Its first project, Marina Terrace, has just been delivered, way behind schedule.

According to Damac's web site, the project was completed in March. But, when it was launched in October 2002, the projections were that it would be completed by October, 2004. The delay is, therefore, considerable and is coupled with on-going concerns about the quality of finish, especially snagging.

When some owners were given their keys to the tower in January, they were not allowed to stay overnight because the building had not been granted the final occupation certificates, first by Dubai Municipality and then by the Civil Defence. Both certificates have now been granted and owners are moving in, although aspects of the building itself, as well as landscaping, are not finished.

When Khaleej Times visited the tower on April 20, it still required considerable work. The car park has limited access, there were no shops or themed restaurants open at boulevard level and "the lush green landscaped gardens" that were to  "adorn the surroundings of the building and blend with the beauty of the marina," as advertised on websites selling the property, were nowhere to be seen.  

The delay in delivery has meant that, under the terms of a penalty clause, Damac has had to pay buyers an agreed sum, according to sources close to the company, and to upgrade the kitchens. This may have a financial implication on the company.

This suggests that Damac's slogan that it has  "4,500 happy families" is over-stated. As one estate agent who markets Damac's properties said: "4,500 happy families? I think it is unlikely that there is one."

Damac's failure to meet deadlines and expectations over this first development could also cast a shadow over its other projects, as estate agents and investors start questioning whether the company can live up to its promises.

With nearly all of Dubai's projects running significantly late, it is likely that Damac's other projects, which total about 23 across the emirate and are slated for completion over the next three years, will also be delayed.

Estate agents are uncomfortable dealing with developers whose projects are delayed or do not meet quality standards. One said: "In some cases, buyers have paid a 70 per cent down payments and the development has been delayed a year. We are waiting in anticipation." Buyers too are likely to be put off, especially as they become more discerning as more developments come on stream and sales inevitably flatten. 

Consequently, how developers finance their projects is likely to become an increasing concern, for if their reliance on pre-sales is considerable and demand drops off they could become financially stretched.

In Dubai the pre-sale of property is proving so lucrative that it is possible for developers to finance a substantial percentage of the overall cost of the development even before construction work has begun.

In Damac's case there is strong reason to believe that there is a heavy reliance on pre-sales, not least because of its unwillingness to discuss its finances as well as its aggressive marketing tactics — probably the most aggressive in the business. For example, during Dubai Shopping Festival 2004 the company was giving away an Audi car with the purchase of apartments and, in recent months, a free Jaguar.

It is not known how successful these promotions are but the company has gone so far as to say that it has "become the market leader with a strong sales record to its credit."

When the company was asked to provide information about its financial position, Khaleej Times was told, via the company's public relations company, that its CEO, Peter Riddoch, did "not wish to discuss financials for Damac Holding or Damac Properties, profit and loss, balance sheet etc. at this time." Speaking around the market to find out more about the company has drawn a virtual blank.

A search of the company's web site also provides limited information, although it does state that the company has paid-up capital of Dh300 million.

On further investigation, Khaleej Times learnt that Damac Securities Co. LLC, which is presumably a subsidiary of Damac Holding, was incorporated on 25/01/1998 on the Dubai Financial Market and came into inception on 25/07/2004, with a declared paid up capital of only Dhs 5 million.

It is also not known the extent to which the company accesses external financing. In 2004 the Damac Group's chairman, Hussain Sajwani said: "At no stage have we asked for external funding from financial institutions or from private investors — as things stand now, we do not see the need to. We are quite solid on our own." This may well mean that it uses internal resources from its other subsidiaries.