Damac Caught out in Egypt

Damac properties, the Dubai-based developer , has been caught up in yet another scam  involving its real estate projects in Egypt after allegedly victimizing a number of investors in the Kingdom, Al-Madinah newspaper reported yesterday. Following on from news about  Damac failing to pay fired employees due compensation, more than 170 Saudis and expatriates were recently discovered to have bought housing units in the company’s defaulting Hydepark project in the Egyptian capital Cairo.

The newspaper said the victims of the Cairo project were in addition to those who invested money in the company’s Al-Jawhara Tower project on the Jeddah Corniche. Units in this prestigious project were sold to Saudi homebuyers, who were impressed by the company’s “unparalleled standards” of architectural detailing and interior design.

The newspaper said all attempts to obtain a comment from the company on the claims of the investors have so far failed. Hussain Sajwani, the company’s CEO, and its media relations manager had not been returning calls. The financial crisis has hit Damac hard – exposing their dubious practices.

Al-Madinah quoted an official source at Damac, who did not want to be named, as saying that the leadership of the company had been evading questions from journalists because it did not want its problems to be publicized.

“This would help the company exert more pressure on its foreign and local investors,” the source added.

According to the newspaper, the questions the company was evading to answer included: When would the actual implementation of the projects start? When will the funds be reimbursed if the projects were not executed? How much would be the compensation for the customers?

Al-Madinah said the company was putting pressure on investors to pay their remaining installments in the projects on time saying unless they pay up it would take action on them for breach of contract.

The contract gives the company the right to abrogate the agreements with its buyers without any prior notice if they fail to pay rest of the installments. As usual – the local laws heavily favor the government developers, but in this case Damac is an “outside” developer. Developers in Dubai are also failing to pay their contractors, Dubai’s real estate market has collapsed, and there are new laws under advisement that would prevent ex-pats from leaving Dubai.