Off-plan property sales must be stopped, says chairman of Al Habtoor

The chairman of the Al Habtoor Group has called for an end to off-plan property sales as ­Dubai housing completions reach their highest levels in almost four years.

Khalaf Al Habtoor, who runs one of the country’s biggest conglomerates, urged authorities to prevent property developers from taking money from investors before construction was well under way on new homes.

“You should not take people’s money,” he said in an exclusive interview with The National. “You should sell when the building is more than 30 or 40 per cent completed. I would recommend to stop [off-plan sales] completely.”

Rampant off-plan property development during Dubai’s boom years was blamed as one reason property prices collapsed in late 2008 and construction work on thousands of homes ground to a halt.

However, the subsequent introduction of mortgage lending caps aimed at limiting the scope for speculation and future boom and bust cycles has led to developers offering extended payment schedules – allowing for small down payments.

Some analysts see this as one explanation for the apparent paradox of booming off-plan property sales at a time of static or falling prices for completed homes.

“If I want to buy something, I want to buy something I can see, that I can touch. I don’t want to see something on a plan,” said Mr Al Habtoor.

“Imagine you are paying money now and receiving it in 10 years. This is not right.”

The scale of current development is reflected in data released by the property broker JLL yesterday.

It shows more homes were completed in Dubai in the past three months than in any quarter in almost four years.

The completion of 5,400 residential units during the third quarter of this year was the highest since the fourth quarter of 2012, when about 6,200 units came to the market, it said.

As many as 11,000 units are due to enter the market in the final three months of the year with some 2,500 of them located in the Akoya project by Damac. Not all are likely to be delivered as scheduled, according to JLL.

Mr Habtoor, whose business interests include a global hotel empire, car dealerships and real estate, is developing the vast Habtoor City project in Dubai.

But not all analysts see the off- plan model as a negative.

“The most conservative payment plan observed to date included a 75 per cent payment at handover,” said Jesse Downs, the managing director of Phidar Advisory.

“This is more in line with off-plan sales strategies and policies in developed markets. It shifts some of the risk away from the investor and toward the developer and their debt and equity sources.”

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Off-plan sales must be stopped, says chairman of Al Habtoor

The chairman of the Al Habtoor Group has called for an end to off-plan property sales as ­Dubai housing completions reach their highest levels in almost four years.

Khalaf Al Habtoor, who runs one of the country’s biggest conglomerates, urged authorities to prevent property developers from taking money from investors before construction was well under way on new homes.

“You should not take people’s money,” he said in an exclusive interview with The National. “You should sell when the building is more than 30 or 40 per cent completed. I would recommend to stop [off-plan sales] completely.”

Rampant off-plan property development during Dubai’s boom years was blamed as one reason property prices collapsed in late 2008 and construction work on thousands of homes ground to a halt.

However, the subsequent introduction of mortgage lending caps aimed at limiting the scope for speculation and future boom and bust cycles has led to developers offering extended payment schedules – allowing for small down payments.

Some analysts see this as one explanation for the apparent paradox of booming off-plan property sales at a time of stagnant or falling prices for completed homes.

“If I want to buy something, I want to buy something I can see, that I can touch. I don’t want to see something on a plan,” said Mr Al Habtoor.

“Imagine you are paying money now and receiving it in 10 years. This is not right.”

The scale of current development is reflected in data released by property broker JLL yesterday.

It shows more homes were completed in Dubai in the past three months than in any quarter in almost four years.

The completion of 5,400 residential units during the third quarter of this year was the highest since the fourth quarter of 2012, when about 6,200 units came to the market, it said.

As many as 11,000 units are due to enter the market in the final three months of the year with some 2,500 of them located in the Akoya project by Damac. Although not all are likely to be delivered as scheduled, according to JLL.

Mr Habtoor, whose business interests include a global hotel empire, car dealerships and real estate is developing the vast Habtoor City project in Dubai.

But not all analysts see the off- plan model as a negative.

