Another one for the "Dubai, Capital of The U-turn" file. After announcing at the end of last week that they wouldn't be taking part in the Cityscape exhibitions, Nakheel and Emaar have had a joint change of minds and have now announced that they will. Limitless have announced that they will not take part this year, probably because there's nobody left.
Source: ArabianBusiness.com
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State-owned master developer Nakheel on Saturday said it would participate in Cityscape Dubai after all, a decision taken following tals with the event organisers.
The company, the developer of iconic projects, like the Palm Jumeirah and The World, said in a statement sent to Arabian Business that the decision was made "following discussions with various industry stakeholders, including partners and the leading event’s organisers".
Its announcement was followed by a similar change of mind from Emaar Properties which said its decision "follows discussions with the various agencies involved in organising the event", it was reported by Zawya Dow Jones newswire.
Both Nakheel and Emaar had said on Thursday that they would not be taking part in Dubai's premier property show.
But Nakheel's statement on Saturday added that it would focus on "exhibiting communal properties on several of its developments that are close to completion".
Nakheel said it had recently completed the handover of 33 islands on The World and is scheduled to complete property handovers on a number of other developments in its portfolio.
The company is also gearing up for the inaugural Dubai World Championship golf tournament at Jumeirah Golf Estates in November.
A Nakheel spokesperson added the company was expecting "a very active last quarter 2009" and was focusing on delivering units and services to existing investors and residents, without giving further details.
Showing posts with label Emaar. Show all posts
Showing posts with label Emaar. Show all posts
Sunday, 20 September 2009
Friday, 18 September 2009
Emaar, Nakheel both no shows at 2009 Cityscape
Source: ArabianBusiness 17 September 09
Photo of one of the Cityscape models Dubai 2008
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Dubai real estate giants Emaar and Nakheel revealed on Thursday they would not be taking part in Cityscape this year.
The developers said they would forego the massive business-to-business real estate investment event, which attracts thousands of visitors every year, to concentrate on the completion and handover of projects amid a sharp downturn.
“Emaar's focus continues to be on completion of the projects in Dubai and internationally. With the opening of The Dubai Mall and The Dubai Fountain and Burj Dubai scheduled to open this year, Emaar's concentrated efforts are towards making the Downtown Burj Dubai community one of the best developments,” a spokesman for Emaar said in a statement sent to Arabian Business.
“As such we have taken a strategic decision not to participate in Cityscape 2009, but will evaluate our participation in Cityscape 2010 based on our objectives, strategy and announcements next year,” the company added.
A spokesman for Nakheel, the state controlled private developer, said: "After careful consideration, Nakheel has decided it will not participate in Cityscape Dubai 2009. The developer of iconic projects, like the Palm Jumeirah and The World in Dubai, determined it was more prudent to focus on property handovers on several of its developments that are close to completion."
Cityscape in Dubai attracts the biggest developers in the region and is seen is a key event in which to launch and sell projects and close multi-million dollar deals.
Last month Arabian Business reported that visitor and exhibitor numbers would be 30 per cent down on last year, when the event drew record crowds.
Saturday, 1 August 2009
Possible $4bn claim on Burj Dubai
During their visit to Dubai 2-3 months ago, the gents from Seoul consulted local law firm Al Tamimi & Co regarding the Korean corporate giant Samsung's involvement in the Burj Dubai project. The first 'print' acknowledgement of what, until now, has been a hot rumour in legal circles, has now appeared on Legal 500. ================================
'Construction: Within Construction, Al Tamimi & Company is a third tier firm, Al Tamimi & Company lost its head of construction and engineering Edward Sunna in May 2008. It does however continue to receive important instructions, notably in the contentious segment. It recently advised Samsung Corporation Engineering & Construction Group in connection with a $4.1bn claim relating to the famous Burj Dubai Tower.'
Monday, 13 July 2009
Burj Dubai opening delayed
From The National 13 July 09
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The Burj Dubai, the tallest tower in the world, will be completed in December, three months later than scheduled, according to two contractors involved with the project.
The contractors said work still needed to be completed outside and inside the building and the new deadline was December.
A person close to Emaar Properties, the company developing the Burj Dubai, dismissed previous reports that there would be a “soft opening” on Sept 9 to coincide with the launching of the first phase of Dubai Metro. The date was never confirmed by the company, the person said. Emaar would not confirm the December opening, but said the building was scheduled to open this year.
“More details on the official launch will be provided in due course,” Emaar said.
