Background:
A few years ago, the Oman Government developed a remote little rocky bay in Bar Al Jissah with 3 beautiful new hotels –
The mega-hotel development that many at the time thought was a reach too far was accomplished with amazing success. \\
here's the 6 star private beachy bit
The Shangri La is accessed by a coastal road that first winds past a planned extension complex of freehold apartments, villas, and a marina.
Photo: The beautiful Bar Al Jissa site, before major construction of the villas got underway. (Hotels shown above are off screen to the bottom)
While the hotel development was a great success, with occupancy rates almost immediately ranking near the top of Shangri La properties world wide.
But the later villa development part seems to be in more than a bit of trouble (run by local giant the Zubair Corporation).
A few weeks ago all work on the site has been stopped by Muscat Municipality. Developers have told purchasers the villas will be completed June 2009 (albeit a year later than originally suggested).
MM are claiming that the buildings don’t have proper building permits and are damaging the 'look' of the place as well. So, they stopped all the construction work. The architects should expect a fine. [The new head of Muscat Municipality is obviously starting to get to grips with the way things used to be done under the previous leadership, and is toughening up.]
Ooops.
It gets more interesting.
A Muscat Confidential reader from the UAE who purchased one of those Bar Al Jissah villas off-plan some time ago, tells me he has been trying for several months – unsuccessfully – to get the developer to give him some pretty basic details: eg
1. Pre-Settlement Building Inspection [UD: who does the inspection and what are their terms of reference]
2. Defect Rectification [UD: like repairing any non-specification items to contractual specification]
3. Rental Management Agreement – Shangri-la [process, contract, fees, guarantees, liabilities, etc]
4. Furniture Packages [you know, those pre-selected options for purchasers to have the buildings furnished for them for a price...)
5. Body Corporate Fees? [how much will the owners be charged to run the complex, rubbish collection charges, rights to use the hotel facilities, etc etc]
6. Handover and Settlement Process [well, duh]
7. Residency Visa [well funnily enough, apparently still a big problem, and I’ve heard it is only a residency visa, and will not be a visa valid for employment]
All reasonable questions to have in writing, I agree. Speaking personally, required BEFORE I would get into paying loads of money and signing a Sales and Purchase agreement, but then these were the days when real estate was a sure winner.
As our reader tells it, the developer has barely even acknowledged his letters/emails [see the correspondence he's sent below], and they haven't supplied answers.
He is one unimpressed international real estate investor, I can tell you! As a result, he’s shared his letters with us here Muscat Confidential.
His problems are symptomatic of similar problems across the industry in Oman. Even people who have taken possession of their villas in The Wave [the first really successful Muscat real estate development] are reported to still be on tourist visas, because the whole issue of these 'freehold residence visas' remains unresolved. These visa were promised whenever a non-Omani/Non-GCC resident bought [and paid for] a house in one of the "designated freehold developments".
In fact, our expat correspondent from the UAE goes on to say:
Big issue for Oman - Open up to FDI in the form of property, cater to high-end buyers, then treat them like imbeciles & expect that they will accept it. Real Estate globally is getting punished and one would expect that Oman would be doing all it could to assure investors in the country. Also highlights that there is no body within Oman to regulate/referee/monitor the activities on behalf of investors of all these so called "developers"…
So what? you might [rightly] ask? Well, he’s pulling together a "Purchasers Group" to get some traction on reality with his developers. Probably his only option.
a similar group "Purchasers Group" were totally responsible for getting the Muscat Hills development going after the developer tried to force off-plan purchasers to pay significantly more than the agreed contract OR ELSE. [Rumour has it that His Majesty stepped in and picked up the rest of the tab to rescue the Muscat Hills situation, after it looked like the Government and the developers were about to get embarrassingly sued in the UK over the issue.
So, bottom line seems to be that there is quite a bit of ‘sorting out’ to be done, on all of the Omani mega-real estate developments, to inject some basic professionalism. The least I’d expect when you consider the prices people have paid for these properties, and the vast amounts of Government infrastructure spending and free prime beach land that was provided [via Omran, for a piece].
Certainly, the Oman Government should realize that the sort of foreign investors who can buy these types of high-end properties are not idiots. Nor are they the sort of people to accept poor performance (like potential breaches of contracts, non-specification delivery, or ‘inshallah’ answers to key questions) without taking serious action themselves.
