schedules is vital given our experience to date.

We welcome all comments and suggestions from our members and a more detailed email will go out to members next week.

Kind regards,

The Committee for and on behalf of the Dubai Action Group

Well that is putting it mildly, just like Ireland (and possibly even worse) prices have crashed.  A great deal of developers are unable to finish their developments and property owners are losing their shirts and in some cases their life savings.

The problem with the overseas property industry is that it was and is unregulated, this is despite the fact that it deals with some of the largest financial transactions individuals will ever make. The situation is mad.  Let me put it this way: if you buy a €1 share in a listed company you are protected by the Financial Regulator because the company selling the share is regulated and has to abide by strict rules in relation to the selling of that share and the stock market; this means make any claims as to the potential of that the investment in that share i.e. they cannot claim it will rise in value. However, with an overseas property you can be spending €1 million on a property and you are left at the will of the gods. The person selling that property can make the wildest of claims e.g. 100% profit in 5 years, say the will guarantee the rent etc and they cannot be held accountable because the sector isn’t regulated. This is why the up most care is needed.

It is a terrible situation that the Irish government allowed to carry on right under their noses.  Whilst the sector is due to be regulated by the forthcoming NPSRA (National Property Services Regulatory Authority) this has already been delayed and is coming eight years too late.

The lack of regulation has led to a huge amount of miss-selling of investments and fraud within the sector. As usual the small investors are left to pick up the pieces and this has led to a great deal of worry for thousands of people who bought properties overseas.

There is an old story in the financial sector that says: during the American Gold Rush it wasn’t the gold speculators who rushed to California that got rich but it was the middlemen who got rich i.e. the traders that sold the speculators the picks and shovels. Indeed this is the period from whence Levi Strauss made his name selling his first jeans. It wasn’t even the people who manufactured the equipment but the middle men that sold it on. This is starting to mirror the overseas property sector with neither the builders, nor the purchaser making the money but the agents and brokers who acted as the middlemen. And it is these middle men that appear to have taken their profits up front, and in many cases ran off, leaving the small investors behind to bear brunt of problems as things have started to go wrong.

I have seen some of these problems first hand recently with case I’ve been working on relating to an Irish overseas property company called Kuvera.  I saw it again a last month when I attended a meeting that hundreds of Irish investors in Dubai attended in City West after which I wrote this post about the group that has been set up to take action on a number of developments sold by Irish agents Larionovo and Profile Developments http://www.republicpr.ie/2009/09/09/investors-in-larionovo-profile-group-sports-city-dubai/

Since then there has been progress and more investors are being requested to come forward. A website has been set up for those owners who are concerned about the project. Anyone wanting to join the Group and be part of any action taken in relation to the development, should download a membership form from the website and send it in with the joining fee of €200. Here is a link  http://concerneddubaisportscityinvestors.com/

This relates to the following Sports City Dubai developments:

- Bermuda views,
- Eagle Heights,
- Profile Residence,
- Stadium point.

A Committee has also been set up to represent the interests of the investors. They can be contacted via the form in the Contact Us section of the website.  A further meeting of the Group will take place on 3rd November at 7.30pm at the City West Hotel.

Ends