“The most conservative payment plan observed to date included a 75 per cent payment at handover,” said Jesse Downs, managing director of Phidar Advisory.

“This is more in line with off-plan sales strategies and policies in developed markets. It shifts some of the risk away from the investor and toward the developer and their debt and equity sources.”

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Antigua and Barbuda aim to emulate Dubai in the Caribbean

The Caribbean islands of Antigua and Barbuda aim to emulate the success of Dubai in becoming a global tourism hub, with plans to build 10,000 hotel rooms and establish a direct flight from the emirate.

The islands are targeting a big increase in tourism to fund a broader economic diversification plan.

“We have set a target of 10,000 rooms for the next five years, which is a very ambitious target but again using Dubai as an inspiration,” said prime minister Gaston Browne in an interview with The National. “If we build 10,000 more rooms we get a million more tourists and a billion dollars in extra revenues. It will change the economic fortunes of my country.”

This week he is meeting with local investors to drum up interest in funding hotel projects.

“Already we have over US$3 billion in investment pledges so we are assured of at least 5,000 rooms. Now we are on a push to get the other 5,000.”

Antigua and Barbuda is one of a number of Commonwealth countries that offer citizenship in return for investment.

Property developers are increasingly targeting investors from the Middle East seeking the security of a second passport and visa-free access to countries such as the UK and Canada.

However, Mr Browne downplayed the attraction of investing in Antigua and Barbuda as purely a passport play.

“This issue goes beyond a passport,” he said. “We have many investors who are not looking for a passport – they are looking for a safe place to invest.

“That is what Antigua offers, it’s one of the safest places on the planet. “

The prime minister was in Dubai yesterday to attend an investment conference where film star Robert De Niro also spoke.

The 73-year-old actor and producer is a regular visitor to the Caribbean country and is also investing in a major resort project on Barbuda island in partnership with Australian tycoon James Packer.

Perhaps the biggest challenge facing the country as it seeks to expand its tourism sector is attracting direct flights from international hubs such as Dubai.

“It’s a chicken and egg situation,” he said.

“We need more rooms to create the economies of scale in order to attract an airline like ­Emirates.”

He said he will this week hold discussions with Emirates to develop those plans. “We may have to start with a fifth freedom flight.

“Even if we have to share space with other countries in the Caribbean in order to build demand, we will do so.”

Currently passengers from the UAE wishing to travel to the islands would fly via a US hub such as Miami.

An Emirates spokesperson said: “Emirates has no firm plans to fly to Antigua at this time, although we constantly monitor the performance of our existing routes as well as evaluate new route possibilities.”

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Robert De Niro arrives in Dubai with business on the agenda after Trump rant

Robert De Niro has landed in Dubai a day after his withering comments about Donald Trump created a global media storm.

In a performance that had overtones of both Taxi Driver and Raging Bull, the film star delivered a scathing criticism of the Republican Presidential nominee Donald Trump in a video message.

Describing the presidential hopeful at various points as a “punk” and a “mutt” that he’d like to punch in the face, the Hollywood veteran delivered a menacingly watchable video tirade that has gone viral.

But it will be business and not politics on the agenda today as the 73 year-old meets with investors at an event in Dubai this morning to promote the Caribbean tourism sector where he has invested $250 million in a resort project in Barbuda. He has teamed up with Australian tycoon James Packer to invest in the island.

Antigua and Barbuda is one of a number of Commonwealth locations that offer citizenship in return for investment.

De Niro has been a regular visitor to Antigua and Barbuda since his 20s. Located in the eastern Caribbean, Barbuda is north of the island of Antigua.

Property developers are increasingly targeting investors from the Middle East seeking the security of a second passport and visa free access to countries including the UK and Canada.

Several celebrities have become involved in campaigning as the US presidential race heats up.

A number of Hollywood stars including Leonardo Di Caprio and Julia Roberts have joined the #VoteYourFuture campaign encouraging young people to vote a month before America goes to the polls.

