Rakeen, the government-owned master-developer of Ras Al Khaimah, will commence their assignment of judicial custodian for Khoie Properties' La Hoya Bay project in Al Marjan Island "very soon", said a top company executive.
"We have been appointed the judicial custodian for the project by RAK court. We will meet the judge and start our work very soon, probably after Cityscape," Wahid Attalla, Executive Director, Rakeen, told Emirates Business.
Escrow account for the project has not yet been opened, he said.
"Rakeen will not be funding the project, but will ensure its completion from instalments received from the investors," said Attalla.
In September, Rakeen was appointed the judicial custodian of La Hoya Bay project under the directives issued by the RAK Court.
In a press statement, Khoie Properties denied allegations of its insolvency, saying its controls over Dh1 billion assets in land and Dh700 million receivables on account of its ownership of the Dh5bn La Hoya Bay project.
According to Khoie, it had procured six plots of land with a total value of Dh302m from Ras Al Khaimah Investment Authority (Rakia), for which the developer had issued six cheques of different amounts. The developer was able to pay Dh72m for a plot on which it launched the project and subsequently started construction.
"The controversy arose when the developer was not able to meet the December 2008 land payment of Dh57m. With the exception of the outstanding land payments, the developer maintains a healthy, asset-rich balance sheet with zero debt to banks," said the statement.
International auditing firm Ernst and Young are currently working on the Khoie Properties 2008 books, following similar audits conducted in 2006 and 2007.
Of the Dh288m it had collected from investors, the developer said within a span of three years it had "strategically" allocated its funds across the project's main expenses. Giving a break up of spend, the statement said Dh81m had been allocated for constructions works, and the architecture, design and engineering consultants; Dh72m had been paid to the RAK Government for the land, Dh61m paid to global agents as commission, while Dh56m was paid as salaries, advertising, promotions and administration expenses, and an interim dividend over the course of three years. The remaining Dh18m had been spend towards building the Ras Al Khaimah American School.
In the press statement, the developer claimed: "They were positive of completing construction of the project, given that piling and foundation works have been completed for several buildings."
Khoie Properties said the real estate market as a whole had been affected by the financial crisis, and they had not been exempt from its economic repercussions.
"In line with this, we seek to clarify that accusations pertaining to insolvency are baseless, and that Khoie Properties still has the capacity to deliver 'La Hoya Bay' project to investors," said the statement.
By Parag Deulgaonkar and Anjana Kumar
© Emirates Business 24/7 2009
