Nakheel back in the game
The Dubai-based developer has confirmed that it will be using some of the funds given by the government to repay its debtors.
May 28, 2009 12:07 by Aarti Nagraj
The global financial crisis has hit Dubai hard, with the real estate sector bearing the brunt of its effect. In February this year, the Dubai government sold $10 billion worth of bonds to the UAE central bank to raise funds to support state- affiliated companies. During the World Economic Forum earlier this month, the Dubai Department of Finance confirmed that it has distributed over half of the $10 billion, and hopes to raise another $10 billion by the end of the year.
“We realized that the markets would be tight for some of our key players. The bond program is to support the government related entities, since it is tough for corporates to raise money and easier for the sovereigns,” Nasser Al Shaikh, the former director general of the finance department said at the time.
However, he also said that the companies would have to make tough calls. “This is important because it is borrowed money and we need to ensure it can be repaid,” he said.
With the government’s funds in hand, Nakheel is likely to settle its large debts with contractors; but will it be enough? The developer suspended several of its projects, including the Trump International Hotel and Tower, its one kilometer tall tower – the Nakheel Harbour & Tower – and the Worlds of Discovery theme park project.
An improvement in the current economic situation, along with the recovery of the real estate scenario in Dubai may be vital for the developer to get back on track.
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