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Wed 28 Mar 2012 11:47 AM

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Dubai’s Versace needs $60m funding - sources

Developer says construction slowed but promises 2013 completion date

Dubai’s Versace needs $60m funding - sources
Enshaa Services Group refused to comment on whether the project was being affected by liquidity woes.
Dubai’s Versace needs $60m funding - sources
The Dubai Creek development has so far missed its original completion date by four years.

Developers of Dubai’s AED2.3bn (US$626m) Palazzo Versace have promised to deliver the project by the end of next year, despite construction having slowed considerably.

Enshaa Services Group refused to comment on whether the project was being affected by liquidity woes, but said it was being partly hindered by a lack of water and electricity on site.

The Dubai Creek development has so far missed its original completion date by four years, and is still not being constructed at full speed.

Sources close to the project, which asked not to be named, told Arabian Business it needs to find $60m to complete by the given target.

“Technically it has never stopped construction, so if you pass by you will always see something. But it is like many projects in Dubai, just ticking along at a very, very slow rate.

“In order to complete by next year the developer needs to find US$60m. If they can find the money this is achievable. Otherwise it is more likely to be 2014.”

When asked for comment by Arabian Business, a spokesman from Enshaa said construction had been purposely slowed in order to keep pace with the surrounding infrastructure developments, but would open next year.

He added that developers did not want to run the development on generators because of the high cost.

“Since assuming control of the development... Enshaa has been targeting the soft opening of the hotel in summer 2013 and with the grand opening in the last quarter of 2013,” he said.

“The development cannot be completed without the services infrastructure... and [Enshaa] is currently exploring alternatives to obtaining services including the running of chilled water pipes from a district cooling plant across the creek, and running cables to an alternate power distribution station other than the one which will eventually serve our development.

“The delivery dates of the development are per the provisions in the sales and purchase agreement.”

However, the spokesman declined to comment on suggestions that the project was being stalled due to funding issues.

Palazzo Versace Dubai was launched in 2006 by Emirates Sunland Group, a 50:50 joint venture between Enshaa’s subsidiary firm Emirates International Holdings (EIH) and Australian developer The Sunland Group.

The design included two Versace-branded residential buildings comprised of 169 units, and a Versace-designed hotel with 217 suites.

The project was located in the master development Dubai Culture Village, being overseen by Dubai Properties Group.

UAE-based Enshaa at the time had a 50 percent stake in Palazzo Versace Gold Coast in Australia, a Sunland-developed property which had been open for around a decade.

In October 2011, Enshaa Services Group, another subsidiary of Enshaa, took control of the project as part of a swap deal.

Under the agreement, Enshaa agreed to relinquish its stake in the Australian property in exchange for full ownership of the Palazzo Versace in Dubai.

Sources say the project has encountered a series of delays since its launch due to different issues, including problems with a nearby dhow ship yard and a complete project redesign.

In the wake of the recession, they said developers also tried to bring in a second construction firm Kele Contracting to replace the original main contractor Arabtec, but have since reinstated Arabtec as the project manager.

Kele was allowed to retain the main construction contract for the nearby D1 tower, which is part of the same development.

When contacted by Arabian Business, Kele declined to comment.

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John 7 years ago

Nothing about this development has ever rung true. They are clearly way behind in terms of construction, but not a word about sales and delivery dates. Versace put its name to it and that was it, not a cent would have been invested, just like the Armani con up the road. Dubai must by now have learned its lesson, the Tiger Moment, that names don't translate into dollars if there is no substance behind them.

Johnny Bravo 7 years ago

Maybe Tom Cruise can help!

Mike DeLonghi 7 years ago

You can add Michael Schumacher, Niki Lauda, Ferretti Yachts and countless others to the fray. It is depressing to see this names being abused and now associated with 'Homes from Hell*.

culture vulture 7 years ago

the entire Culture Village infrastructure looks like nothing is progressing.

There might be a few cranes dotted around including at Versace but all those buildings are just sitting there in various unfinished forms. Is there one completed building?

Sad really, as the Culture Village concept was really great but it has been let down very badly. Of course no roads etc. will be constructed as there are no completed buildings to connect.

I wonder if it will ever be finished, or will join the list of continual on hold projects?

Anonymous 7 years ago

What an eyesore this is!! Everyone sees it when they cross Garhoud bridge. This project and the high-rise in Healthcare City (a hotel?), constant reminders to all Dubai visitors of Dubai's crash and burn real estate market.

I believe the government should jump in and help complete some of these eyesores if they believe they can recoup the money in a reasonable amount of time. I would not look at this as a financial investment because it may not be but instead, CLEAN UP THE MESS investments!! The sooner these eyesores are completed the better.

These remind me of my days living in Egypt driving through Maadi, seeing lots of unfinished buildings. At least cranes were removed but not in Dubai...craziness.

Yunus 7 years ago

And now its Real Madrid resort....no no, no, no,no, its consolidation time...there will be a time to run again.

Come on we need to stop with the commercial antics. Lets fix the existing roads, infrastructure, build a trainway connecting all the emirates, eliminate traffic congestion, take out pedestian crossings out of or near traffic circles(RTA), develop bicycle paths,excelerate investments in renewable energy. Introduce citizenship for expats who have been here over 10yrs make them 2nd or 3rd grade citizens thus developing the population. Fix the existing!

We should approach development in all the Emirates in a holistic, organic approach thats family friendly that encourage a healthy lifestyle. The UAE in my opinion could be a tourist hotspot like never seen before but with indigineous concepts.