By Courtney Trenwith
Nepal’s richest man speaks out about the millions of dollars he has lost in Dubai property projects that local developers have failed to deliver on
It has been a case of not third but fourth time lucky for a Nepalese billionaire who has lost millions of dollars investing in Dubai.
Binod Chaudhary, Nepal’s only billionaire, has spent the past 12 years working on property deals in the emirate but each time he has moved forward the local developer has failed to see the project through.
But this month, construction began on the 200-key luxury Taj Hotel in Jumeirah Lake Towers (JLT), a joint venture between the renowned Indian brand and Chaudhary’s CG Hotels, a division of the conglomerate CG Corp Global.
It is a celebratory milestone for the 60-plus-year-old, who has been eager to support the Dubai growth story but has suffered significant losses with no recourse.
In 2006, Chaudhary bought the island known as Nova Scotia in The World development, a collection of man-made islands about 4km off the coast of Dubai. Built by Nakheel, very little development has taken place and some investors have taken legal action against the master developer.
“We designed a hotel, we announced a hotel, and the whole project, sadly, couldn’t move forward,” Chaudhary said. “The World has no value.”
Chaudhary also bought into the plan for Jebel Ali Downtown. The developer behind the scheme, Limitless, suffered during the 2008-09 economic crisis and is still paying off a reported $1.3 billion of debt.
Work on the project slowed down but Chaudhary said the required infrastructure was not there to allow him to use his $4.6 million plot.
“The way Jebel Ali Downtown was marketed, we wanted to do an iconic business hotel there. We invested in a Limitless property nine years ago … but the dream that we were sold, compared to what exists today, it’s a sad state of affairs,” he said.
“The hotel was fully designed, we were ready to [begin construction]. [Now], we’re still sitting on the plot of land.
“Post the Dubai-crisis that area has not taken off, the whole project has been in total limbo and you can’t open a hotel in the middle of the desert because you need supporting infrastructure.
“It’s serious money - with that kind of money I could open a hotel. Here you have to pay 50 percent in advance for a plot of land, and that’s become sand. AED17 million is sitting there without producing anything for eight years.
“There’s nothing I can do. I’m in litigation with Limitless and I don’t think it conveys a very good picture in the investors’ community.”
Yet again, Chaudhary intended to invest in Bawadi, a master-development announced in 2007 that was to form part of the Dubailand mega-tourism project on the outskirts of Dubai. While some parts of Dubailand have been completed, Bawadi did not come to fruition.
On this occasion Chaudhary did not sign any deals. But he did invest time and money in considering plans for a hotel there.
“We were in serious negotiations to do a hotel there. That destination has not moved,” he said.
“So it’s not all hunky dory [in Dubai].
“In hindsight, instead of going to The World, we should have gone to The Palm, instead of going to Jebel Ali Downtown, we should have gone to the Marina. Instead of going to Bawadi we should have gone to JLT. Simple.”
Chaudhary concedes that in all cases the developers behind the failed projects were affected by the global financial crisis that saw Dubai’s over-leveraged property market plummet 60 percent in 2009. However, he called for greater protection for investors willing to take costly risks in projects that would not get off the ground without injection of funds from outside investors.
“We come with a great sense of hope and confidence and if the larger, macro environment changes, we as investors should be protected and supported, not penalised,” he said.
“[Master developers] have to always factor in some of these unexpected eventualities when you plan larger projects which are way ahead of its time. Because if somebody believes in your vision and believes in your long-term vision and invests in it, it is your moral responsibility to ensure that it takes off, or you give them alternates.”
But the Nepali remains determined to succeed in Dubai. Despite the previous negative experiences, he signed a joint venture to own half of the Taj Hotel in JLT, this time opting for an already well-established area.
“I have a home in Dubai, I have serious investment in Dubai. I have great respect for Dubai, otherwise I wouldn’t choose this as my other home. I have the greatest admiration of what Dubai has achieved,” he said.
“I’m still committed; despite all of this we’re building a hotel and I still believe there is business to be done. The way Dubai has built the Emirates Airline is a manifestation of a great vision.”
While it has taken Chaudhary 12 years to get a project off the ground in Dubai, CG Hotels has stormed ahead in other emerging markets, facing little hurdles.
In six years, the company has opened 17 hotels in Sri Lanka and three in Nepal in the past four years. It also has launched two in China and expanded to 35 in India, among other locations.
“So it’s not that we were only looking at Dubai but we were seriously looking at it because we believe in the Middle East, we believe in Dubai and we’re not giving up, despite all these series of set-backs. Finally, we were able to crack a project which we are really proud of, which is the Taj at JLT,” Chaudhary said.
Cinnovation also is establishing a plant in Saudi Arabia to produce and distribute Wai Wai instant noodles, the product that propelled the family business to success many decades ago.
It is also launching a fast-food chain based on the noodle, called Wai Wai City, in Dubai by the end of the year.
Chaudhary said he remains keen to expand the company’s hotel collection in the region too. The next would likely be a wellness retreat similar to the popular The Farm in the Philippines.
“We have a global presence, we have luxury resorts to top-end business hotels, to boutique hotels to wellness to safari. I think we are one company that has a very diversified experience that can bring in all these brands, if there’s a suitable destination,” he said.
“Unfortunately, because of these events I’ve not been able to grow [in Dubai] but we could have brought a huge amount of very interesting hospitality projects. It’s not because of a lack of desire or interest.”For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
If I were him, I would be looking at expanding in Myanmar and Vietnam. Both those markets having burgeoning tourist markets.