By Joanne Bladd
State-backed Emaar eyes sale of Dubai headquarters in face of $1.3bn of debt due in the next year
Emaar Properties, the UAE developer, is mulling the sale of its Dubai headquarters in a bid to tackle AES3.8bn ($1.3bn) of debt due in the next year, it has been reported.
State-backed Emaar has been marketing a number of the buildings it owns within Emaar Square, as well as two buildings it owns in Emaar Business Park near Sheikh Zayed Road, The National said.
Building number 3 in the Business Park, which has more than 200,000 square feet of space, is being advertised to some buyers at a price of about AED1,200 per square foot, the paper said quoting unnamed sources.
Several floors of that building house Emaar’s head office.
"Emaar has been selling commercial space as part of its normal business operations and is currently seeking the sale of such properties," a spokeswoman for Emaar told The National.
According to the company’s financial statements, it earned AED468.7m on sales of buildings for the first nine months of the year, up from AED70.7m in the same period last year.
In the second quarter, the developer sold one of its Emaar Square buildings for AED331m.
Is the totally overblown spin finally coming off Emaar? This company has spent more on PR than it has on services to its developments it would appear, because now the reality of debt and oversupply have dimmed its fortunes. The Burj is empty, and who is going to pay for the folly?
Dubai needs 3 things to strengthen confidence
Can we start with transparency of service charges
The real estate bubble burst was clearly not of Emaar's doing so its a little unfair to find faults with development projects that were undertaken by Emaar.
Despite the fact that the situation looks gloomy, to say the least, and buildings might be empty now, they will fill up in the future albeit a little later than expected. All this investment has led to great infrastructure in a great city.
If Emaar has to sell a few assests so what, at least its not running to the state to bail it out like other well established companies in other parts of the world have done.
Emaar is simply following what should be a standard business ethic to reduce its debt pile, selling assets rather than raise more loans in a stiff financial climate. That is exactly what Dubai World and Dubai Holding companies should do, fire sale or not, to get the oustanding down.
There are plenty of assets worth circulating to potential international investor owners Dubai Metro, Meydan, Jebel Ali Freezone, Technology Freezones, Dubai Marina, major hotels, government buildings. The fact that Emaar are selling buildings on a leaseback basis is perfectly normal procedure in every big city from London and Paris to New York and Sydney. Most of the assets in these cities are owned by foreign entities, including the Gulf states, WHY NOT THE REVERSE, the world has changed financially forever. Emaar is bringing some element of sophistication to the property market and a small glimpse of honour to the economy.
Expecting banks to constantly reengineer loans is bad for credit and business.