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Robert De Niro in Dubai: Film star delivers another withering assessment of Donald Trump

Robert De Niro landed in Dubai in the wake of a media storm that followed a withering attack on Donald Trump.

In a performance that had overtones of both Taxi Driver and Raging Bull, the film star delivered a scathing criticism of the Republican presidential nominee Donald Trump in a video message that went viral over the weekend.

In an interview with The National, the Goodfellas star revealed why he decided to speak out and what he thinks could happen with Donald Trump in the White House.

Describing the presidential hopeful at various points as “a punk” and “a mutt” that he’d like to punch in the face, the Hollywood veteran delivered a menacingly watchable video tirade released over the weekend.

“This is such an awful situation that I felt compelled to say something about it because people have been letting him get away with it for some reason and now they are starting to react,” he said in an interview.

He was attending a conference in Dubai where he was promoting investment in Antigua and Barbuda where he is developing a resort.

Earlier he gave the audience a blunt assessment of the property tycoon turned presidential hopeful as footage from the epic Raging Bull played on a giant screen in the background.

A younger De Niro throwing wild jabs and uppercuts playing Jake La Motta in the 1980 movie regarded by some as his greatest work, provided the perfect backdrop to the question that came next.

“Would you like to punch him in the face?” he was asked in a reference to his Trump tirade.

“I’d love to punch him the face,” he replied to loud applause.

“This guy does not have a clue about what goes on in the rest of the world no matter what he says.”

Later, in an interview he chuckles at the suggestion that his Trump comments were even more compelling to watch than his final monologue in Raging Bull where he reminisces over past lost opportunities.

But the trademark grin that spreads from cheek to cheek quickly disappears when he talks about what a Trump presidency would mean for America.

“It’s disgraceful this guy was allowed to get as far he has,” he says.

“I don’t understand how people could be seduced into thinking this guy has an answer. He has no answer.”

So would he remain a resident of the United States if Donald Trump is elected the next president?

“That’s a good question – I don’t know,” he says. But he predicts mass protests would follow at the very least.

Several celebrities have become involved in campaigning as the US presidential race heats up.

A number of Hollywood stars including Leonardo di Caprio and Julia Roberts have joined the #VoteYourFuture campaign encouraging young people to vote a month before America goes to the polls.

But not all celebrities are critical of the Republican nominee.

John Voight, the Academy Award-winning star of Midnight Cowboy defended Donald Trump on Saturday and described Robert De Niro’s remarks as an “ugly rant”.

Mr De Niro brushed off the jibe:

“I like John, he’s a nice guy – but he doesn’t know what he’s talking about.”

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The pursuit of Khater Massaad, the tile tycoon of RAK

He was the golden boy of business in the Northern Emirates. He transformed a small tile factory into a global manufacturing name and was recruited to run the Ras Al Khaimah Investment Authority (Rakia) in 2007 to achieve the same kind of transformation across the wider economy.

But four years after leaving the UAE, Khater Massaad is being pursued by his former employers from Africa to the Caucasus.

On Tuesday they caught up with him at Jeddah’s airport when he was detained by Saudi police on an arrest warrant issued from the northernmost emirate. It related to his conviction in his absence last year in a Ras Al Khaimah court on fraud charges.

Khater Massaad was once lauded for extracting wealth from the barren rocks of the Ras Al Khaimah mountains, helping transform the emirate into an unlikely manufacturing hub and picking up numerous business awards along the way.

But at some point between the boom years of 2007 and 2008 and his departure from the emirate in 2012, his relationship with his former employer changed dramatically for the worse.

Ever since, he has been relentlessly followed by lawyers engaged by Rakia around the world.

Yet other than his conviction last year in Ras Al Khaimah when he was not present to defend himself, he has not been found guilty of any crimes in other legal jurisdictions.

Before his arrest in Saudi Arabia this week, the 63 year-old Lebanese-Swiss tycoon agreed to speak exclusively to The National after a series of allegations relating to his tenure at Rakia were made by his former employer.

