A fully-owned unit of the Dubai-based property developer, Union Properties, has begun an arbitration process to recover about Dh1.5 billion related to the construction of a project that was completed a decade ago.
The Dubai-listed developer behind the Motor City master-planned development did not name its subsidiary, the entity against which it has lodged an arbitration request or the project involved in the dispute.
“The claim is related to construction work for a significant project that was completed around 10 years ago,” the company said in a brief statement to the Dubai Financial Market, where its shares trade.
Union Properties has completed a number of projects in Dubai including Motor City, Dubai Autodrome, the Green Community and Uptown Mirdiff.
The company’s executive management will not "spare any effort in pursuit of the collection of the amount owed, and is taking the proper legal procedures, which are in the interests of the company’s shareholders", Khalifa Al Hammadi, group chief executive of Union Properties said on Wednesday.
Union Properties, like its UAE peers, has struggled to maintain profit growth on the back of a slowing real estate market in the UAE. It swung to a loss of Dh219 million in 2019 from a profit of Dh62m for the prior year.
Dubai's real estate market has softened in the wake of a drop in oil prices that began in 2014. Ongoing concerns about oversupply in the market have also posed challenges.
Last year, the emirate formed a higher committee for real estate planning, headed by Deputy Ruler Sheikh Maktoum bin Mohammed that includes a number of senior property developers. The committee aims to balance supply coming onto Dubai's property market through greater collaboration between government-related entities and private sector firms.
Dubai's property market is expected to bounce back strongly in 2021 on the back of increased economic activity related to Expo 2020, Hussain Sajwani, chairman of Damac Properties said last month.
Union Properties is planning a Dh200m expansion of the Dubai Autodrome. It also plans to turn its three units – ServU, The Fitout, and Dubai Autodrome – into private joint stock companies as it reorganises its business to cut costs and improve its bottom line.
The proposed companies will have their own governance standards and will pursue independent institutional management strategies, Union Properties said earlier this year.
