Jumeirah Golf Estates in talks to cut project costs

GOLF PROJECT: An artist's impression of the company's Norman Clubhouse development.

The master developer behind Jumeirah Golf Estates is offering contractors accelerated payments of money owed in return for a discount believed to be 30 percent.

In an emailed statement to Arabian Business, a Leisurecorp spokesman, which is part of government owned conglomerate Dubai World, said: "In response to the current global economic climate, Leisurecorp is having discussions with long-term suppliers to realign contracts to these new market conditions.”

Leisurecorp’s offer joins similar proposals made to a number of high profile construction firms and consultants working on Dubai’s biggest projects.

A report this week in The National suggested payments totalling billions of dirhams remain outstanding and are being renegotiated.

Arabtec CEO Riad Kamal on Sunday went public with a claim that his company is owed AED3.6bn ($980m) in payments, 80 percent by government owned companies.

The Dubai subsidiary of UK engineering firm, WSP, which was a consultant on Nakheel’s postponed Tall Tower says it is owed AED165m.

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READERS' COMMENTS

Its fair only if they pass it on!!??
Posted by abhay, delhi, India on Friday 15 May 2009 at 15:36 UAE time

As said by the Leisurecorp spokesman: "In response to the current global economic climate, Leisurecorp is having discussions with long-term suppliers to realign contracts to these new market conditions.” It is only fair that Leisurecorp understands that their customers too are also in the same boat as they are i.e. they reduce the value of the villas and the payment due to them accordingly...take a cue from what Nakheel (their group company) has done on the projects that are getting delayed. But i guess this is not the case to be...They have a large legal team, who certainly have drafted the sale purchase agreement (SPA) to suit their own convinience i.e. show the SPA to their customers and flex the muscles directly and via authorities for their benefits without caring a damn about their customers.

Poor contractors :'(
Posted by Frankie, Dubai, UAE on Tuesday 12 May 2009 at 22:51 UAE time


In response to Mr. Thomas' comment about 'no responsible CEO would accept these new terms (of now being offered only 70% payment)'. My view is that the CEO would be irresponsible in NOT accepting the offer, as 70% is better than 0% and that is what his company will get if he doesn't agree to the offer. No choice, my Friendly Contractor, take it or leave ... The contractors will know better in the future to either negotiate the T&Cs better or find different customers in the world for their products and services. The contractors also brought it upon themselves.

Payback Strategy
Posted by Frankie, Dubai, UAE on Tuesday 12 May 2009 at 22:18 UAE time

Given that JGE's contractors will now be suffering to the tune of 30% on work already performed - fine, I agree that they should accept it as it would take them years to recover those receivables if they sued . Don't you think that they will now, with or without JGE's knowledge, reduce the already-low quality of construction and finishings to compensate for getting hammered earlier ... an eye for an eye, no ?? It's only fair game.

Discounted payment
Posted by JP on Tuesday 12 May 2009 at 16:56 UAE time

I know it hurts. But any sensible and practical person would accept it to get paid now rather than having to go to the court and wait indefinitely to get justice and incur additional costs.

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