Nakheel broke ground on its Palma Residences project today, with the Dubai government-owned developer claiming construction will be complete in 18 months.
At a press conference held in the city today, Nakheel said 30 units at the Palm Jumeirah development had already been sold at a combined value of AED223m (US$60m), with 30 more potential buyers in the pipeline, said Nakheel chairman Ali Rashid Lootah.
Lootah said that the number of sales on the project so far were a “sign of trust” in the developer and that Nakheel would be launching plans for a “similar” development by the end of this month.
The main contractor for the project is Dubai Civil Engineering, it was also announced today, which has signed a construction deal worth AED194m.
Palma Residences, which consists of 104 Mediterranean style townhouses, was announced in March 2012 and is indebted Nakheel’s first new residential project since the Dubai property market crash in 2008.
The company began taking orders for the project on April 2. Prices range from AED6m to AED8m.
The project will test demand for property in a market where prices have plunged by more than 65 percent since their mid-2008 peak.
The slump forced Nakheel to write down the value of its real estate by AED78.6bn ($21bn) and prompted the bailout.
Most of the Palm project will be financed by sales agreed before construction begins, a method that was common before the property slump.
Nakheel plans to spend AED1.4bn this year to complete nine projects across Dubai that had been suspended after the property crash, according to an Islamic bond prospectus obtained by Bloomberg News in September.
Nakheel plans to complete 7,982 homes in 2012, the document showed.
“My main challenge is to deliver to buyers the homes they bought,” Lootah said in February. “The banks and the contractors made a lot of money off us during the boom days, but the buyers have been patient and we want to deliver the homes they paid for and dreamed of. That’s my main goal.”
Nakheel settled AED6.6bn of claims related to property sold in projects that were halted indefinitely, Lootah said.
The buyers have been offered alternative homes in projects nearing completion or credit notes that can be redeemed in five years. Nakheel has about AED3.4bn of claims left to settle, he said.
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