Mohammed Alabbar, the chairman, said last June the project would be ready by September this year. Emaar has been tight-lipped over the final height of the Burj, which is thought to have topped out earlier this year at 818 metres. Some reports have suggested the building could reach 888 metres.
Burj Dubai is part of the Dh73.4 billion (US$19.98bn) Downtown Burj Dubai development.
Emaar, the largest developer in the UAE, is also expected to be chosen to manage the development of what could be the next tallest tower in the world, the 1km Kingdom Tower in Saudi Arabia.
The skyscraper is part of the Dh98.06bn Kingdom City project in Jeddah.
Emaar said last month it was in final contract negotiations to manage the entire project.
The Burj Dubai, the tallest tower in the world, will be completed in December, three months later than scheduled, according to two contractors involved with the project.
The contractors said work still needed to be completed outside and inside the building and the new deadline was December.
A person close to Emaar Properties, the company developing the Burj Dubai, dismissed previous reports that there would be a “soft opening” on Sept 9 to coincide with the launching of the first phase of Dubai Metro. The date was never confirmed by the company, the person said. Emaar would not confirm the December opening, but said the building was scheduled to open this year.
“More details on the official launch will be provided in due course,” Emaar said.
Mohammed Alabbar, the chairman, said last June the project would be ready by September this year. Emaar has been tight-lipped over the final height of the Burj, which is thought to have topped out earlier this year at 818 metres. Some reports have suggested the building could reach 888 metres.
Burj Dubai is part of the Dh73.4 billion (US$19.98bn) Downtown Burj Dubai development.
Emaar, the largest developer in the UAE, is also expected to be chosen to manage the development of what could be the next tallest tower in the world, the 1km Kingdom Tower in Saudi Arabia.
The skyscraper is part of the Dh98.06bn Kingdom City project in Jeddah.
Emaar said last month it was in final contract negotiations to manage the entire project.
Thursday, 9 July 2009
Emaar merger likely to be "distressing"
A merger between Dubai's Emaar Properties and three local firms is likely to be more distressing than supportive due to strategy uncertainty and exposure to the suffering property sector, EFG-Hermes said.Dubai Holding, owned by the ruler of Dubai, and Emaar said last month the builder of the world's tallest tower would merge with Dubai Properties, Sama Dubai and leisure developer Tatweer.
"While the merger might result in the creation of a stronger operational/financial entity with better access to funding and ultimately greater control over supply, there is no visibility regarding the strategy of the combined entity," EFG-Hermes said in a report.
The deal, which has an unknown valuation, could lead to a substantial dilution for Emaar shareholders, with Dubai Holding firms unlikely to bring liquidity to the new entity, the bank said.
It added the government ownership level in Emaar could rise to as much as 89 percent from 32 percent.
Emaar's shares have fallen nearly 25 percent since the merger was announced, and were off 6.95 percent at AED2.41 at 0849 GMT on Wednesday. Dubai's index was down 3.5 percent.Ratings firm Moody's Investors Service said late last month it placed Emaar on review for downgrade, and downgraded Dubai Holding to A3 from A2.
The increased exposure of the combined entity to Dubai's fragile real estate sector was also a concern, EFG-Hermes said.
Property prices in the emirate's once-booming real estate sector have fallen 45 percent from peaks in 2008 and are likely to fall as much as 60 percent overall, it added.
Dubai house prices will fall another 20 percent this year as the emirate continues to suffer a sharp economic downturn, a Reuters poll showed last month. (Reuters)
Monday, 29 June 2009
Share slump follows Emaar merger announcement
From ArabianBusiness.com 29 June 09
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Dubai's Emaar Properties said on Sunday the entity resulting from a proposed merger with three units of Dubai Holding, owned by the emirate's ruler, will have combined assets worth AED194bn ($52.85bn).
Emaar Properties' shares plunged after announcing merger plans, dragging Dubai's index to its biggest one-day fall for seven months.
Emaar, which is building the world's tallest tower in Dubai, and Dubai Holding announced a plan on Friday to merge the developer with real estate units Dubai Properties, Sama Dubai, and leisure developer Tatweer – all prominent players in a sector badly hit by the global financial crisis.
The new entity would have AED13.4bn of debt obligations, around 7 percent of total assets, Emaar chairman Mohammed Alabbar said in a statement on the bourse website.
The property developer also said its own total book value of assets at the end of March was AED68bn, with AED10bn of debt obligations.
"The proposed consolidation will create a robust and strategic asset base while joining the strengths of the management teams and employees of these companies," said Alabbar.
