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Thu 25 Aug 2011 08:47 AM

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Nakheel settles $2.72bn of claims in stalled projects

Developer says will deliver nearly 8,000 homes by end-2012, reveals construction schedule

Nakheel settles $2.72bn of claims in stalled projects
Nakheel said Wednesday it is restructuring some AED59bn ($16.1bn) of liabilities, including AED32bn to Dubai government
Nakheel settles $2.72bn of claims in stalled projects
Nakheel said Wednesday it is restructuring some AED59bn ($16.1bn) of liabilities, including AED32bn to Dubai government
Nakheel settles $2.72bn of claims in stalled projects
Nakheel settles $2.72bn of claims in stalled projects
The World, Nakheel
Nakheel settles $2.72bn of claims in stalled projects
Palm Jumeirah
Nakheel settles $2.72bn of claims in stalled projects
Nakheel is the developer behind The Palm project

Nakheel has settled about 60 percent of liabilities linked to buyers in its stalled real estate projects, representing about AED10bn ($2.72bn), the company’s chairman said Wednesday.

The property developer behind the palm-shaped islands off Dubai’s coast said it will deliver 7,982 homes in nine developments across the city in the 15 months ending Dec 2012, in projects including Jumeirah Islands, Al Furjan as well as Badrah and Veneto in the Waterfront project.

[To see Nakheel's schedule for its short-term projects, check here]

“Our liability on the long-term projects is approximately AED10bn and we’ve managed to solve and find and accommodate people for a value of AED6bn in 1.5 years,” said Ali Rashid Lootah.

"It's been a tough 18 months ... we have managed to complete a complex restructuring.”

Nakheel was one of the biggest casualties of Dubai’s real estate crash, suspending at least 100 projects in the wake of a property collapse that more than halved house prices in the emirate.

Investors in stalled projects deemed “long-term” by Nakheel, such as Palm Jebel Ali and Palm Deira, which do not have any planned construction schedules, were offered homes in completed Nakheel projects or to transfer their payment to another investor or project.

In March, buyers in the Palm Jebel Ali project – where five and six-bedroom villas sold for AED16m at their peak – were offered credit swaps for properties on Palm Jumeirah or a refund.

Lootah said Wednesday the developer planned to build new villas on Palm Jumeirah to accommodate a rise in demand, and to begin work on a dedicated mall for the offshore island.  “We are reviewing-  and hopefully before the end of year, after doing internal evaluations-  the Palm Jumeirah Mall, which is going be an added value to Palm Jumeirah and the rest of the area,” he said. “And also hopefully we will be launching new villas on Palm Jumeirah and will go out for engineering very shortly.

“We are seeing transactions are increasing and there is high demand and that has encouraged us. Details will be announced, numbers and design will be announced before the end of the year.”

At Nakheel’s offshore project The World, Lootah said the developer was in talks with a company to offer day tours for visitors from Palm Jumeirah out to the islands.

“We are trying to develop a new tour and cruising business to The World islands from Palm Jumeirah, we see a lot of demand for tour agencies for such things,” he said.

“We have a lot of people who come to Dubai for short stays and people asked us to develop that… for some packages for short-term tourism.”

Construction on the offshore project ground to a virtual standstill in the wake of the economic downturn and Nakheel is embroiled in at least 12 legal suits related to the islands.  

Active work is only continuing on one island – Lebanon – where a beach club is due to open in the fourth quarter of the year.

Nakheel has claimed a number of island owners are in default, while a source told Arabian Business in July 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 millions of dollars of debt.

Nakheel said Wednesday it is restructuring some AED59bn ($16.1bn) of liabilities, including AED32bn to Dubai government, AED19bn to trade creditors and AED8bn to banks.

Nakheel is today expected to issue the first tranche of a twice-delayed AED4.8bn Islamic bond to trade creditors at a profit rate of 10 percent.

The company offered trade creditors repayment of 40 percent cash and the remaining 60 percent in the form of an Islamic bond, or sukuk as part of its restructuring program.

The Islamic bond will not be backed by the government but by Nakheel's assets, the chairman said, adding no assets had yet been sold as part of the restructuring.

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Jag 9 years ago

60% of investors deposits for stalled projects have been settled? You mean instead of refunds, credit notes were issued by Nakheel which the poor investors had to sell at a 40-45% loss for no fault of theirs except having put their trust in Nakheel.

What about the balance 40% of investors?? When will they be issued refunds?? Or is Nakheel not bothered about their small investors?

kurt 9 years ago

Having seen the list of developments what are Nakheel's plans for Jumeriah Golf Estates?

firoz akberali 9 years ago

can we have the list of the so called "long term" or "delayed projects decalred by nakheel such as "Mina Rashid" project where they never started the required infrastructures work or handed over the plots schedule for Decenber 2010?can we have any comment from Nakheel?

KEVIN 9 years ago

Mr. Ali Rashid Lootah, how come you don't move the property owners of Palm Jebel Ali to Palm Jumeira? This will give instant boost of confidence to owners who bought in Palm Jebel Ali as they have been waiting for past 6 years now. Don;t you believe they deserve it after such long delay from Nakheel's Part. If Nakheel will do good it will make profit. How can Nakheel be profitable if it gives loss to these property owners who dreamt of living on Palm and invested with full confidence in Nakheel? We hope you will look into this matter if you consider yourself a man of action.