The Ajman Government has taken control of the troubled Marmooka City development, one of the emirate's largest, in a bid to restore confidence in the project. Marmooka City has suffered from ownership uncertainty, defaults, lack of infrastructure and falling prices since the Government sold more than 200 plots covering 70 hectares to developers.
The sale of land, marketing and infrastructure development was originally handled by the private company Marmooka Capital, which also had substantial shareholding. But last week, Real Estate Investment Establishment, a company owned by Sheikh Humaid bin Rashid, the Ruler of Ajman, announced it had bought out Marmooka Capital's share for Dh800million, the state news agency, WAM, reported. "We have bought the shares of our partner Marmooka Capital in the project in order to reinforce our marketing," said Ghaleb Jaber, the general manager of Real Estate Investment Establishment.
More than 100 developers, who have already pre-sold some of the 200 towers to investors, hope this deal will make the handover of their land easier. Ajman became a popular choice for home seekers on a modest budget because prices were much lower than Dubai. Ajman is less than an hour's car ride from Dubai. Property prices in Ajman doubled in the first half of last year to peak at about Dh600 per square foot in the summer, but have since dropped back to Dh300 per square foot, leaving some developers in financial difficulty.
Omar Bissar, a partner at Dubai-based Excel Advocates who represents about 40 developers with 70 plots, said dozens of the plots were at the centre of ownership disputes. "More than 30 plots are being occupied by farms," Mr Bissar said. "These farms have been granted previously by the Government to other people. The repossession of the land has not been done." Mr Bissar said some developers had failed to meet instalments to Marmooka Capital for their land. but they have been told they would be allowed some leeway.
"Developers have received a relaxation of six months but the market is down and some cheques [to the master developer for land] have already bounced. What will happen to them?" Mr Bissar said. Mr Jaber of Real Estate Investment Establishment said he was working with Ajman Municipality to ensure developers received their land from next month. Ajman moved to strengthen the regulation of its property sector late last year after a series of complaints from developers and investors.
The Ajman Real Estate Regulatory Agency (ARRA) was established in December and has been working on the land ownership issue at Marmooka City. "A letter from the municipality has gone to those who exceeded the limits of their boundaries," said Omar al Barguthi, the director general of ARRA. "They have a deadline within the next few days to comply with the rules. I am sure it can be worked out in different ways."
Mr al Barguthi said developers had to take some of the responsibility for starting to sell too quickly. "Developers are blaming the Government for not handing over the land and not getting the infrastructure, but this did not stop them from selling, apparently," he said. "It is much easier to sell than to solve the problem." Mr Bissar said buyers were walking away from their investments in Ajman partly because of falling prices, and partly because promises of residence visas had been broken. Many developers advertised property with the promise of a visa, but the government has since clarified that home ownership does not automatically mean residency.
One of Mr Bissar's clients is Al Barakah, a developer that sold apartments to investors in what was advertised as Ajman's tallest tower, the Burj Manara Ajman. It has four other plots in Marmooka City. Al Barakah was one of several developers in Ajman that also offered investors large guaranteed returns on their down-payments, and issued postdated cheques to back up its promises. Its chief executive, Imran Khan, is now sought by Dubai police for failing to honour Dh40m in cheques. His company has recently told investors that Al Barakah is insolvent.
ngillet@thenational.ae