Dubai's Leading Developer Makes Plans to Restart Projects

Commercial News » Commercial Real Estate Edition | By Kevin Brass | September 28, 2010 11:56 AM ET

Nakheel, the troubled Dubai developer, is poised to restart work on eight projects, as it finalizes a deal to rework its debt, the company's chief executive told reporters this week.

A reorganization plan should be completed by the end of the year, including an arrangement to repay Dh4 billion (about $1 billion) to its trade creditors, Nakheel chief Chris O'Donnell said. Under terms of the deal, contractors will be paid 40 percent of the money owed in cash and 60 percent will be covered by a sukuk, an Islamic bond.

A subsidiary of government-controlled Dubai World, Nakheel has already restarted work on the Al Furjan development, after working a deal with the contractor to finish 300 homes.

Other projects that may get a kick start include Jumeirah Park, Jumeirah Village and Jumeirah Islands Mansions. However, plans for the Palm Jebel Ali and Palm Deira, two of the company's iconic artificial islands, remains "unclear," the National reports.

Nakheel says 85 percent of its creditors have approved the deal, although 95 percent is needed to issue the sukuk. The company told Reuters it is "well on target to achieve its 95 percent acceptance of all payables and claims within the near future."

Any sign of progress is certainly welcome news to the thousands of investors who bought off-plan units in the stalled projects. Many of the developments have been selling units since 2003, the National notes.

Nakheel stopped work on a wide variety of projects in the wake of the market slowdown, including plans to build Nakheel Tower, a one-kilometer skyscraper announced in 2008.

Meanwhile, the Dubai government is planning to return to the bond markets next week to raise $1 billion, Bloomberg reports. It will be Dubai's first attempt to sell bonds since Dubai World restructured $24.9 billion in debt.

"Investors are more comfortable with Dubai risk, especially after the announcement of the Dubai World deal with creditors," Anas el Maizi, an Abu Dhabi-based fund manager at Royal Capital PJSC, told Bloomberg.

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