Dubai’s real estate no longer needs a wheelchair?
Since the collapse of the real estate market in Dubai, property developers including Nakheel and Emaar were crippled by the collapse but there may be a ray of hope now
August 2, 2012 3:40 by M. Aldalou
Despite talks of unfinished residential and commercial projects, an excess of supply with a weak demand, Dubai may be seeing a recovery in one of its most important sectors; Real estate.
The largest players in the market, including Nakheel and Emaar have both announced their surge in profits in the first half of this year. Emaar is the developer of the world’s tallest building, yet that has not stopped the property ‘giant’ from suffering through many hindrances along the path to a steady stream of revenue since the strike of the recession.
However, this week they have announced that they have experienced an 82 percent surge in profits; displaying the hopeful glow of the phoenix reborn from the ashes.Emaar saw its net profit in the first six months rise to 1.22 billion dirhams, compared with 671 million dirhams in the corresponding period last year.
“The real estate market in Dubai is turning around, led by the robust performance of key growth sectors including aviation, retail, hospitality, tourism and foreign trade,” said Mohamed Alabbar, chairman of Emaar.
Dubai and Abu Dhabi based hotels have all reported a surge in revenue as well; thanking the strong tourism magnet that continues to grow strong even during the month of Ramadan. Hoteliers are noticing a pattern that grows stronger year by year; displaying the strength of tourism as unfaltering.
Even Nakheel, who has faced more than a few hindrances, what with their constant battle against stubborn landlords refusing to pay service fees and their hope for a further discount before they begin to consider settling their creditors; has experienced a surge in profits that almost skimmed the surface of 40 percent. However, the Dubai based property developer is still in debt and is not ready to pay back yet.
At the height of the property boom in the city, Nakheel’s extravagant developments contributed to its debt woes and have been attempting to get up ever since the crippling real estate collapse. The fatal mistake that property developers committed was increasing the supply of real estate properties without having any projections of demand to meet it.
Nakheel currently has AED 5 billion in creditor payments to make but its chairman hopes that its creditors will take more than 80 percent discount before settlements are made.
“The total claim was about Dhs8 billion. We’ve settled Dhs3 billion. The remaining big boys, they put the big figures, but we’re confident it will be about the same [reduction],” Nakheel’s chairman said.
Photo Source: Worldarchitecturenews.com