Five years ago, Nakheel’s main problem was keeping up with demand. Back in 2007, anxious buyers queued for as long as twelve hours just for the privilege of handing over cheques for millions of dirhams. The Jumeirah Park project had just launched, and the queue of cars stretched back from Nakheel’s sales centre for several kilometres.
That was then; this is now. At this month’s launch of Nakheel’s newest venture on the Palm Jumeirah - its biggest claim to fame - the queues barely stretched around the counter.
So what went wrong? It’s safe to say it’s not been an easy few years for Nakheel. Famous for raising man-made islands out of the Arabian Gulf, the developer attracted even further unwanted fame globally as it battled to restructure more than US$16bn in debt in the wake of the Dubai property crash.
Fast forward to April 2012, and as chairman Ali Rashid Lootah sits down to announce Nakheel’s latest annual results, it appears things have changed - at least in terms of the developer’s fortunes anyway.
“We achieved profit of AED1.28bn (US$348.5m)… It has been a good year. We have been doing fantastic across the board, across all of our areas… It is a big sign of the recovery of the market,” he says.
“We see the demand for our properties increase and I can also assure you that 2012, from the early figures we have, is going to be even much better.”
That is partly because, according to Lootah himself, Nakheel has managed to slash contractors’ claims down to just fifteen percent. Within a few short years, Lootah has turned the company around and brought it through a painful restructuring process.
“Our cumulative profit for 2010, plus 2011 - post restructuring - was AED2.25bn (US$612m). Compared to 2010 it is a 53 percent increase,” he states.
The 2011 figure is also up 33 percent and 2012 looks even more positive, particularly as the developer gets back into its core business and the phones start to ring at its sales centre.
“This is the start of the recovery,” says Lootah. “We are launching new projects and people are buying the new product from Nakheel and paying down the 40 percent deposit.”
One of the new projects to capture investor interest is Palma Residences, the first residential project to be launched on the famous Palm Jumeirah since the market crashed four years ago.
Due to be completed in eighteen months, Lootah claims the project sold out 30 percent of its units — which are priced at between AED6m to AED8m each - within a week of being launched.
With sales of AED223m (US$60m) already in the bag and 30 more potential buyers in the pipeline, Lootah says this is a sign that the recovery is fully under way.
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