Just to relate my experience of losing approx £5,000 (euro 7,000) after using Homes Dubai, a Manchester-based property agent and the currency broker, HIFX.
In January, I reserved a £30k studio apartment in the Al Salam City development close to Dubai in the UAE. The salesperson had me fill-out a reservation form and promised the actual purchase agreement from the developer would be issued within 30 working days. I immediately paid a non-refundable deposit and the first installment payment.
The first installment payment was in Dirhams and had to be sent to an account in Dubai, so the salesperson repeatedly recommended that I use the services of HIFX, a currency broker, even providing a reference number to quote. On that advice, I called HIFX to arrange the first installment payment. Although I repeatedly told their dealer that I had not received the formal purchase agreement containing the exact amounts and dates of payments, he still offered to enter me into a legal contract to purchase, in advance, the entire estimated total purchase price in AED using estimated installment payment dates. Trusting his judgement, I foolishly agreed. As well as the initial installment, I was then obliged to transfer a large deposit for future payments.
Later the same day, I informed the dealer again by e-mail that I had not received the sales contract from the seller so the amounts and dates would need to be modified sometime in the future. He promptly called me to say that he was "very concerned" to hear that. However, a short time later he again called, stating that he had spoken with his superior and that it would all be arranged "in my favour" (direct quote).
Now the bad part. By August I had still not received the sales contract from Homes Dubai. It was difficult to get any information from them, I was told that the salesperon I had dealt with had left. I was reluctant to send any more money to an account in Dubai without any contract, so I wrote to cancel my reservation and request a refund. Their MD refused any refund.
Simultaneously, I attempted to contact the dealer in HIFX to cancel that contract but he too was now working elsewhere. His replacement informed me that I had legally committed to buy the entire estimated purchase price in AED and to close the contract, the AED would need to be sold back to HIFX - with a loss of several thousand euro on my part given the intervening fall in the value of the US dollar (to which I learned the AED is linked).
I complained to HIFX on the basis that the dealer should not have offered me the initial deal, having being repeatedly informed that I was neither in possession of a sales contract, actual purchase price nor actual payment dates. Secondly, a loss could not reasonably be interpreted as an arrangement "in my favour". Thirdly, the dealer had again contacted me in June 2007 yet still failed to warn me of the mounting losses; even at that stage the losses could have been limited. Finally, HIFX have informed me that Homes Dubai are one of "their agents", a clear conflict of interest which Homes Dubai did not reveal to me.
In October, HIFX made a "final" offer to withhold my initial deposit and bear the additional loss, threatening further action if I did not agree within 24 hours. Desperate to limit my losses and fearful of their actions, I was compelled to accept their offer under protest. The loss borne by HIFX amounts to a paltry 100 euro...
As well as refusing a refund, Homes Dubai deny all liability regarding the currency loss and their advice to use HIFX's financial services.
So I now face a combined loss of approximately £5,000 or euro 7,500.
Thanks for posting your warning – it can’t have been easy making that post knowing that you may be ridiculed.
It certainly highlights some of the risks with foreign investment, learnt the painful way: - Never put faith in an agent’s recommendation of solicitors, currency brokers, etc. to use. Their recommendation may be fine, but there could also be a vested interest. In this case clearly at least one vested interest. (Agent got commission from your currency exchange.) - Don’t pay non refundable deposits till you have all the facts and documentation. - Don’t enter into agreements to solely use one exchange broker for payments. It is better to shop around and even play them off against each other to get the best possible price. Even if someone like HIFX offer competitive price structures (think they have some sort of table for determining rate you are given by actual rate and amount being exchanged) it is possible you won’t proceed with sale or sell on before completion. In these events it is possible to be tied in to making the exchange for outstanding amount, as happened here. - If an agent, exchange broker or anyone else makes a promise to arrange something “in your favour” you get them to put that on paper and even firm up how it will be in your favour. Else it’s your word against theirs, and we know they suffer from selective memory. - Never be pressurised into a sale / decision. If you don’t have time to come to an informed ‘yes’ decision then walk away. There will be plenty of other opportunities where you have the time you need to complete your research and become comfortable with any decision to proceed.
On the bright side, Dubai sales have slumped and your loss may eventually have been greater if you had you proceeded with the purchase.
From what you have said there may also be mileage in pursuing compensation from your Manchester based property agents. Presumably they are governed by British law and what they have done is, at the very least, not ethical. (Pushed you into using a broker to transfer more than the initial reservation deposit before the contract was made available.)
Everyone, please be careful out there. I really didn't think that this could happen to me. Whatever happened to fair play?
Would you believe that the agent is now pretending that I'm obliged to continue with the purchase on foot of the reservation form? The form states that I just have to inform them in writing that I'm not proceeding. I have. Several times. I've even got a receipt for it from them!
If agent is only notifying you verbally that you have to proceed with purchase then get them to put it on paper. (Email will do.) I'm confident a solicitor would be able to use this to show further unethical behaviour on the agents part.
Soup Dragon: Yes, I have it all in writing, by e-mail. It's just getting a little intimidating at this stage.
vbland: I would have taken the local bank route... except my bank couldn't process Dirhams. After the initial deposit/fee in pounds, that's what the agent wanted the rest to be paid in, directly to an account in Dubai.
