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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
The claimants paid an extra $3 million in February to effect the transaction, but Nakheel later demanded AED 41 million in additional delay fees (a penalty for two late payments for the islands). Nakheel refused to hand over the 750 mainland units (at Jumeirah Village, apparently) for Diamond Developers (the claimants) to pass on to its buyers, saying it had not signed the settlement agreement. Nakheel has now been ordered to complete the consolidation.
The decision could trigger a wave of further claims at the Dubai World tribunal, says the FT. Dubai World is Nakheel’s parent company, and the tribunal has been set up to handle all disputes related to it. “The result is already drawing interest from other purchasers in similar situations,” says Jonathon Davidson of legal firm Davidson & Co, which represented the claimants.
It won’t be a surprise if the decision prompts further claims, particularly relating to the World. The World project, a series of manmade islands off the coast of Dubai, has been plagued with problems. Buyers complain of a lack of basic infrastructure; that has contributed to a lack of development, which has already been stifled by the economic downturn and subsequent questions of viability. According to reports, a number of investors/developers have entered consolidation agreements with Nakheel and have been subsequently hit with the delay fees.
In addition, Nakheel has also come under fire at Jumeirah Golf Estates, where last month’s Dubai World Championships was held. According to villa owners in Lime Tree Valley, construction on their buildings has been completed but more than a year later there are still no utilities. Nakheel is responsible for their installation, and says it will happen in “early 2011.” But given the long wait so far, owners would be forgiven for not holding their breaths.
So much for bouncing back.
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