Dubai - Property developer Sama Dubai, a division of Dubai Holding, on Thursday refused to comment on a news report that Kuwaiti real estate firm Al Arabiya is seeking arbitration proceedings against it for blocking the sale of plots in the Lagoons project to Union National Bank (UNB).
The Financial Times on Thursday reported that Al Arabiya said the deal had been fixed in June with Abu Dhabi-based UNB and Sama Dubai .
Declining to comment on the issue, Farhan Farid-ooni, executive chairman of Sama Dubai, told Gulf News in a statement: "Commenting on an investor's relationship with us breaches our contractual agreement with them."
Many Dubai-based analysts have been trying to predict the future of house prices in Dubai over the next couple of years, with the majority saying there will be a notable correction.
Al Arabiya has already spent around Dh1 billion on 18 plots since 2007 at the Lagoons development in Ras Al Khor.
However, last week, Sama Dubai returned payment cheques after holding them for three months. It is not clear why the cheques were held for so long.
Abdul Salam Al Merri, chief executive of the Lagoons project, is under investigation and was held for questioning last month.
The report quoted an executive at UNB as saying the market for large plots in the development have now stalled as nervous investors keep a more watchful eye on their cash.
"I haven't heard of a sale there for three months since our issue cropped up," the executive said. "Maybe it has something to do with the arrests there."
The Kuwaiti firm, listed on the Kuwait stock exchange, has told Sama that they intend to press ahead with arbitration at the Dubai International Arbit-ration Centre within Dubai's chamber of commerce, according to the Financial Times.
UNB is also considering legal action, it said.
This is just the latest in a long series of cracks appearing in Dubai's fragile property sector, unsettling all those with interest in the market.
Police have questioned several officials of big companies like Nakheel, Dey-aar and Tamweel.
By Suzanne Fenton
© Gulf News 2008
