Dubai's Nakheel too aggressive, says Emaar boss

Mohamed Alabbar accuses Palm developer of being too "aggressive" during boom years

Mohammed Alabbar, chairman, Emaar Properties.

Mohammed Alabbar, chairman, Emaar Properties.

Mohamed Alabbar, chairman of Dubai developer Emaar Properties, has accused Nakheel Properties of being “unnecessarily aggressive” during the emirate’s six-year real estate boom.

Speaking to the UK's The Sunday Times, Alabbar singled out state-owned Nakheel, which borrowed more than US$10bn and had to be bailed out by the government, as one of the biggest companies to expand too far and quickly during the boom years.

“They were unnecessarily aggressive. They were too optimistic. And they got burnt,” he told the newspaper.

Nakheel was one of the high-profile corporate casualities during Dubai’s debt crisis, which saw house prices in the emirate decline by over 60 percent. The developer, which built the artificial Palm Jumeirah island, agreed a US$16bn debt restructuring deal in 2011 and was forced to scale back its plans.

The state-owned developer said last month it had paid around AED10bn to trade creditors and contractors since November 2009. Local newspaper The National on Sunday said the firm is currently in talks with lenders to extend a AED8bn (US$2.17bn) loan due in 2015.

Concern over Dubai’s debt burden in light of several announcements for multi-billion-dollar real estate projects, including a AED6bn island development off the coast of Jumeirah Beach Residence, are unfounded, added Alabbar.

“Dubai is more serious. We are optimistic but realistic - older and wiser,” he said. Alabbar also said that the emirate’s debt is manageable: “When you look at the size of the debt and the assets of the city and its revenues, it is do-able to pay this thing over 15 to 20 years”.

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Posted by: Ole Torero

There is something wrong in the atmosphere lately! maybe the bull want to charge and get everybody on his way flying. in any case it sounds like a too dangerous game

Posted by: JTH

Mr Al Abbar, you were all in the same boat. Emaar was not at all better.

Posted by: jon

@RBH, they were but they weren't with huge mega projects like Nakheel. Dubai has a big debt problem which it needs to tackle before going any further because it risks being another Greece. International banks once the backbone of projects seem to be unsure of Dubai now a days, for example the recent rejection of debt repayment where creditors were offered $.18 on the dollar. I read another article here today where it mentioned that their planning $45 bn investment in Pakistan. Why not pay off the bills of the country and invest more at home then abroad? The only way out of this mess is going to be taxes, proberly not sales tax but maybe expat tax. Its only logical

Posted by: Reny

We are already paying taxes - its just a different name called "Salik" :)

Posted by: realiste

yes indeed Vicky.
Reality would come home to roost very quickly then.

Wouldnt have to read "if you dont like it leave" anymore from some people, would we!

Posted by: vicky

Many are in UAE cause of tax free country, imagine people migrating if direct tax is implemented...

Posted by: Red Snappa

Brushing off Dubai's ongoing indebtedness as a non-issue, is all very well, but the debt restructures just keep coming. Amlak, 48% owned by Emaar Properties, as I recall from only recent press is currently in talks with its creditors to reschedule AED 7 billion (US$ 1.9 billion)! And there are still other state-linked firms in similar discussions for even bigger sums.

I feel sure that every international bank, contractor etc is jumping up and down rubbing their hands with glee at the possibility of getting their bills paid and money back in 15 to 20 years.

Talking of Dubai's asset bank, I certainly agree with MA about Nakheel, didn't they offer sections of the Gulf seabed as collateral behind their Trade Creditors 60% repayment bond.

Time an indebted entity handed over a tangible asset in lieu of the money, to prove feasibility.

No matter how credible the disclaimant, a new generation of mega-projects in a high debt repayment era, makes the international financial community uneasy

Posted by: RBH

Haven't Emaar suffered too?! You guys were aggressive and competing with Nakheel as well to be the no. 1 properties provider.

Posted by: Tarun

If we consider the value of projects completed ,number of residential or commercial units, number of communities developed and run in Dubai value of projects to be completed (e.g. Palm Jebel Ali & Deira, International City phase 3 etc.), Nakheel is bigger in terms of Dubai market. Emaar is bigger than Nakheel if we add up its assets in the UAE and other countries.

Posted by: Guerrdo Paul

Emaar was always, and still is, the no. 1 developer. Nakheel never was, and never will be. Is there a doubt? Emaar has strong processes and work flow procedures, put in place during 2003-2005. It can run on auto pilot. Nakheel cannot.

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