GoogleAppEngine wordpress complains (Could not create directory) on update and plugin install

I have a problem updating wordpress or installing wordpress plugin in my local version of google app engine. I get the following message.

Downloading install package from http://ift.tt/1S1Nvvj…

Unpacking the package…

Could not create directory.

With the same code base I am able install plugin using MAMP (Macintosh, Apache, MySQL, and PHP). However fails with google Pyton script (dev_appserver.py). I tried changing the permission of the file system by giving privilege to all user for write. Tried executing as sudo dev_appserver.py .. Followed the advice in other post, No luck.

Whats the problem here?, With MAMP all looks good in my local, but the same code break as I deploy to GAE (​appcfg.py -A APP-ID update app.yaml). Whats the problem here

via Chebli Mohamed