Dubai Properties, Sama Dubai and Tatweer had combined total assets of AED126bn at the end of last year, with around AED3.4bn worth of external debt obligations, the company said.
Property prices in Dubai have slumped since last year when the global economic crisis and a drop in oil prices ended an economic boom in the Gulf region.
Emaar, the largest listed Arab developer, which is 31.2 percent owned by the ruler, said the consolidation process will take around four months.
Tatweer said earlier this month the bankruptcy of its partner Six Flags, one of the largest theme park operators, would not delay a multi-billion dirham park project in Dubai.
Tatweer is building at least seven theme parks in the Gulf Arab emirate.
Dubai Holding said in February it would merge back-office operations at Dubai Properties, Sama Dubai and Mizin to cut costs.
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Dubai's Emaar Properties said on Sunday the entity resulting from a proposed merger with three units of Dubai Holding, owned by the emirate's ruler, will have combined assets worth AED194bn ($52.85bn).
Emaar Properties' shares plunged after announcing merger plans, dragging Dubai's index to its biggest one-day fall for seven months.
Emaar, which is building the world's tallest tower in Dubai, and Dubai Holding announced a plan on Friday to merge the developer with real estate units Dubai Properties, Sama Dubai, and leisure developer Tatweer – all prominent players in a sector badly hit by the global financial crisis.
The new entity would have AED13.4bn of debt obligations, around 7 percent of total assets, Emaar chairman Mohammed Alabbar said in a statement on the bourse website.
The property developer also said its own total book value of assets at the end of March was AED68bn, with AED10bn of debt obligations.
"The proposed consolidation will create a robust and strategic asset base while joining the strengths of the management teams and employees of these companies," said Alabbar.
Dubai Properties, Sama Dubai and Tatweer had combined total assets of AED126bn at the end of last year, with around AED3.4bn worth of external debt obligations, the company said.
Property prices in Dubai have slumped since last year when the global economic crisis and a drop in oil prices ended an economic boom in the Gulf region.
Emaar, the largest listed Arab developer, which is 31.2 percent owned by the ruler, said the consolidation process will take around four months.
Tatweer said earlier this month the bankruptcy of its partner Six Flags, one of the largest theme park operators, would not delay a multi-billion dirham park project in Dubai.
Tatweer is building at least seven theme parks in the Gulf Arab emirate.
Dubai Holding said in February it would merge back-office operations at Dubai Properties, Sama Dubai and Mizin to cut costs.
Tuesday, 16 June 2009
Explain yourselves! UAE Capital and Securities Authority to Emaar
From Reuters and WAM (the official UAE News Agency)
On Sunday Emaar's shares rose 7.18% after Kingdom Holdings (KSA) announced that Emaar would invest in Kingdom's Jeddah development which will include The World's Next Tallest Tower. However, Emaar's share price fell 5.7% yesterday following Emaar's announcement that it was not investing in the Jeddah development but merely "offer[ing] management services against a fee". Kingdom Holding's share price has also fallen 2.7 percent.
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The UAE bourse regulator has asked Emaar Properties to give detailed clarification about a deal with Saudi Arabia's Kingdom Holding, the official WAM news agency said on Monday.
Emaar on Sunday denied it was investing in a development by Saudi Arabia's Kingdom Holding that will feature what would be the world's tallest tower, but said it was in a deal to offer management services against a fee.
"The Capital and Securities Authority has asked ... that Emaar Properties presents a clarification about the deal signed with Kingdom Holding that includes the details about the deal, its nature, value and the possible impact on the earnings of Emaar and in which period," WAM reported.
Emaar shares surged 7.18 percent on Sunday, the day after Kingdom Holding Co said it had appointed the Dubai-based firm as developer of the project, with a total investment of at least 100 billion riyals ($26.7 billion). The share tumbled 5.74 percent on Monday.
"The statement from Kingdom Holding was misunderstood, Emaar clarified its role in the project today," said Roy Cherry, Shuaa Capital vice-president for research.
"Emaar has been appointed supervisor on the project, against this service the company will charge a fee. As such it will not be exposed to the risks nor reap the full rewards of this 100 billion riyal project.
"Kingdom Holding, owned by billionaire Prince Alwaleed bin Talal, said on Saturday in an emailed statement that Emaar would be in charge of developing and supervising the construction of the Kingdom Tower.
Emaar, the region's largest property developer, is currently constructing the world's tallest tower, Burj Dubai, in the emirate - a regional trade and tourism hub.
