Irish Independent covers Dubai action group against Larionovo

Today’s Irish Independent carried a full page on the plight of the Dubai Action Group who are commencing legal action for the return of the funds they paid overseas property agent’s Larionovo and parent company Profile.

Here are the links to the Irish Independents own website, but I have also copied the full articles below.

http://www.independent.ie/national-news/investors-in-dubai-dream-fear-836420m-lost-1939242.html

http://www.independent.ie/national-news/give-me-back-my-8364440000-life-savings-1939188.html

Investors in Dubai dream fear €20m lost

By Fiach Kelly and Shane Phelan

Wednesday November 11 2009

A GROUP of small Irish investors who bought into a dream property scheme in Dubai now fear that as much as €20m of their money could be lost.

The Concerned Dubai Sports City Investors Group, which hopes to recruit hundreds of members, bought off-plan apartments through the now defunct Larionovo property agents. They are worried that as much as €20m — cash many hoped would fund their retirements — is caught up in Dubai.

The group is building up a war chest to help fund a campaign to retrieve their deposits.

Since Ennis-based Larionovo went bust last year, investors in the scheme, believed to number as many as 1,000, have had trouble trying to find out what has happened to their money.

SSIAs

The investors, described as sales people, doctors and farmers, have paid as much as €200,000 each — many from their SSIAs — but do not know whether their money is still there or at what stage the developments, originally supposed to finish in 2008, are at now.

The investors bought into the Sports City scheme, part of a massive 2 billion sq ft mixed theme park, which developers said would “dwarf Disneyworld”. It promised golf courses, indoor and outdoor stadia, various academies — including a Manchester United soccer academy — as well as swimming pools, health spas and many other facilities.

A meeting of the group last week in the Citywest Hotel in Dublin heard that they have no idea if building work has even started on some apartments, such is the difficulty in getting information from developers. Some recently received letters telling them the project had been put “on hold”.

However, they fear the developments have been cancelled and believe the term “on hold” is being used to avoid refunding them.

The group has 180 people on its email list and believes hundreds more who invested in the scheme are not yet aware of the action group. It is hoping for €200 from each investor to establish a fund supporting a legal effort in both Ireland and Dubai. Over €7,000 has so far been collected.

The group first became concerned when Larionovo went bust last November. The company’s liquidator, Grant Thornton, says it is providing as many answers as it can.

Merged

“The best we can do is point them in the direction of the guys they did the deal with and ask them what is happening,” said liquidator Paul McCann. “The sales people are gone.”

Before Larionovo went bankrupt, it merged with a Dubai-registered company Profile, and traded as Profile Ireland. A section on the Profile website, which is designed to give updates on four of the specific developments, is now down.

Profile says it does not own the properties and only managed them. It maintained it was a management company and its deals with developers may have expired. “It is therefore the responsibility of the developers and owners of the projects to report updates of construction and the relevant information that customers are entitled to in order that they can discuss their investment.”

Anyone interested in the group is advised to contact spokesperson Simon Palmer on 01 2103520. The group is also online at www.tinyurl.ie/dubai/

-    Fiach Kelly and Shane Phelan

Give me back my €440,000 life savings’

By Fiach Kelly

Wednesday November 11 2009

FATHER-of-three Alan O’Neill remortgaged his home and ploughed his pension, personal savings and money set aside for his children’s education into the Dubai scheme.

The ice salesman, from Ballycullen in south Dublin, travelled to Dubai before committing his money. He liked what he saw and hoped the investment would yield cash for his family’s future. But now he has no idea where the €440,000 he put into the scheme four years ago is, or what it has been used for.

“I read about it in the papers and it sounded interesting,” he said. “I went over and I was just sold on the Larionova idea and the concept.

“I’ve invested in four different properties with Larionovo. The first one was International City, which is now completed and I still don’t have deeds or keys for it. I’ve seen the end product, the site. I’ve bought in Sports City — Westgate is 60pc paid, again through Larionovo and Profile. The third property I bought was Snowdome through Larionovo and Profile and 32 group, which is 50pc paid.

“I’ve a €10,000 deposit paid on another one — the Waterfront — to Larionovo. I have no idea where that has gone.”

He returned to Dubai again last year to see what progress had been made on the developments.

“I was over there twice last year and they were just up to sub-floor level. There were no problems at the start and all the indications were fantastic until Larionovo disappeared overnight.

“The last contact I had was around nine or 10 months ago and I’ve been trying to email them and had people email on my behalf but there’s been no joy.

“I’m planning to go over there in December to find out for myself. I don’t think it will be completed. I’d like my money back at the moment because I really need the cash at home.”

- Fiach Kelly

Ends

Thank you to Fiach Kelly and Shane Phelan for their assistance in helping raise the profile of the Group.

Problems emerging Larionovo/Profile’s Sports City Dubai

People have been aware for some time that the gloss has well and truly come off the Dubai property market.

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

Investors in Larionovo / Profile Group, Sports City Dubai

Calling all Larionovo and Profile investors. This week I was asked to attend a meeting of investors in the Dubai Sports City development to help them raise the profile of the problems associated with the development. They are putting together an action group of investors in the development to seek answers on what is happening with regard to the project and where they stand legally.

Please could you email me on simon@republicpr.ie if you would like to become part of the Group.

Ends