La Hoya Bay was originally scheduled for completion in 2008, but the project has suffered from jailed CEOs, involvements from the government and insolvency. More than 700 buyers paid an initial fee of 20-30 per cent in the project, which Khoie hired Arabtec to construct.

Frank Khoie, former CEO of Khoie Properties, now chairman, told The National many buyers are likely to walk away from their deposits, rather than paying the remaining 70 per cent.

“The financing people have a simple question, show us proof that if you build it buyers will come and pay the 70 per cent,”

said Frank Khoie. Investors have openly asked where the inital Dh200m have gone. Khoie responds that every single dirham has gone directly into project-related costs, but investors are still worried as little or no progess has been made and are questioning this payment as well.  One anonymous investor said ready properties in the resell market are sold for half the original price of La Hoya Bay, adding:

“Who will invest in a speculative off-plan project at more than the market rate?”

Frank Khoie says he’s determined to finish what he has started.

The Project

The La Hoya Bay project is located on Marjan Island, Ras Al Khaimah and has a land area of approximately 1,500,000 sqft comprising of the following sectors:

• Sector a: La Hoya Residences: comprising seven residential buildings and recreational facilities
• Sector b: La Hoya Bay Business Village: comprising offices with Free Zone status, apartments and retail – space
• Sector c: La Hoya Bay Regency, a European Village: with 12 nos. residential buildings, retail
  and a 200 room hotel
• Sector d: La Hoya Bay Autumn Leaves: premium service apartments with medical facilities, private Yacht Club and community center for the semi-retired
• Sector e: La Hoya Bay Bermuda Hotel and Apartments: a 800 quality condominium apartments, and a 300 room hotel and Yacht Club.
• External Works: Include landscaping, three marinas and swimming pools.

The gross floors built up area will be around 5,500,000 ft2.

Mr. Frank Khoie Chairman of Khoie Properties stated that he is very happy to reach this agreement with Arabtec Construction for building this prestigious project in Ras Al Khaimah which will be of great benefit to enhance the development of Ras Al Khaimah as a destination of quality waterfront and resort environment living and expressed confidence in the ability of Arabtec to deliver the works to the highest standard and in a timely manner.

Mr Riad Kamal Chairman of Arabtec Construction said that Arabtec is very pleased to reach such an agreement with Khoie Properties for this prestigious project which will add to its long list of iconic projects developed and executed in the U.A.E.

The Main Consultant for the entire La Hoya Bay is Paul DeVylder – Architect JLT (PDA), who is leading all design and engineering services. Commercial Management Services will be undertaken by Northcroft Middle East, part of the Northcroft Group, one of the oldest Chartered Quantity Surveying Companies in the world, established in 1840 and headquartered in London.

Media reported angry scenes at the meeting, as executives repeated what Frank Khoie himself said on Thursday from his prison cell. Khoie has told investors they can claim refund within 90 days and that construction then will commence. Investors, on the other hand, were curious to know how they can apply for a refund and how Khoie will be able to pay.

“Is there any substance to him saying he will be in a position to refund investors? If he can afford to refund investors, why hasn’t he settled his debt and got himself out of jail?”

Ashley Merry of the La Hoya Bay Investors Group said to 7Days. She believed many investors would want a refund but they were unsure how this could happen, as Khoie left no information about how the refund or the process will be.

About 800 foreign property buyers, half of whom are based in the UK, are worried about the future of their investment. Two months ago, a local court appointed Rakeen, the development arm of the Ras al Khaimah Investment Authority (RAKIA), as receiver of the development on Marjan Island, which is the emirate’s largest development. This would allow work on the project to continue and followed the jailing in June of Khoie, the developer’s chief executive. He was sentenced to three years for bouncing a Dh57m cheque written to RAKIA.

The court needed Khoie’s consent to declare receivership. He first vetoed this option last May.

“In British law, receivership is for companies that are insolvent or bankrupt,” said Khoie. “Our company is not bankrupt. We have Dh500m in assets. I am in jail for only the criminal aspect of the cheque.”