Whoever in the Government is in charge of this, or whoever should be, get a grip and sort these developers out.
here is our reader's letter to the Bar Al Jissah developers. How pissed off is he? See for yourself.
EMAIL 1
Dear Mr. Lakshminarayan,
I am writing to you as the official representative under the terms of the SPA with BAJRC to seek some clarification on project questions that I have been asking the Marketing Agent (PRD) to clarify on your behalf for many months.
To date I have yet to receive any information regarding the following items:
1. Pre-Settlement Building Inspection
2. Defect Rectification
3. Rental Management Agreement – Shangri-la
4. Furniture Packages
5. Body Corporate Fees
6. Handover and Settlement Process
7. Residency Visa
As the property developer responsible for delivering this project and provisioning of these services I am looking to you to advise on what is proposed.
Considering this property is due to be handed over in less than 60 days, as per your latest advice, I would expect that the above items have been resolved/agreed and are now being implemented.
Frankly I am fed up with hearing the response “the developer is working on this” from PRD after numerous requests for information on how this property is to operate.
I think we, the purchasers, have been patient enough until now for solutions to be presented - after all you have been in the process of delivering this project for over 2 years.
As you are aware we have all invested a substantial amount of money with BAJRC based on contractual obligations and representations as to the product and services that are expected to be delivered.
The above items have a very large impact on capital expenditure requirements (furniture packages), ongoing costs (body corporate), quality (defect rectification), and proposed income (rentals) and we will be incurring interest cost whilst these items are unresolved. Not to mention the additional logistics of being available for settlements, handovers, residency applications and moving house when required.
This is something that your purchasers, owners or investors, NEED to prepare for and make the appropriate arrangements to action – we are not able to drop everything at a moment’s notice for BAJRC once you finally get you act together.
I trust that you understand my concerns, concerns that are shared amongst many other purchasers, and I would appreciate a formal response from you by the 12th of January 2009.
Yours
XXXX
After no response, this was followed by
EMAIL 2
Dear Mr. Lakshminarayan,
Today is the 15th of February and as I have not received a response from you or your company, despite having confirmation of receipt of my request.
BAJRC seems to believe that it is either exempt from treating it’s customers with some basic common courtesy or is too incompetent to do so.
I have requested clearly and politely for the information on this investment without success – now I am going to introduce you to some high-level, sustained NEGATIVE PUBLICITY in the hope that it motivates you into addressing these concerns.
As a result of your non-reply, listed below is the course of action that I, and others, are now going to take.
A list of outstanding requirements from BAJRC to advise purchasers in the Barr al Jissah Residences and a copy of this email detailing BAJRCs failings to communicate to date has been compiled.
This correspondence will be sent to the following recipients as of Wednesday the 17th of February 2009 as a first step.
Request for Assistance to resolve my concerns from the following parties
1. OFFICE OF H.H. PERSONAL REPRESENTATIVE OF H.M. THE SULTAN
2. B.A.J.R.C - Khaled Mohammed Al Zubair
3. Zubair Corporation - Mohammad Al Zubair
4. Omran - Mr. Wael Al Lawati
5. Department of Tourism - Dr. Rajiha Abdul Ameer Ali
6. The Shangri-La Hotel – Arbind K Shrestha
7. The Shangri-La Hotel – Head Office - Shangri-La International Hotel Management Ltd, Hong Kong
If a response is still not achieved, the next steps will be to forward my complaint to the following parties:
Other investors to commence a Purchaser Action Group
1. Media Groups
2. Local Newspapers, Magazines & Blogs [UD: that's me]
3. Regional Papers – Gulf News, The National, 7 Days, Arabian Business,
4. International Press – Specifically UK Newspapers & Travel publications
5. Local Banks – HSBC, NBO, OAB, Bank Muscat
6. Real Estate Developers & Agents
a. The Wave
b. The Blue City
c. Muryia Developments
d. Cluttons
e. Hamptons
f. Gulf Property World
Please do not misunderstand the above as an idle threat.
I am putting BAJRC on notice that, as your customer in a very significant property investment, you have a duty of care to inform me of matters affecting my investment.
If you continue to treat me, your customer, with such ignorance and disregard as to not even bother responding to my real and clear concerns then I am determined to introduce you to the concept of a Purchaser Action Group and the affect that it can have on your businesses credibility.
