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Indebted Nakheel halts property sales in Dubai

30 mei 2011


Indebted Nakheel halts property sales in Dubai

State-backed developer said it is focusing on consolidations and swaps options over unit sales

Nakheel, which overstretched itself building islands in the shape of palms and other ambitious projects, is part of state-owned conglomerate Dubai World

Nakheel, the Dubai developer restructuring $10.8bn in debt, has confirmed it is no longer selling real estate units in the emirate.
The state-backed company, which overstretched itself building islands in the shape of palms and other ambitious projects, said its focus is instead on offering swap options to existing investors.
“Nakheel has stopped selling properties currently, and is focusing on consolidations and swaps options,” a spokesperson said in an emailed statement.
Nakheel offered credit swaps in the wake of Dubai’s real estate crash, to enable buyers to transfer cash from unfinished or halted developments to completed real estate.

The company was one of the biggest casualties of Dubai’s real estate downturn, which saw prices halve from their 2008-peak and almost half of developments in the emirate cancelled.
The developer's inability to meet its debt obligations, in the wake of a property collapse and the global credit crunch, helped trigger Dubai's debt crisis in 2009.
In March, Nakheel said it had paid AED4.6bn ($1.25bn) in overdue payments to trade creditors.
Real estate analysts were divided on news the developer had stopped pursuing property sales, with some seeing it as a sign Nakheel was keen to restore confidence in its projects.
“In good times and bad, looking after existing clients before pursuing new ones makes smart business sense,” said Michael Michael, director of sales and leasing at Landmark Properties.
“The announcement to stop selling properties and focus on consolidation and swap options may restore a degree of customer confidence in Nakheel and its projects.
“I believe the announcement shows a sign of commitment which is always good for the market.”