I sympathise with your losses, but also think you were incredibly naive and somewhat cavalier with your money. I also lost money in trying to buy an apartment in Dubai which I pulled out of. Unfortunately there are a lot of dodgy agents and unethical developers and it is very easy for the unwary and naive to get caught out. But the old 'buyer beware' is ever more relevant when buying abroad. You still don't seem to understand what HIFX is. They are not lawyers, they are solely currency dealers - you tell them you want to purchase a foreign currency, they give you a rate and you agree to buy at that rate. I've used HIFX on many occasions. You are always warned that you are entering into a legally binding contract and asked whether you want to go ahead before you commit to buy. You admit that you knew it was a legal contract. If you have absolutely no experience of buying abroad, you really should have taken advice from someone before committing to a legally binding contract. Neither is it the fault of a currency dealer that you chose to buy the entire amount of AED before you even had the full SPA from the developer. Property bought in Dubai off-plan is always payable in stages - usually over several years, so you had no need to buy the dirhams in advance. HIFX and other currency dealers offer much better rates of exchange than the high street banks, but they are currency dealers not legal advisors. It's no use blaming them for your decisions. They are there to exchange currency not advise you about contracts. Your case really does emphasise the need for people to do research before committing to something they don't understand. On a different note, I'm not sure why Soup Dragon thinks Dubai sales have slumped. I have invested in 3 properties in Dubai and follow the market there fairly closely and prices still seem to be increasing and rents are holding up well. Homes Dubai do not have a leg to stand on about completing on the purchase if you have it in writing that you can cancel, so please stop worrying about that. Besides, if you haven't signed a contract, there is nothing legally to complete on.
Thanks fws. It's just that the HIFX dealer told me that he'd spoken to his boss and that it would all be taken care of "in my favour" (they have that on tape). That was within 30 minutes of making the deal, after I expressed concern. At that stage, I could have cancelled it and only lost a few euro. Also, their website does indeed say "call now for specialist advice"...
On a different note, I'm not sure why Soup Dragon thinks Dubai sales have slumped. I have invested in 3 properties in Dubai and follow the market there fairly closely and prices still seem to be increasing and rents are holding up well.
Everybody knows that the market in Dubai is overflooded with properties and that prices are crashing as we speak.
NoLuckAbroad. There are several ways that you can secure the funds in another currency. I like to get the best spot rate at the time. Others like to put their next instalment (might not be due for a few months) into a foreign account in staggered payments (that way they aren’t hit as badly by fluctuations in exchange rate.) Advising you on ways to secure the funds that may suit your needs best is the sort of thing HIFX mean when they say “Call now for specialist advise.”
Fws. I’m not in a good position to comment on sales in Dubai. My comment was based on the sweetners being offered to investors in Dubai and developers in Dubai diversifying into other areas. Both can be interpreted as negatives for Dubai’s potential.
Reader 07 - you state that "everybody" knows the market in Dubai is flooded and prices are crashing as we speak. Where on earth is your evidence for such a statement? Only last week AME Info reported that supply is unlikely to reach demand until 2010. The price of land has risen astronomically and the forecast is still for a huge growth in population. No property investment is safe, but it is unwise to make comments about the real estate market unless you really have some proof that things are indeed crashing.
Originally posted by fws: Reader 07 - you state that "everybody" knows the market in Dubai is flooded and prices are crashing as we speak. Where on earth is your evidence for such a statement?
nobody can yet predict whether demand will match supply. Although developers can build only in restricted areas, they are squeezing every last square metre and Dubai is currently like a giant building site, with the number of properties available rocketing.
Originally posted by fws: Reader 07 - you state that "everybody" knows the market in Dubai is flooded and prices are crashing as we speak. Where on earth is your evidence for such a statement? Only last week AME Info reported that supply is unlikely to reach demand until 2010. The price of land has risen astronomically and the forecast is still for a huge growth in population. No property investment is safe, but it is unwise to make comments about the real estate market unless you really have some proof that things are indeed crashing.
I am not that much interested in Dubai, but there are 2 things worth mentioning:
- prices in AED in October 2007 are 10% cheaper than in October 2006. I have been offered some properties at these prices so I could compare to the offers I had 1 year ago.
- considering that the $ lost 15% in the last year versus the £, this shaves another 15% of the price.
So the prices in £ in October 2007 are 25% cheaper than in October 2006.
I agree, if you bought in 2002-2003, you might have made a killing but if you bought in 2007 then you lost money.
I'm always wary about what we here about supply and demand, even when articles appear in the national press. (You don't know how thorough the author has been when doing their research.)
For those that have been to Dubai:- Did you walk about when it was dark? If so, were there a lot of lights on in the completed buildings?
Originally posted by fws: Reader 07 - you state that "everybody" knows the market in Dubai is flooded and prices are crashing as we speak. Where on earth is your evidence for such a statement?
I think this is avery brave post and i don't think anyone will think you an idiot. I do however see this as a cautionary peice that highligths how easy it is for ordinary people to lose money. Once you get outside the EU you lose mamy of the benifits and protections and your risk factor increases considerably. Then you have to take on board the type of cultures your dealing with, I would advise anyone to at least have some understanding before getting involved in middle eastern cultures. There are so many scams these days to get people to part with their money. And at the end of the day what protection do people have.
There are probarbly many more people out there that are to embarrased to admit they have also lost money.
To suggest the Dubai market has crashed is a joke.I spend alot of studying the market and prices are still going up and will do for at least another 3 years.
I think for experienced professionals like yourself it is still possible to get good investments in places like Dubai. I do think it is much harder for ordinary people though, there are many pitfalls to beware of, and anyone who tells you otherwise is mistaken. It seems to be the case that when a market first becomes a good place to invest all the big boys move in on mass. After they have snapped up all the best investments they start to promote the area as a good place to the ordinary public so they can sell on their investments and make money.
In general people should ignore the hype, look at places that seem good value to them, try to get some understanding of the places they are interested in and get in soon before the market starts to go up. That way they'l have a real chance of getting a really good property and a chance to acheive all the growth potential. Not just get on a bandwagon of hype several years to late when the people in the know are already starting to move their money out.
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