The government of the emirate has been investigating the executive and some of his associates for the past five years as part of what they claim to be a wider US$1.5 billion fraud probe.

He is accused of investing hundreds of millions of dollars of the emirate’s funds with no legal due diligence

He in turn vehemently denies the claims made against him and says he is simply a fall guy.

“I made a lot of money for them and created a lot of wealth,” he says during an August 7 telephone interview from Lebanon, where he now runs his own ceramics business called Star Industrial Holdings.

Earlier that month the London office of Bell Pottinger, the international communications company retained by Rakia, sent a release to journalists with a judgment from a court in the emirate dated October 28, 2015.

The case had not been previously reported and was based on claims that land owned by Rakia had been leased at an artificially low price, and which in turn had been sublet at a vast profit by his associates.

It is referred to as the “lease case”.

The judgment translation was accompanied by a document detailing a number of other allegations relating to Mr Massaad and his business activities in countries that included Armenia, Georgia, Indonesia and the Democratic Republic of Congo.

Perhaps more interesting than the extraordinary allegations contained in the document was the equally extraordinary approach taken by the authority in publicising them at all.

Yet despite the apparent candour, subsequent requests made by the newspaper to meet Rakia officials to discuss the many allegations made by the authority against Mr Massaad have at the time of publication been unsuccessful.

Unlike some of its neighbours, Ras Al Khaimah’s mineral wealth comes from rock rather than oil.

The entire RAK economy was worth less than 2 per cent of the country’s overall GDP, according to a 2010 bond prospectus.

But beneath the imposing Al Hajar Al Gharbi mountains was ample rock to form the raw building materials needed for the rapidly expanding skylines of Dubai and Abu Dhabi.

The walls and floors of the country’s great houses and hotels are covered with tiles made from the ground, glazed and reconstituted rock of Ras Al Khaimah.

The country’s first cement plant was opened here in the 1970s, but it was RAK Ceramics, founded in the 1980s, that really established the emirate’s manufacturing base.

Khater Massaad was the key figure in what was a remarkable economic transformation.

Under his control, RAK Ceramics would later become the world’s biggest tile maker – a hugely significant manufacturing addition to the economy of a country still driven by oil and gas extraction.

The government of Ras Al Khaimah today owns about 9 per cent of the company, according to Bloomberg.

Mr Massaad roundly rejects any involvement in the many allegations made against him. He says he was not aware of any case brought against him until his conviction in his absence emerged.

“I did not know I was charged – nobody called me, nobody informed me,” he says.

In addition to the “lease case”, Rakia also claims that Mr Massaad was at the centre of another scandal involving a port deal in Georgia.

Rakia alleges that in 2007 and 2008, when he was chief executive of the authority, Mr Massaad was responsible for acquiring the Poti Sea Port Corporation in Georgia.

Three years later, when Rakia was preparing to sell the port, it is alleged he and two associates fraudulently procured a sham joint venture company for the development of a car terminal with a company called Raystar Trade – created just four months earlier with no history of conducting any business whatsoever and without a bank account.

Rakia alleges that an associate of Mr Massaad then drafted a termination agreement to end the sham joint venture ahead of the sale.

As part of that termination, it is alleged that more than $17 million was transferred to a Swiss bank account held by an associate of Mr Massaad and that the payment was authorised by him.

Mr Massaad denies all the allegations made against him in relation to the Georgia port deal.

“I was not involved in that joint venture,” he says. “There was a board of directors and they were running the company. I could not follow each and every company where Rakia was invested.”

After leaving Ras Al Khaimah for Lebanon in 2012, Mr Massaad has since successfully built up a new venture based around ceramics. He runs Beirut-based Star Industrial Holdings, which includes Forsan Ceramics, a $186m joint venture with local Saudi investors that is already one of the largest ceramics producers in Saudi Arabia.

After being detained in Saudi Arabia this week, Mr Massaad’s advisers acted swiftly to issue a statement publicising his arrest and again denying the allegations made against him by Rakia.