Prince Alwaleed, the chairman of Kingdom Holding, signed the deal on behalf of Jeddah Economic Co with Emaar Chairman Mohamed Alabbar, Kingdom said in its statement on Saturday.
Saudi Arabia, the largest Arab economy, launched two large projects in the Red Sea port city of Jeddah in October. They include the construction of a tower that will be more than 1,000 metres (yards) high.
The kingdom needs one million houses by 2014 to meet the needs of its growing population, and there are shortages in residential, commercial, retail and hospitality property in Riyadh, Jeddah, Mecca, Medina and the Eastern Province, HSBC said in a report earlier this month.
On Sunday Emaar's shares rose 7.18% after Kingdom Holdings (KSA) announced that Emaar would invest in Kingdom's Jeddah development which will include The World's Next Tallest Tower. However, Emaar's share price fell 5.7% yesterday following Emaar's announcement that it was not investing in the Jeddah development but merely "offer[ing] management services against a fee". Kingdom Holding's share price has also fallen 2.7 percent.
======================
The UAE bourse regulator has asked Emaar Properties to give detailed clarification about a deal with Saudi Arabia's Kingdom Holding, the official WAM news agency said on Monday.
Emaar on Sunday denied it was investing in a development by Saudi Arabia's Kingdom Holding that will feature what would be the world's tallest tower, but said it was in a deal to offer management services against a fee.
"The Capital and Securities Authority has asked ... that Emaar Properties presents a clarification about the deal signed with Kingdom Holding that includes the details about the deal, its nature, value and the possible impact on the earnings of Emaar and in which period," WAM reported.
Emaar shares surged 7.18 percent on Sunday, the day after Kingdom Holding Co said it had appointed the Dubai-based firm as developer of the project, with a total investment of at least 100 billion riyals ($26.7 billion). The share tumbled 5.74 percent on Monday.
"The statement from Kingdom Holding was misunderstood, Emaar clarified its role in the project today," said Roy Cherry, Shuaa Capital vice-president for research.
"Emaar has been appointed supervisor on the project, against this service the company will charge a fee. As such it will not be exposed to the risks nor reap the full rewards of this 100 billion riyal project.
"Kingdom Holding, owned by billionaire Prince Alwaleed bin Talal, said on Saturday in an emailed statement that Emaar would be in charge of developing and supervising the construction of the Kingdom Tower.
Emaar, the region's largest property developer, is currently constructing the world's tallest tower, Burj Dubai, in the emirate - a regional trade and tourism hub.
Prince Alwaleed, the chairman of Kingdom Holding, signed the deal on behalf of Jeddah Economic Co with Emaar Chairman Mohamed Alabbar, Kingdom said in its statement on Saturday.
Saudi Arabia, the largest Arab economy, launched two large projects in the Red Sea port city of Jeddah in October. They include the construction of a tower that will be more than 1,000 metres (yards) high.
The kingdom needs one million houses by 2014 to meet the needs of its growing population, and there are shortages in residential, commercial, retail and hospitality property in Riyadh, Jeddah, Mecca, Medina and the Eastern Province, HSBC said in a report earlier this month.
Monday, 15 June 2009
Emaar denies deal with Kingdom Holding to develop world's tallest tower
From the Gulf News 15 June '09
Despite the announcement from Kingdom Holding earlier this week, it appears there's been a 'misunderstanding' and Emaar's having no role in developing The World's Next Highest Tower to be located in Jeddah. FYI, Prince Alwaleed is the largest shareholder in Citigroup.
Despite the announcement from Kingdom Holding earlier this week, it appears there's been a 'misunderstanding' and Emaar's having no role in developing The World's Next Highest Tower to be located in Jeddah. FYI, Prince Alwaleed is the largest shareholder in Citigroup.
=========================
Emaar Properties on Monday issued a denial that it had made any deal with Saudi Arabia's Kingdom Holding Company on developing the world's tallest tower with a total investment of at least 100 billion riyals ($26.7 billion).
Kingdom Holding, owned by billionaire Prince Alwaleed bin Talal, said on Saturday in an emailed statement that Emaar would be in charge of developing and supervising the construction of the Kingdom Tower.
The news saw a surge in Emaar's shares rise up to to 7.8 per cent.
In a statement issued to Reuters, the Dubai based properties said that it will not invest in any projects of this sort.
Emaar is currently constructing the world's tallest tower, Burj Dubai, in the emirate - a regional trade and tourism hub.
