‘Risky’ investment: Over 250 families have Rs3b at stake at Creek Marina project in DHA

Investors fear builder will run away with their hard-earned money as construction has stopped.

KARACHI:

A man invested all his life savings in a luxury apartment project so he can have a comfortable life with his daughter. Everything looked fine in the beginning — work permits were issued to project sponsors, workers removed the earth and piling was done.

Warnings about project delays followed soon as contractors missed one deadline after another and investors started making enquiries. But the old man believed that he would soon see apartments rising at the seafront until one day when he went to the site and saw that work had been wrapped up. He died out of shock the next morning, his daughter recalled, insisting his name is not mentioned in print.



More than 250 such families have invested over a total of Rs3 billion in the six-star residency, Creek Marina Apartments, the project which for years has been stuck in a legal limbo between the project developers and the Defence Housing Authority (DHA). Each family has paid Rs15 million or more for the apartments that have yet to be constructed.

The luxurious apartment project was launched by a Singapore-based firm, Meinhardt, in collaboration with DHA, amid much fanfare and advertising in 2005. The project was to be completed by December, 2009.

Two years past the deadline, the investors — mostly businessmen and professionals, who paid 85 per cent of the total cost — are still waiting for some consolation. “We paid a huge price believing it would be a dream house after retirement,” said Shabbir Allibhai, one of the people who invested. “Creek Marina promised us security, a prime location of being next to the golf club and boasted of having a raffle club.”

Apartment brochures boasted of dazzling eight residential towers of three and four bedrooms, located around lush green trees and blue waters. Today, on the construction site, there stands an incomplete tower of 15 storeys, instead of the promised 24 floors, and another tower of eight storeys.

“We have heard of low-cost housing projects going into shambles but when two big names were involved, we never imagined this would happen,” complained another investor.

“We trusted the project and took special interest,” said Amin Dawood, an investor. “It was the housing authority’s responsibility to monitor the project till the end.” When the project was launched, it was described as a DHA-Meinhardt Partnership. A special purpose vehicle was created by Meinhardt by the name of Creek Marina Private Ltd (CMPL). Some 280 out of the 780 units were booked, with the completion date of December, 2009. This was later moved to December, 2011.

The contract for construction of the apartments was given to a Chinese company, who did piling and foundations but then left in mid-2007 after a dispute.

They claimed safety concerns for their decision to back out. CMPL claimed refunds of performance bonds, totalling $13 million. After this, two local constructors — Principal and Paragon — took charge and started sluggish construction, which was halted in 2010.

The investors kept clearing the dues even though no construction was taking place as they were receiving legal notices. After a while, they decided, however, to form Creek Marina Action Committee. “The aim of forming such a committee was to push the authorities to either complete the project or to ask for refunds,” explained Allibhai.

In 2011, the Sindh High Court ordered whatever fund is available in the CMPL account it may be used exclusively for construction and the budget would be approved by DHA. The money was, however, never released and DHA never approved this.

An official of the DHA explained that they fear that Meinhardt will run away with the money. “They already have a significant amount of money, which they are not using in construction, even though we tried to negotiate with the authorities.”  The DHA official said that though a decision has yet to be taken, they can go to court against Meinhardt once again.

The members of the action committee have also gone to court for fraud against CMPL and filed an injunction. They have also contacted the DHA and Meinhardt to recover their money but nothing concrete has come out of it.

The investors admitted there is a trust deficit now as they believe the DHA wants Meinhardt to surrender the project, while the latter, they claimed, wants to run away with their money. “We were blinded as we thought it was a great project. The sufferers are us who paid their hard-earned money to get the apartments as promised,” said Allibhai.

Representatives of Meinhardt and CMPL were unavailable for contact despite several attempts over email and phone.

Published in The Express Tribune, December 16^th, 2013.