RAKIA appealed and Khoie said he finally agreed on certain conditions. “They agreed to drop the cases, and I agreed that they will become only a project manager. Ownership is mine. It is my money, it is my project, I created it.”

The chief executive said he had 60 days to change his mind. “I waited 57 days and I withdrew my consent because they failed to honour their side of the agreement to dismiss my cases and release me,” Khoie claimed. “It was our moral agreement.” RAKIA officials denied any agreement of that sort.

Khoie yesterday posted “settlement proposals” to RAKIA on his website, including an extension on land payment and the dismissal of cheque cases. La Hoya’s investors had hoped the appointment of Rakeen would speed up the development, which is still only in the early stages of construction.

“The situation now returns to its original status, to square one,”

said Neil Pattison, a British investor in the project. Other investors agreed.

The National

‘Following last year’s credit crunch and its impact on the UAE’s real estate market, we were unable to meet our December 1, 2008 land payment of $15 million to Ras Al Khaimah Investment Authority (RAKIA),’

CEO of Khoie Properties, Frank Khoie, said in a statement.

‘Rakia’s officials have not been able to accept our deferred payment proposals and have taken legal action,’ he said.

Khoie said they are in discussions with RAKIA for a possible handover of the La Hoya Bay project, but a senior RAKIA official denied this. The official, who declines to be named, said that Khoie Properties had collected Dh280m from the investors of La Hoya Bay but had only spent Dh50m on construction.

Frank Khoie was not immediately available for comment when contacted by Reuters.

La Hoya Bay is located on the man-made island of Al Marjan in Ras al Khaimah and was sold to 800 investors, of which 50 % are from the UK. The investors are pressing the Government of RAK to intervene because little progress has been made on the project.

“The company being insolvent means you are unable to meet your liabilities. So it is basically insolvent,”

said Ahmad Jazayeri, the chief financial officer of Khoie Properties.

Senior member in jail

A senior member of the board of Khoie Properties has been in jail for nearly two months after being detained for allegedly bouncing a Dh57m cheque written to pay for the land.

“He is in prison for one bounced cheque worth Dh57m, but every six month there is another cheque,”

said Wahid Attalla, the executive director of Rakeen, the property arm of Ras al Khaimah Investment Authority (RAKIA).

“Honestly, he does not have enough funds to meet his obligations,” Mr Jazayeri said, confirming a senior member is detained.

Investors pushing RAKIA

The La Hoya Bay Investors Group have faith in the project and 70 investors have signed a petition encouraging RAKIA to take over the project and finish it

“We are delighted that RAKIA is in negotiations with Khoie to save this exciting project and to retain the existing investors,” said Ashley Merry, a spokeswoman for the La Hoya Bay Investors Group. “We still have faith in La Hoya Bay. We are grateful that they have actually taken an interest and are negotiating, whatever the outcome.”

Both RAKIA and Rakeen, the buyer of La Hoya Bay, are in talks with Khoie to ascertain the developers’ liabilities. A possible takeover has been suggested but RAKIA resist this option:

“I do not think such a deal will happen,” said Khater Massaad, the chief executive of RAKIA. “The problem if we take over the project is that we will have to put in cash. Khoie Properties collected Dh280m and only spent Dh50m in the construction of the project.”

Mr Jazayeri said that two-thirds of the investors’ contributions had been spent on the project.

History

In 2007, Khoie bought plots of land for La Hoya Bay from RAKIA, worth a total of Dh306m, and began off-plan sales to investors. Instead of paying the total amount, Khoie paid Dh72m to the authorities and provided post-dated cheques every six months to cover the outstanding amount. Mr Jazayeri said the next cheque was due in June.

Close to making a decision

According to Mr Attalla, the government is close to making a decision.

“What we have is a developer who is more or less bankrupt and the Government of Ras al Khaimah, represented by RAKIA, is trying to find a solution for the sake of the investors. But it is all about how much liability there is. There is a limit to how much we can do.”

The National