Indebted Nakheel halts property sales in Dubai

State-backed developer said it is focusing on consolidations and swaps options over unit sales
Indebted Nakheel halts property sales in Dubai
Nakheel, which overstretched itself building islands in the shape of palms and other ambitious projects, is part of state-owned conglomerate Dubai World
By Shane McGinley
Mon 25 Apr 2011 12:36 PM

Nakheel, the Dubai developer restructuring $10.8bn in debt,
has confirmed it is no longer selling real estate units in the emirate.

The state-backed company, which overstretched itself
building islands in the shape of palms and other ambitious projects, said its
focus is instead on offering swap options to existing investors.

 “Nakheel has stopped
selling properties currently, and is focusing on consolidations and swaps
options,” a spokesperson said in an emailed statement.

Nakheel offered credit swaps in the wake of Dubai’s real
estate crash, to enable buyers to transfer cash from unfinished or halted
developments to completed real estate.

The company was one of the biggest casualties of Dubai’s
real estate downturn, which saw prices halve from their 2008-peak and almost
half of developments in the emirate cancelled.

The developer's inability to meet its debt obligations, in
the wake of a property collapse and the global credit crunch, helped trigger
Dubai's debt crisis in 2009.

In March, Nakheel said it had paid AED4.6bn ($1.25bn) in
overdue payments to trade creditors.

Real estate analysts were divided on news the developer had
stopped pursuing property sales, with some seeing it as a sign Nakheel was keen
to restore confidence in its projects.  

“In good times and bad, looking after existing clients
before pursuing new ones makes smart business sense,” said Michael Michael,
director of sales and leasing at Landmark Properties.

“The announcement to stop selling properties and focus on
consolidation and swap options may restore a degree of customer confidence in
Nakheel and its projects.

“I believe the announcement shows a sign of commitment which
is always good for the market.”

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