By Courtney Trenwith
Chairman says customers who defaulted on payments were 'partly to blame' for developer’s delays, debt
The chairman of Dubai property developer Nakheel has blamed customers for delays in its projects, claiming the company had “no choice” but to freeze work at many of its landmark developments because buyers stopped paying.
Several of Nakheel’s projects were put on hold during the 2009-10 property crisis, in which the emirate’s property prices feel by about 60 percent and Nakheel fell into AED12m worth of debt, causing the government to take over the company from Dubai World.
Some projects since have been revived, while others remain indefinitely stalled.
Chairman Ali Rashid Lootah said in an interview with 7Days that buyers who defaulted on their payments were partly to blame for the market collapse.
“Let’s not forget part of the problem was people stopped paying developers,” he reportedly said.
“So how do you expect developers to deliver if people are not paying? The developer had no choice but to delay certain projects and try to accommodate the people.”
Lootah’s comments are likely to inflame investors, many of whom are still waiting for the off-plan properties they bought from Nakheel to be completed.
The developer has particularly come under fire in relation to its archipelago of man-made islands off the coast of Dubai, known as The World, where there has been very little construction amid allegations that Nakheel has failed to provide promised infrastructure such as water and electricity supply.
Nakheel claims such services are the responsibility of the island owners.
Lootah said the company had been transparent with customers in informing them about delays and cancellations and had been able to maintain their confidence.
“That [transparency] helped us win their confidence,” he said.
“We managed to find solutions for most of our investors on the long-term projects, which were postponed. I can assure you that most of the people who went along with our solutions did not lose. We gave them alternatives to their investment.”
Lootah also commented on traffic issues affecting some of Nakheel’s developments, including Palm Jumeirah where thousands of Sandance revellers were unable to attend the New Year’s event because of massive traffic jams that caused delays of more than three hours.
“That’s exceptions. Certain events once a year, what can you do?” he said.
A new mall as well as additional hotels and apartment blocks will see thousands more residents and visitors use the Palm’s roads but Lootah is adamant traffic will not become an issue.
“I don’t really see any traffic jam on the Palm. The mall was part of the original plan; it’s nothing new,” he said.
Earlier this year the company announced changes to its Palm Deira project that would see construction begin.
It will now be known as Deira Islands and be made up of four islands rather than another palm shaped development similar to the successful Palm Jumeirah.
Others revived projects include Nakheel Mall and Hotel, Palm West Beach, The Boardwalk and nine hotels to be built over the next three to five years.
Lootah said the company planned to return to its pre-crisis level by the end of the decade.
“We will be debt free and hopefully have an IPO, and be a strong player in the market,” he said. “We’re back and we’re here to stay.”
* Nakheel no longer responds to media enquiries from Arabian Business, nor does it grant Arabian Business access to any of its media events or announcements.For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
This is hilarious!! This man needs a medal for excuses !! Just admit to the real problems !!!!!
As a Palm Jebel Ali investor I can confirm that we all were up to date with our payments when Nakheel stopped work on this project and only Nakheel is to be hold responsible. Nakheel did not offer anything worthwhile as alternative but we will not go away.
Mr Lootah, Ting Ting, Pull the other one. It has bells. What a Loot.
"Lootah said the company planned to return to its pre-crisis level by the end of the decade."
It will take a decade to recover from the crash of 2009? So the boom-bust-boom cycle has become the b-u-s-t-boom-b-u-s-t cycle.
doesnt speak to AB but speaks to 7Days.
Sums "Nakhell" up really.
I dont know why you even bother reprinting their press blurbs.
When we bought in Palm jebel Ali in 2002 we were promised hand over in 2008. Sept 2008 all of us were forced to pay our instalments although construction of the villas was far from even being started. How can the developer blame investors for not paying when the actual truth is that the funds have never been kept in escrow and have not been used to build the project for years? The disaster of palm jebel Ali has nothing to do with the crash, or investors not paying. And it happened a long time before the current chairman has joined nakheel ...... Wondering if he's aware of this while accusing investors ......
"We gave them alternatives to their investments"...the alternative was...'take it or leave it"?
Mr Lootah , Is this now the new excuse you use , do not insult investors with comments such as these, and your trying to justify the traumas and heartache that nakheel has put thousands of investors through. Nakheel took our hard earned money, Nakheel promised us all, Nakheel did not build , Nakheel did not correspond, Nakheel you blatantly ignored all your investors , and now you are trying to let the world know that it's the investors fault. Shame on you!
This is now a normal rant. Only in this part of the world is the customer ALWAYS WRONG!!
I was one of the investors who swapped Palm Jebel Ali villa with Jumeirah Park and Marina Residences. At the time when this was offered it definitely didn't seem like a good deal. But now, the prices of these units have shot up so high that I have not only recovered the money I had originally invested in Palm Jebel Ali, but also getting pretty decent profit - enough to buy a ready villa in Palm Jumeirah. Not sure if I should be thankful to Nakheel or not.