By Joanne Bladd
Company chief admits question mark over original plan for Palm development.
Fairmont’s Palm Jumeirah Hotel will miss its scheduled completion date by at least a year to 2011 as its backers struggle to secure funding, the President of Fairmont Hotels & Resorts said on Tuesday.
Kuwaiti firm IFA Hotels & Resorts, partners in the five-star resort on Dubai’s Palm Jumeirah, is finding it hard to gain finance in the souring debt markets, said Thomas Storey, president of the Canada-based hotel chain.
“The problem is our partners in that venture are having financing challenges just like everyone else,” he told Arabian Business. “So it’s hard to know [when it will be built.]"
There is also a question mark over whether the original plan for Palm Jumeirah, a development of state-backed Nakheel, the Dubai real estate firm that requested a standstill on debt repayments in November, will ever be realised, he said.
“The question is going to become ultimately will the Palm ever get developed out now the way it was originally envisioned. I think it is a question mark now.”
Asked whether the coastline resort, which was initially scheduled for completion this year, will now ever be a money-making venture for Fairmont, Storey said he was hopeful.
“I think it can [make us money]. The issue is; we’ve got to get it built first.”
The Fairmont Palm Jumeirah is also home to IFA’s second Dubai-based buy-to-let project, comprising around 200 branded condominiums that have been bought by investors.
When the scheme was announced last November, the Kuwaiti company promised annual returns of 10 percent to investors in the hotel’s first five years of operation, a figure that Storey said the firm will now struggle to deliver on.
“That’s going to be tough,” he said. The units, which are on track for handover in the second-quarter, will be managed by Fairmont in exchange for a portion of the rental fee. All have been sold, Storey said.