By Shane McGinley
State-backed developer says existing buyers on troubled offshore project have defaulted
Dubai state-owned developer Nakheel is pricing islands on
its troubled ‘The World’ project for sale following talks with potential
investors, the company said Thursday.
A number of owners of islands on the troubled offshore
project are in default, the developer confirmed. Nakheel is embroiled in at
least 12 legal cases relating to The World.
“We confirm that we have had interest from purchasers and
the properties are currently being priced,” a spokesperson from Nakheel said in
“We confirm that we have purchasers who have paid in full
and others who are in default. Remedies and consequences to this breach are
determined in the agreements between the seller and the purchaser.”
Announced at the height of Dubai’s real estate bubble, ‘The
World’ was one of the most iconic developments linked to state-owned Nakheel.
Construction on the offshore project ground to a virtual
standstill in the wake of the economic downturn, which saw real estate prices
in Dubai fall more than 60 percent from their peak.
Most buyers on the project have failed to begin work, with
the except of an AED68m beach club on the island of Lebanon, which is due to
open in the fourth quarter of 2011.
Austria’s Kleindienst Group, the developer behind the
six-island Heart of Europe Project, has stalled construction work amid a $199m
legal battle with Nakheel for breach of contract.
In February, at least five islands were advertised for sale
at discounts of up to 17 percent on the initial purchase price as distressed
developers cut their losses.
Last month, Arabian Business revealed Nakheel had issued buyers
on The World with ultimatums to pay any outstanding balances on their islands
or lose ownership.
A source said the developer had changed terms on payment
schedules previously agreed with buyers of islands to fast-track the collection
of fees. The new demands were allegedly issued after a revamp of Nakheel’s
chairman and board in March 2010, as the developer sought to restructure
$10.8bn in debt.
Nakheel, which this month saw its ownership transfer from
Dubai World to Dubai government, has said 70 percent of the 300 of the manmade
islands in The World are sold.
Nakheel has stalled construction on at least 100 projects in
the wake of the downturn, according to data on the website of Dubai property