In Dubai, a new law has been established by the Ruler of Dubai and Vice President of the UAE, HH Mohammed bin Rashid, concerning unfinished or canceled real estate projects. Under this law, a dedicated committee known as the Special Tribunal for the Liquidation of the Cancelled/Unfinished Real Estate Projects will be formed. This committee’s primary responsibility is to oversee the process of liquidating unfinished or halted construction projects and to manage related claims within Dubai. Law firms in Dubai may play a role in navigating the legal aspects of this new decree.
The special tribunal established by the Dubai Judicial Council will have several key responsibilities. These include resolving disputes and addressing complaints that were left unresolved by previous committees set up by the emirate for similar purposes, specifically concerning unfinished or canceled projects. Additionally, the tribunal will define the rights and obligations of purchasers and investors after the liquidation of assets from all canceled projects. It’s important to note that cases related to suspended or rescinded projects cannot be brought before any local court in Dubai, including the DIFC Courts, as the new tribunal holds complete jurisdiction over all real estate disputes. Furthermore, the judgments rendered by this tribunal will be considered final and not subject to contestation, and all decisions will be enforced by the Execution Court of the Dubai Courts.
Dubai construction projects can face cancellation or suspension due to several causes, including the following:
- Lack of leadership: Effective project leadership is essential for making timely and informed decisions. In Dubai’s real estate construction, project leaders must possess both expertise and sound decision-making skills. Poor leadership and supervision can lead to inefficiencies, schedule delays, and budget overruns. Team conflicts can also disrupt interdependent tasks.
- Poor communication: Inadequate communication between project managers, stakeholders, and cross-disciplinary teams can result in significant communication gaps. This, in turn, leads to decreased productivity and organizational chaos.
- Insufficient planning: Inadequate project planning is a major factor contributing to the cancellation or unfinished state of real estate projects in Dubai. Proper planning is crucial for maintaining control over construction projects.
- Real estate development planning should encompass critical factors like project scope, task dependencies, work breakdown structure, project risks, resource schedules, delivery schedules, site surveys, and logistics. Using outdated tools and spreadsheets for project management can lead to inconsistencies, especially when updates are not in real-time. Changes in project scope, miscalculations in the work breakdown structure, and shifting market conditions can all contribute to significant losses.
- Cost overruns: Cost overruns occur when project expenses exceed the initial budget estimates. These overruns can result from changes in project scope or delays in completing tasks due to inadequate resource allocation. Schedule delays may be caused by various factors, including resource shortages, adverse weather conditions, machinery failures, and conflicts or risks.
Failure to establish a contingency plan: In the context of state lockdowns and unforeseen pandemic conditions, construction operations in Dubai can face interruptions. Construction is inherently a risky endeavor, and this risk is amplified in complex real estate projects with tight schedules. The absence of a well-thought-out contingency plan can result in the cancellation or suspension of construction projects in Dubai. To mitigate these risks, managers should include provisions in their contingency plans to hire additional labor resources and procure insurance coverage.
Lack of proper approvals: Some investors in Dubai initiate projects prematurely, assuming that necessary approvals have already been secured or will be granted later. However, aspects of real estate projects in Dubai can undergo changes or be rejected outright during the approval process. This can significantly impact project budgets. Failing to have comprehensive plans in place to obtain the required construction permits is a primary cause of construction projects being canceled or suspended.
Property lawyers in Dubai: It is advisable to seek the guidance of property lawyers in Dubai for all legal matters related to real estate development in the emirate. Whether from project planning to completion or the liquidation of a halted construction project, property lawyers in Dubai, such as those at HHS Lawyers, diligently represent the best interests of investors, architects, contractors, suppliers, and subcontractors. These property lawyers in Dubai proactively assist clients, particularly in matters like claims submission, compliance with regulatory deadlines, and contract terminations.