Nakheel boss blames customers for delays

Chairman says customers who defaulted on payments were 'partly to blame' for developer’s delays, debt

Nakheel chairman Ali Rashid Lootah.

Nakheel chairman Ali Rashid Lootah.

The chairman of Dubai property developer Nakheel has blamed customers for delays in its projects, claiming the company had “no choice” but to freeze work at many of its landmark developments because buyers stopped paying.

Several of Nakheel’s projects were put on hold during the 2009-10 property crisis, in which the emirate’s property prices feel by about 60 percent and Nakheel fell into AED12m worth of debt, causing the government to take over the company from Dubai World.

Some projects since have been revived, while others remain indefinitely stalled.

Chairman Ali Rashid Lootah said in an interview with 7Days that buyers who defaulted on their payments were partly to blame for the market collapse.

“Let’s not forget part of the problem was people stopped paying developers,” he reportedly said.

“So how do you expect developers to deliver if people are not paying? The developer had no choice but to delay certain projects and try to accommodate the people.”

Lootah’s comments are likely to inflame investors, many of whom are still waiting for the off-plan properties they bought from Nakheel to be completed.

The developer has particularly come under fire in relation to its archipelago of man-made islands off the coast of Dubai, known as The World, where there has been very little construction amid allegations that Nakheel has failed to provide promised infrastructure such as water and electricity supply.

Nakheel claims such services are the responsibility of the island owners.

Lootah said the company had been transparent with customers in informing them about delays and cancellations and had been able to maintain their confidence.

“That [transparency] helped us win their confidence,” he said.

“We managed to find solutions for most of our investors on the long-term projects, which were postponed. I can assure you that most of the people who went along with our solutions did not lose. We gave them alternatives to their investment.”

Lootah also commented on traffic issues affecting some of Nakheel’s developments, including Palm Jumeirah where thousands of Sandance revellers were unable to attend the New Year’s event because of massive traffic jams that caused delays of more than three hours.

“That’s exceptions. Certain events once a year, what can you do?” he said.

A new mall as well as additional hotels and apartment blocks will see thousands more residents and visitors use the Palm’s roads but Lootah is adamant traffic will not become an issue.

“I don’t really see any traffic jam on the Palm. The mall was part of the original plan; it’s nothing new,” he said.

Earlier this year the company announced changes to its Palm Deira project that would see construction begin.

It will now be known as Deira Islands and be made up of four islands rather than another palm shaped development similar to the successful Palm Jumeirah.

Others revived projects include Nakheel Mall and Hotel, Palm West Beach, The Boardwalk and nine hotels to be built over the next three to five years.

Lootah said the company planned to return to its pre-crisis level by the end of the decade.

“We will be debt free and hopefully have an IPO, and be a strong player in the market,” he said. “We’re back and we’re here to stay.”

* Nakheel no longer responds to media enquiries from Arabian Business, nor does it grant Arabian Business access to any of its media events or announcements.

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Posted by: Nicola

Totally disagree. If in some cases there might be some truth it might account for 2% or max 3%. The reality is that the RE sector between 2005 and 2007 was drugged and mostly unregulated. Many developers were cashing money for developments on paper to finance existing construction and as a certain point this scheme has collapsed with the consequences everyone knows. Of course the introduction of the escrow accounts, the STRATA law will prevent these practices to happen again or let's say it will be some rare occurrence. But to put the blame on home owners I think it's merely an excuse which has very little support on statistics. To support my statement, I'd ask Mr. Lootah to explain why Emaar, having developed even more than Nakheel, didn't experience the same problems as other developers? Where are the previous CEO's and executives of the large developers? Why the only one whom remained in office is Emaar's boss? I bet there are no answers to my questions.

Posted by: Kiran Kaur

Please do a article on Schon Properties for the Dubai Lagoon project which was launched back in 2005 and suppose to hand over in 2007

All we hear is lies and false promises

Posted by: Irshad

I think it is high time the Dubai Government should take serious notice of Nakheel misdeeds and the customers anxiety and distrust. Instead of saving its reputation, the Nakheel chief has opened a pandora box by his racist comments. I have many family friends living in various Nakheel developments and none of them are happy. Suggest to merge Nakheel with Emaar and someone sober and professional should be given the task of saving the face of Nakheel and building confidence with thousands of unsatisfied and affected customers.

Posted by: Hassan

Blaming customers, what a joke coming from a CEO that needs customers to do business.

Nakheel are by far the worst developer in Dubai, the have not completed any project, they delay and in some instances don't even deliver your property and then they charge tons for adding BUA and finally refuse to give you NOC if there is a wooden dog house in your lawn.

I do not understand why such a company is allowed to complete doing business its hurting all the good image that Dubai is receiving.

Posted by: Mark Renton

As someone who has watched the Dubai property market from the beginning, I have come to the conclusion that only an idiot would buy a Nakheel property, and only a total idiot would buy a Nakheel property off-plan.

Unfortunately, I have also come to the conclusion that there are no shortage of idiots around, who either are not aware of the history of Nakheel and Dubai freehold property generally, or rather optimistically think that somehow their investment will be different from all the other ones.

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