Two companies picked to build a total of 381 luxury villas at Jumeirah Park project
Property developer Nakheel on Sunday awarded contracts worth $136m to two local construction firms for a luxury villa project stalled after Dubai's property market collapse.
The developer, which successfully restructured a $16bn debt in 2011, will self-finance the construction of 381 luxury villas on Jumeirah Park, Nakheel chief executive Sanjay Manchanda said at a press conference.
"We would not go ahead with these projects if we don't have the financing. We want to ensure that we won't make the same mistakes again," said Manchanda.
Nakheel's extravagant developments at the height of Dubai's property boom contributed to its d ebt problems.
The developer's flawed off-plan property sales model and mounting debt problems forced Nakheel to shelve ambitious projects like two palm-shaped island developments and write off real estate assets worth $21.4bn.
But Dubai has begun to undertake big projects again and revive some earlier plans that had to be dropped following the property market collapse.
Speculative buyers are back in Dubai's markets helping to drive a 13 percent increase in apartment prices this year, a study by property consultant CBRE showed.
Manchanda said Nakheel had no immediate plans to raise money. "We have adequate funding arrangements for our old projects and funds for the new projects are also in place."
State-owned Nakheel's capital expenditure for existing projects was around a billion dirhams, he said. The developer had a total of around 8,500 to 9,000 residential and commercial properties to be completed, of which around 4,500 have been handed over to buyers so far.
"We will see the remaining units being delivered next year," he said.
For the Jumeirah Park development, Arabtec will build 134 luxury villas, and family-owned contractor SS Lootah Group is to build 247 villas at the same location.
Nakheel said it had sold more than AED1.2bn worth of villas in the project so far. Construction of the new villas will begin in February and the project is expected to be completed in the fourth quarter of 2014.
Arabtec's contract was worth AED159m, the chief executive of Arabtec construction Greg Christofides told reporters at the sidelines of the press conference.
Dubai-based contractors have struggled for the last few years as developers delayed payments and shelved projects. However, some movement in Dubai's property market has improved the situation.
"Serious developers have taken their commitments seriously," said Christofides.