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