Nakheel completes its $16bn refinancing and starts building again
Posted on 25 August 2011 with 2 comments from readers
The government-owned developer most hit by the Dubai real estate crash almost three years ago has finally announced the completion of its $16 billion refinancing with the issue of an Islamic bond today to contractors and will be restarting work on 8,000 long-delayed housing units.
The company is also keeping its name Nakheel and intends to rebuild its tattered reputation with customers, suppliers and bankers.
Restarting construction sites
It will resume work on communities like Jumeriah Park and Jumeirah Village as well as building more luxury homes and a shopping mall on the Palm Jumeirah where several fronds remain vacant.
Nakheel chairman Ali Lootah said: ‘The completion of this financial restructuring is closing an old chapter and looking forward for delivery and meeting our commitments towards our investors and our trade creditors and also to re-establish the name of Nakheel and put forward new projects which are needed for our company and the Dubai economy.’
Everybody will now be looking to Nakheel to make good on its past broken promises and contractual commitments. Most people tend to say that they will believe this when they see it and so Nakheel could face a long haul.
There are also plenty of unanswered questions about the abandoned second Palm Jebel Ali and other projects whose future is not clear. But it is good to see the fallen giant Nakheel back on its feet.
Soaring vision
Once trumpeted as the company ‘where the vision of Dubai gets built’ the effective insolvency of Nakheel is a major problem that is now overcome, though for the time being it will mainly be occupied with making good past commitments rather than relaunching its one-kilometre high tower project (above), now being copied in Jeddah as the Kingdom Tower.
Some have argued for Nakheel to be broken up and sold but that solution to its future has not been chosen. However, there could still be a case for land sales to finance future projects, if buyers can be found at reasonable prices.
But it will probably be another generation until there is a property boom like that seen in 2003-8 in Dubai, although the legacy of that boom is very considerable in terms of by far the best urban infrastructure in the Middle East. Other cities will struggle to catch up, if they ever can.
2 Comments posted by readers:
Next time you fly in or out of Dubai by daylight, take a good look down…a real good look. It’s a desert. Always has been and as far as I can see, always will be! A desert with a vast amount of very silly unused buildings! They always have been and as far as I can see, always will be! So a bankrupt company is back on it’s feet doing what it does best… destroying investors wealth!
“The company is also keeping its name Nakheel and intends to rebuild its tattered reputation with customers, suppliers and bankers.”
Good to see Dubai pulling itself up by its bootstraps to come out of this recession.