It said: “Dr Massaad strongly denies all of the trumped-up charges brought against him. These were based on an improperly motivated 2015 RAK court decision itself unsupported by any true evidence, in a trial held in absentia and without the basic legal right of being notified before or after the trial of the purported investigation conducted against him.”

Ras Al Khaimah was equally swift in issuing its own statement, again through the London office of the Bell Pottinger communications firm.

It said: “We are aware that Saudi Arabia have executed a GCC arrest warrant … in respect of Khater Massaad’s conviction in the United Arab Emirates for a number of frauds and criminal activity, for which he was tried and convicted by the UAE criminal court in October 2015. His conviction was in absentia after he fled the country. We will work with the Saudi authorities to ensure Khater Massaad returns to the UAE to stand trial.”

For the man who once had a Midas touch in making riches from rocks, everything now depends on what the Saudi authorities do next and whether the next plane he boards is to Lebanon or the UAE.

Interviewed before his arrest this week, Mr Massaad sounded more dejected than angry, more fatalistic than fearful.

“It is all absolutely untrue. It’s a shame to reach this situation,” he said. “Unfortunately what happened, happened.”

He was speaking on his mobile phone while passing through airport immigration in Lebanon.

He wrapped up by emphasising he was, at that point at least, free to travel wherever he desired.

“I am not a fugitive. I am a free man. I can travel where I want,” he said.

On Tuesday, in Jeddah, that changed.

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Dubai ports operator DP World to minimise Hanjin disruption

Ports operator DP World said it was working with customers to minimise disruption following the collapse of Hanjin Shipping.

About ten ships operated by the Korean company are currently in Dubai’s Jebel Ali Port according to Hanjin data. Two other ships have arrived in Abu Dhabi’s Khalifa Port Container Terminal.

The collapse of the shipper with debts of US$5.5 billion has caused widespread disruption across global trade networks with an estimated $14bn worth of cargo tied up as ships idle outside ports worldwide.

“While we don’t publish data on client receivables, following Hanjin Shipping’s decision to file for court protection, we have been working with our customers and partners to minimise impact on world trade,” said a DP World spokesman in response to questions from The National.

“The filing for receivership is still at an early stage and we note that the exact form of the proposed restructuring plan is still unknown. We recognise the importance of our role as global trade enabler to the supply chain, so while protecting our interests, our main focus is limiting any disruption to service for our customers to continue the smooth flow of goods across our global network.”

The insolvency of the world’s seventh-largest container carrier is already hitting container rates which could make it more expensive for people planning to ship goods or belongings to and from the Emirates.

Maersk Line, the world’s largest container shipping company, is already seeing a short-term rise in freight rates and an inflow of new clients, Bloomberg reported on Monday.

“There’s no doubt that we’re seeing a reaction in the rate market,” Klaus Rud Sejling, the executive in charge of Maersk Line’s east-west network, told the newswire. “The question is, what will happen with the rates in the longer term.”

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A heart-shaped island is being developed off the coast of Dubai targeting honeymooners and the otherwise romantically inclined.

Kleindienst, the Austrian developer behind The Heart of Europe project on The World islands, plans to open the retreat by the end of this year.

“If you go out there you can already find the island shaped as a heart right now, said Josef Kliendienst, a former policeman turned property tycoon.

While there will be no accommodation on the island itself, visitors will be able to stay in the floating “seahorse” villas moored alongside.

The developer is showcasing the floating homes this week at the annual Cityscape exhibition in Dubai, the largest real estate show in the country and one which is seen as a bellwether of property market confidence.

It is taking place on the heels of a number of lavish and large- scale project launches in recent days, even as brokers report subdued sales activity and weakening rents.

Dubai property prices fell 2.4 per cent in the second quarter or by 5.2 per cent on an annualised basis according to the latest data from Cluttons, the property consultancy.

Still, Mr Kliendienst believes his project can prosper even in a weakening property market because he is selling holiday homes rather than end user units.

