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Nakheel bounces back, gets tripped up
Troubled Dubai World’s troubled developer Nakheel has resumed work on a number of troubled projects, but no sooner is it back on course than it strolls into more trouble.
December 22, 2010 3:39 by Samuel Potter
Poor old Nakheel. No sooner has the troubled property developer hauled itself back onto its feet, than it finds another obstacle to trip over.
The National reported this week that the company is showing signs of “bouncing back.” Not exactly a confident endorsement of the company’s current prospects, but after the last year or so that’s positive news indeed. The paper says that the company has resumed work on a number of projects since the summer. If you recall, in August it announced that it was restarting construction on six residential projects (Jumeirah Park, Al Furjan, Jumeirah Village, Jumeirah Islands Mansions, Jumeirah Heights Clusters and Al Badrah).
So what’s new? Well, nothing if you read the story. It’s just the National filling space, but it does provide a useful counterpoint to the news in the Financial Times that Nakheel has lost out on a case that could leave it out of pocket – at least in its view.
Here’s the detail: a Dubai tribunal has issued a ruling preventing Nakheel from claiming extra fees from a buyer involved with its infamous World project. According to the paper, Nakheel has sought hundreds of millions in “delay fees” from clients who have made down payments on property on the World, but missed scheduled payments.
The judgment surrounds Nakheel’s consolidation agreements. Around a thousand have been completed since the downturn struck; they are part of Dubai World’s restructuring agreement on $25 billion of debt. A consolidation agreement transfers payments from one client to another, in this particular case Nakheel was to transfer down payments on two island plots to mainland plots, according to the FT. The basic idea is that the money a buyer has placed down on an unfinished project is transferred to a finished one, so that they can profit from finished real estate.
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