Dewan head of the Dubai 1000
04/12/2008 07:59 PM | By Arno Maierbrugger, Sub-Editor
Dubai: German real estate fund ‘Dubai-1000-Hotel-Fonds’ may cause severe losses to investors, according to lawyer Jens-Peter Gieschen of German solicitor’s office KWAG, which specialises in capital law and investor protection.
The fund was started in 2005 on the German grey capital market to finance a 1,000-room luxury hotel project in Dubai. The project, which should have been completed in July 2007, hangs in the balance.
The fund was scheduled to collect some 142 million euros from investors. Initiated by German investment broker Georg Recker, the fund promised annual returns between nine and 12 per cent.
“The yield prognosis of the fund has been entirely unrealistic,” Gieschen said. He visited the construction site of the luxury hotel in February and found nothing but a fence surrounding an excavation.
The site did not have a plot number or signs of contract companies, which is mandatory for building projects in Dubai, he said.
Public prosecutor Ina Holznagel from Dortmund, Germany, has ordered a probe as the fund is presumably still collecting money from investors.
Twelve investors have now launched an official complaint against Recker and his investment company Dubai 1000 Verwaltung.
German magazine Cash Online reported Recker as saying that the fund has been closed after collecting the targeted 142 million euros from investors, and the hotel project is developing according to plan.