__________

Photo gallery

New property projects at Cityscape Global 2016 in Dubai – in pictures

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“If you look at any city in the world that has developed over a long period of time, you will find around the city in a driving distance of 30 minutes to one-and -a-half-hour’s areas with vacation homes, on lakes and rivers and in the mountains. The weekend comes and people jump into their cars and go to their vacation home.”

“The Heart of Europe is the first project in the UAE that serves a similar purpose. Therefore we are seeing more and more Emiratis purchasing homes from us with the idea to use them during weekends, for celebrations or for an Eid break.”

The developer has already sold more than 50 of the seahorses which sell for between Dh9 million and Dh12m.

The Heart of Europe aspires to bring an authentically European feel to a location that feels for the moment at least, anything but European.​

Even by Dubai standards the project appears ambitious, with plans to bring outdoor climate- controlled areas where even good old European rain is available.

“When you travel you want to see different things and hear different languages,” said Mr Kliendienst. “Europe has 51 countries and in my entire life I have met only one person who has travelled all 51 countries.

“We will have 51 food and beverage outlets from these different countries. For us it is important that, say, a coffee shop from Napoli feels like a coffee shop from Napoli. He will need to bring his sign, his recipes, his waiters, his food and when you enter he will welcome you in Italian. You will be taken to Italy the moment you enter. It needs to be authentic.”

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The chief executive of Habtoor Leighton Group (HLG) who was arrested in Dubai this month has been released without charge.

His release coincided with the exit of Al Habtoor Holding from the joint venture construction company behind some of Dubai’s biggest projects.

Jose Antonio Lopez-Monis, the chief executive and managing director of the contractor was arrested on August 17.

His detention came to light after CIMIC Group, which has a 45 per cent stake in the contractor, issued a statement to the Australian Stock Exchange.

The company issued a second statement on Friday morning confirming Mr Lopez-Monis has been released without charge.

At the same time CIMIC said it had entered into a binding agreement with its two joint venture partners in HLG which “will enable one of the shareholders, Al Habtoor Holding LLC to transfer its shares to another partner Riad Al Sadik, subject to execution of final documentation.”

Mr Sadik is the current chairman of HLG who along with Khalaf Al Habtoor, founded Al Habtoor Engineering Enterprises in 1970.

No further details were released.

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The chief executive of Habtoor Leighton Group (HLG) who was arrested in Dubai this month has been released without charge.

His release coincided with the exit of Al Habtoor Holding from the joint venture construction company behind some of Dubai’s biggest projects — including one that was billed as the world’s largest building.

José Antonio López-Monis, the chief executive and managing director of the contractor was arrested on August 17. No further details on why Mr López-Monis had been detained were made public.

His detention came to light after CIMIC Group, which has a 45 per cent stake in the contractor, issued a statement to the Australian Stock Exchange.

The company issued a second statement on Friday morning confirming Mr López-Monis has been released without charge.

At the same time CIMIC said it had entered into a binding agreement with its two joint venture partners in HLG which “will enable one of the shareholders, Al Habtoor Holding LLC to transfer its shares to another partner Riad Al Sadik, subject to execution of final documentation.”

Mr Sadik is the current chairman of HLG who along with Khalaf Al Habtoor, founded Al Habtoor Engineering Enterprises in 1970.

The withdrawal of Al Habtoor from HLG marks the end of a partnership that was formed in 2007 when Al Habtoor Engineering merged with Gulf Leighton, part of CIMIC Group — Australia’s biggest contracting group.

Over a decade the pair delivered high profile projects countrywide but came unstuck on the $2.4 billion Dubai Pearl launched in 2009.

According to the HLG website, the development was expected to be the largest single building in the world covering some 20 million square feet spread across four 73-storey mixed-use towers.

But seven years after its launch, construction work has long since stopped with only the partially constructed concrete frames of the buildings visible from the surrounding roads.

HLG could not be reached for comment on Friday.

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