Union Properties aims to recover Dh1.5bn claims linked to construction

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 company 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 Mirdif.

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 yesterday.

Union Properties, together with its UAE peers, has struggled to maintain profit growth because 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 previous 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 senior property developers.

The committee intends to balance the supply that comes on to Dubai’s real estate market through greater collaboration being carried out between government-related entities and private sector companies.

Dubai’s property market is expected to bounce back strongly from next year thanks to 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.