Amid fears of an overheating real estate market in Dubai, a chain of legal and management scandals involving property firms threaten to shake investor confidence and ruin the city state’s stellar business reputation.
In a bid to root out corruption and create a better, more transparent corporate governance standard, Dubai’s public prosecutor office has opened a series of investigations into several property and finance companies. This renewed focus on corruption has ensnarled some of Dubai’s well known known brands and resulted in the questioning and arrests of a number of high profile business individuals who are suspected of using their position to make illegal profits.
Unhappy investors have filed lawsuits against real estate companies while others have had to threaten legal action to resolve their grievances. In some cases, Dubai’s real estate regulatory authority had to get involved to mediate disputes between investors and developers.
At the beginning of this year, a Wisconsin based real estate company, Capital Partners, filed a $1 billion suit against Dubai’s Tecom Investments alleging that the company sold it land it didn’t own and then unfairly cancelled its contract while in a middle of a dispute arising from ownership issues, according to The Financial Times (U.K). Capital Partners was planning a $1 billion mixed-use project that included apartments, hotels, and office space. The land that is the subject of the suit is a protected archaeological site allegedly owned by Dubai’s tourism department, according to Arabian Business.