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KAI RYSSDAL: I got a ride back to my hotel last week from a guy who lives here in town. We drove past the new house he’s building in an upscale expat neighborhood nearby. I think he said he put $3 million down on the place. He’s hoping it’s going to be finished this summer. If it is, he’s one of the lucky ones. Real estate here has been open to foreigners since 2002. Speculators and would-be Dubai transplants have been coming ever since. And developers are having trouble keeping up with them.
Marketplace’s Sean Cole has our story.
SEAN COLE: In Dubai, apartment buildings sell out before they’re even built. In fact, that’s how they’re built — construction is paid for by the buyers. Most of these buildings aren’t completed on time. And Reza Mamati, a high tech entrepreneur from Iran, didn’t want any part of that. So he picked a building that was practically finished. But he still had to wait. And he doesn’t know why.
Reze Mamati: I really don’t know what to do, I mean so you sit and you wait until when? You wait forever?
Mamati has lived in Dubai for five years during which time rents have risen to like New York prices. So to save a little money he bought an apartment in Goldcrest Views One. All the buildings here have names like that. He says it was 90 percent done when he looked at it in February of last year.
Mamati: Flooring was done, cabinets were there. Everything was there just the ceiling was remaining.
Two bedrooms. 900,000 dirhams, which is about $250,000 US. He took out a loan for the down payment and developer said he’d have the keys in a month or two…or three..four.
Mamati: First they said okay we’re waiting for this approval that approval, water and electricity, security check. You know, always there is something.
In august they said December. And in December the lease on the villa he was living in ran out. So crammed himself and his wife into a little studio.
Mamati: I mean move out from a two bedroom villa to a small room. I mean imagine my wife how much angry she is still she cannot stand it anymore. I have just this extra payment each month for nothing.
Mamati took me to see the nothing.
Mamati: See that one.
Sean Cole: In the middle?
Mamati: Yeah, in the middle.
It’s in an area called Jumeirah Lakes Towers, which is hardly a neighborhood at this point. There’s nothing but construction around Mamati’s building. 79 high rises are planned for this area. And if last year is any indicator, most of them will be late. I read one report that said 50 percent of the projects in Dubai were delayed in 2007.
Ranya Afifi: Now that we’re past ’07 I think delays were as high as 80 percent.
Sean Cole: 80 percent?!
Afifi: 80 percent.
Sean Cole: That’s crazy.
Afifi: Yeah.
Ranya Afifi wrote that report. She’s a strategist at Shuaa Capital in Dubai. She says everyone’s competing for limited labor and materials. Plus everything that makes a building go: roads, utilities, whatever. All that’s late. Meantime there are lots of Reza Mamatis who want to buy here she says. And they all need to cut Dubai some slack.
Afifi: When your economy grows at 53 percent over, you know, just a few years and your population grows at similar rate over three or four years. That’s a lot to absorb within a year or two. People need to understand that it’s just matter of time and you know Dubai will come around.
Meanwhile, Reza Mamati is still out tens of thousands of dollars. He thought of demanding compensation from the developer, Mazyood Giga International or MGI. I went to talk to them about that.
Yousuf Choksy: It is all interconnected. You know this construction business it is not a one man show. You know, it’s all…
Yousuf Choksy director of projects for MGI. He says the building was finished in march last year and the power and water and approvals, all of that really did take a long time. He says he ended up laying the power cables at his own expense.
Choksy: In all honestly if they’re going to get compensated we should also get compensated.
Sean Cole: But, I mean, did you really think you suffered as much as they did?
Choksy: Can I tell you one thing, Sean? Their suffering is negligible to what…
Sean Cole: But you’re a company…
Choksy: I’m a company no true. But they are going to get better than what they have thought about. They are going to get a beautiful swimming pool. Have you see our swimming pool?
Sean Cole: No I haven’t.
Choksy: Let’s go after this and…
Sean Cole: You wanna?
Choksy: I will take you there.
Sean Cole: That would be awesome. Actually the marketing guy ended up taking me there.
Marketing Guy: Rooftop swimming pool. We do have gym. Sauna. Everything.
The view from the roof was pretty great. And then I asked if I could see Mamati’s apartment on the twenty-third floor. It was all ready for him.
Marketing Guy: Rooftop swimming pool. We do have gym. Sauna. Everything.
And it is pretty nice. Lots of windows. Couple bathrooms. Mamati’s seen it too. And after all this, he wasn’t that impressed.
Mamati: I really think it’s not worth it. So it’s not my dream.
Anyway, the apartment’s his now. They finally handed the building over last month. But one of the buyers still wants compensation: a guy in the UK who plans to rent his place out. He hired a lawyer and he’s got a bunch of other buyers involved. But Mamati’s begging off. After all, he says, he has to live there.
In Dubai, I’m Sean Cole for Marketplace.
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