What did happen at Hydra?

We have attached a summary of what happened with Hydra and Al Fahim's role in the project.

Hydra was started in 2006 when Al Fahim convinced the Royalgroup (owned bythe UAE Royal Family) to back his property development vision.Hydra Village was the flagship first development and was to have build2,500 houses and apartments. For such attractive looking properties thepurchase price was low - this combined with the huge PR effort, meant themost of the properties were popular. However all purchases were done 'offplan', i.e. people were purchasing property before building had even commenced.

The PR efforts for Hydra Village were very impressive. Once the deposits(usually 20% of the final price) started rolling in, the marketing spendincreased. Hydra even produced its own TV series (Hydra Executives based onThe Apprentice format). The budget to produce this TV programme came out ofthe deposits from the houses.

Hydra were puffed up with their own success and decided to launch otherdevelopments. The funds to commence these new ventures was also taken fromthe deposits from Hydra Village purchasers - consequently development ofHydra Village fell behind schedule. Then came the credit crunch anddeposits for the new ventures started to dry up.

The Hydra Village purchasers began to get really concerned as it becameapparent that the development on the Hydra Village site was behind schedule(to say the least). Pictures began to circulate and purchasers began to getvery nervous.

Throughout all this, Al Fahim kept assuring his customers that everythingwas on track and that Hydra was a massive success. Many of his customersnow believe his statements were knowingly untruthful. They are also angrythat their deposits were used to support other ventures and for marketing,rather than being entirely spent on building their homes.

With development at a virtual standstill, Hydra contacted their HydraVillage customers with demands for the next payment installment. Hydra tookthe astonishing step of notifying many of their customers that they had'increased the size house/apartment'. The impact of this was that, inaddition to having to pay the next installment, many were being asked forextra money to pay for a bigger house that they had not asked for. Withmany customers seemingly unwilling to pay their further installment, Hydraadvised that non-payers would face significant financial penalties.

To make matters worse, many of the promised facilities (hotel, sports centre, green areas) were all scrapped as the company re-planned the development.

Hydra maintains that it has been the victim of the global collapse inproperty prices and that many Hydra Village purchasers were speculators whohave since been unable to pay their property installments. Hydra maintainthat the default of the speculators has caused many of the current problemsfor the customers who simply wanted a home to live in.

Although Hydra has intimated that it is willing to accept deferral of someof the next installments due on the properties, over 400 people arecurrently believed to be pressing ahead with a legal action against Hydra. The removal of Al Fahim from his CEO role appears to have helped move this forward but he still remains on the Board.The development is around two years behind schedule.