By Andy Sambidge
Master developer's chief exec confirms receipt of money as part of $10bn bond plan - report.
Master developer Nakheel is receiving funds from Dubai government as it looks to complete projects and pay outstanding obligations, its chief executive confirmed on Monday."The actual figure is confidential and so are all the other details, but yes Nakheel is receiving funds," Chris O'Donnell said in comments published by Emirates Business.
The developer said it was also talking to its contractors and re-negotiating payments plans and contracts.
"Yes, we are trying to help them and ourselves through our current situation. We are at the stage of commercial settlements and negotiations. Rather than detail on percentages, it is a true statement to say that construction costs are falling and there is definitely a reduction," added O'Donnell.
Dubai sold $10 billion of bonds to the UAE central bank earlier this year to raise funds to support state-linked companies suffering from the financial crisis, and plans to issue another $10 billion in bonds later this year.
Speaking about the latest on the status of Nakheel projects, O'Donnell said that work on Palm Jebel Ali has slowed down while the Palm Deira and the Universe projects are on hold.
However, construction on Jumeirah Village and Al Furjan is progressing, he said.
On what basis, exactly, is the money being received? Is it a loan, a share deal, a handout or simply a good old-fashioned marker which will be paid back when life returns to normal? Nakheel, as one of the most prominent Dubai companies, needs to do more to restore confidence than this.
If u followed the news u'd know. It will be as a loan !
Dear, if the prices is going down all over, and as you said "construction costs are falling and there is definitely a reduction," added O'Donnell. then you should also consider the investor on this. I am one of the investors in Furajn and tried to get options from nakheel as i could not sell or finance the property and nakheel staff was not helpful at all. how can we trust to invest with them and they are not willing to come up with solutions for us.. why should we lose our money because they are not willing to compromise. Please understand our situation to..
I am actually a little too busy to follow up the news of every failing UAE company, so thanks to Abu Ali for the news it will be a loan. This wasn't stated here on AB. I suspect Abu Ali is one of the paid bloggers in the UAE, so keep up the good work!
I am one of those unfortunate sub-contractors who has already provided a 10% discount on receivables (nearly 2 Million) to get it on instalments & the tail end is yet to come for Palm Jebel Ali, Deira & Universe projects. A similar situation exists for me at Al Furjan & Jumeirah Village but its only about a million there & the main Contractor says it is yet to get the mony from Develpoer which is renegotiating on cost front and I am guessing as to what would be that â€œ%â€
Construction on Jumeirah Village Circle is in progress but with lot of delay, I would request Mr. O'Donnell of Nakheel to compensate investors as well as end user, end user also have to unnecessary pay extra rent to their existing landlord for extending their current contract. When Nakheel is re-negotiating and bringing down the cost with the contractors they must pass on to their buyers, this will at least cover some loss which buyers have taken in Nakheel projects due to delay.
I am one of those unfortunate investors, not flippers, at Jumeirah Park, where work seems to have come to a standstill around January in most parts. I wish they would finally pay all their contractors, so this nice development will be finished and can be handed over to their rightful owners. After all, most of the owners have already paid 60 + % and after the latest regulations from RERA will lose a lot of money without any wrongdoings on their part if work is stopped for good (not officially cancelled of course). I do hope that the people in power come up with some sensible regulations for this market, not just for the locals, so Dubai can thrive again. I know that my comment will probably not make any difference to this whole issue but it feels good to get it off my chest.
Would be great, later when everything is agreed on the funds, if Nakeel can share with investors what amount will be allocated to paying for outstanding payments and the amount will be actually used in further progressing Nakeel projects. From my humble financial experience it doesn't make sense to borrow money to finalize these projects when the turning point in the economy can't be reliably predicted and therefore determine when financially capable investors will start to buy your product (i.e. generating cash in flow to the borrower). Even more no one can predict what structure the market and the industry will adopt during the next growth cycle especially the fundamentals/structures/principles are challenged today.