By Shane McGinley
State-backed developer said it is focusing on consolidations and swaps options over unit sales
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.”
They have not been selling property for many, many months now. Only assets such as cars, furniture, laptops, phones... Fire sale kind of stuff. And I'm dubious on the announcement that they sold a World Island in 2010. As much as I'd like to believe it I highly doubt it, unfortunately.
Too many unfullfilled contractual obligations in all sectors and by everybody. It will take more than 15 years to rebuild trust if they start now undoing all the wrongs that exist in the sector. There are no signs so far they are willing to do it.
There is no need to halt sales, As properties are not sold for last couple of months.
The empty reception area and sale cabins of Nakheel sales office support my view
Investment and investors rights are not protected in UAE
This was heralded. Nakheel and Emaar misjudged the market and the opportunity. Hence the result before all.
Will this ever get rolled back..??
But some activity is being seen now with change of laws and the authorities beginning to wake up. But time has been lost to their detriment.
Emirates which banked on Dubai's boom like Sharjah and Ajman too have no one to blame at the end of the day.
But what is next for Dubai..?? Same old trade-hub-centric policies, which means it retains its age old tradition of the Abra type wholesale business..??
Someday, some stalwart will rise up and write a history of the Real Estate developments in Dubai, which in fact was the Rising Graveyards of Dubai.
Unless the regulations change, nothing else will.
Nakheel should start handing over properties in their short term
Some how that will show their seriousness to build back the lost confidence, at lest in the investors who have paid almost full amount since last 3 years.
The primary problem with Dubai is that it has still not learnt it's lesson from the market crash. There's no repentance. Sorrow maybe, but no repentance. Repentance literally means to have another mind. If there is true repentance one wouldn't start talking big the moment some sectors start showing some signs of recovery. The proof of that is in the words of one of the hoardings that Jumeirah has recently put up. I forget the exact words, but they seem to suggest that the glory days are back. That makes me afraid. I feel that that ad can be one indication that that mindset may not have changed. I hope I am wrong, but I am afraid if Dubai ever goes back to those "glory days", it will fall again, never to rise again.
Nakheel does not only halts property sales. They basically halt everything. No street lights in the Gardens, no maintenance, no gardening, no or poor administration but still increasing cost and rents.