Thursday, Nov 20, 2008

Gulf News

Dubai: London and Dubai-based property wealth manager MiNCMiNC, developer of Prodigy 1 in Jumeirah Village South, is offering investors a novel way to get their project built, against the dismal background of the economic crunch.

MiNCMiNC has put forward a proposal to investors, in which each investor would pay around Dh1,000 per square foot in order to get the project finished.

In letters to investors, MiNCMiNC said that due to the current economic crisis, two local banks have withdrawn their funding from the Prodigy project, making it impossible for construction to continue.

Using an interesting strategy, MiNCMiNC told investors that "the project is no longer financially viable. Costs have increased to the extent that MiNCMiNC would make a significant and material loss if it were to build this project."

Speaking to Gulf News, investors were concerned that MiNCMiNC was giving them an ultimatum of paying or cancelling the project.

However, MiNCMiNC officials are adamant that it is just a proposal and the project will go ahead. "If our proposal is rejected, then we will wait until we get project financing. But I don't think we'll get financing for at least 18 months," Simon Everest, director of operations, told Gulf News.

MiNCMiNC is talking with other local banks to try to secure financing, according to a sales customer adviser at MiNCMiNC. "We want to get the building built," Everest said.

In exchange for each investor paying Dh1,000 per square foot, instead of the lower prices they were paying previously, contractors will be able to resume construction immediately.

© Gulf News 2008. All rights reserved.

 

Community Comments (2) - Comment on this article

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Re: The little investor gets the hit ! by Wael Saksouk, Financial Analyst - 20-Nov-08
Oh God finally a just person making a fair statement!
The real estate giants owned mostly by the government should suffer a lose. Did I jut say that? Did I just say that Dubai government, the big boys, should lose on a venture to protect the consumer? Yes I guess I did!
I don’t believe it is going to happen however, the small fish never had a place in this country, and although I do not believe it is fair, I think the small investors should have expected this to happen. There is no way Emaar, Sorouh, Tameer, Nakheel….. are going to lose money just to save a bunch of households. Dubai financial market still needs to do a lot more if it plans to become comparable to other world markets. We need visibility, accountability, and liquidity. All factors that will bring the DFM closer to becoming a market run by fundamentals not chit-chit [Report Abuse | Email to a Friend | Reply to this Comment]

 

 

The little investor gets the hit ! by Mazen B, Associate, ABC - 20-Nov-08
Its perplexing how the real estate companies seem to believe that they are supposed to be shielded from losses: if the project is financially viable, we will go on, however, if it seems like it will be a losing venture, we will ask for more money from buyers, or better yet, will cancel project and return funds, at a convenient pace...
They took a bet on the future of the real estate market and so did investors, both hoping to make a killing... if they want to share in the upside, they have to share on the downside...
the lack of equality is becoming inreasing visible... and it seems they are getting the protection they need!! What regulators have to remember is that the small fish in the see are plenty, and would have a much more damaging impact overall compared to the few developers that will just bail out... [Report Abuse | Email to a Friend | Reply to this Comment]

 

 

 

 

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