Emaar Properties on Monday issued a denial that it had made any deal with Saudi Arabia's Kingdom Holding Company on developing the world's tallest tower with a total investment of at least 100 billion riyals ($26.7 billion).
Kingdom Holding, owned by billionaire Prince Alwaleed bin Talal, said on Saturday in an emailed statement that Emaar would be in charge of developing and supervising the construction of the Kingdom Tower.
The news saw a surge in Emaar's shares rise up to to 7.8 per cent.
In a statement issued to Reuters, the Dubai based properties said that it will not invest in any projects of this sort.
Emaar is currently constructing the world's tallest tower, Burj Dubai, in the emirate - a regional trade and tourism hub.
Saturday, 13 June 2009
Emaar to develop Saudi kilometre high skyscraper
The Jeddah tower From a Kingdom Holding (KSA) Press Release 13 June '09 and Zawya.
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Saudi Prince Alwaleed bin Talal's Kingdom group said Saturday it had signed Dubai-based Emaar to develop and supervise the construction of a kilometre-high tower in Jeddah.
The Jeddah Kingdom City and Kingdom Tower will comprise 23 million square metres (247 million square feet) of commercial, residential and office space on 530 hectares of land near Jeddah's international airport, Kingdom said in a statement. The Kingdom Tower was unveiled first in 2003 and in 2007 the Kingdom group announced that the US-based engineering firm Bechtel would oversee the project. Kingdom Tower is part of the Kingdom City development which will be one of the largest and most comprehensive real estate projects to be built in Saudi Arabia located at Obhur, North of the creek of Jeddah and the mountains to the east.
Prominently located on a prime site, the master plan, encompassing 5.3 square kilometers. Kingdom City in Jeddah is 20 km from the old city of Jeddah near King Abdulaziz International Airport. The centerpiece of the development will be the landmark Kingdom Tower. Kingdom City is expected to house 80,000 residents and accommodate 250,000 visitors who will enjoy its facilities; lakes, canals, water sports and other leisure activities.
Prince Alwaleed commented: "The alliance between Kingdom Holding Company and EMAAR is strategic."
EMAAR are in charge of developing and supervising the construction of Jeddah Kingdom City land and Kingdom Tower, the highest in the world. EMAAR was selected by Kingdom Holding from 5 other international developers, for their previous proven experience in the development of mega projects, their knowledge of the area and social setup. EMAAR was able to bring together an experienced team within a week from the signing to work on the development, master planning, traffic study, environment and updating market research and commencement of ground work. Furthermore, the preliminary license was obtained and the EMAAR team is working closely and in co-ordination with the Jeddah municipality.
The centrepiece of the 100 billion riyals (26.6 billion dollar) project will be a 1,000 metre-high (3,280 feet) needle-like skyscraper, taller than any building completed or under construction in the world.
The current tallest building, the Burj Dubai, which towers over the Dubai emirate to the east of Saudi Arabia at a current height of 800 metres (2,624 feet) while still not completed, is being built by Emaar.
According to industry reports Bechtel pulled out early this year.
========================
Saudi Prince Alwaleed bin Talal's Kingdom group said Saturday it had signed Dubai-based Emaar to develop and supervise the construction of a kilometre-high tower in Jeddah.
The Jeddah Kingdom City and Kingdom Tower will comprise 23 million square metres (247 million square feet) of commercial, residential and office space on 530 hectares of land near Jeddah's international airport, Kingdom said in a statement. The Kingdom Tower was unveiled first in 2003 and in 2007 the Kingdom group announced that the US-based engineering firm Bechtel would oversee the project. Kingdom Tower is part of the Kingdom City development which will be one of the largest and most comprehensive real estate projects to be built in Saudi Arabia located at Obhur, North of the creek of Jeddah and the mountains to the east.
Prominently located on a prime site, the master plan, encompassing 5.3 square kilometers. Kingdom City in Jeddah is 20 km from the old city of Jeddah near King Abdulaziz International Airport. The centerpiece of the development will be the landmark Kingdom Tower. Kingdom City is expected to house 80,000 residents and accommodate 250,000 visitors who will enjoy its facilities; lakes, canals, water sports and other leisure activities.
Prince Alwaleed commented: "The alliance between Kingdom Holding Company and EMAAR is strategic."
EMAAR are in charge of developing and supervising the construction of Jeddah Kingdom City land and Kingdom Tower, the highest in the world. EMAAR was selected by Kingdom Holding from 5 other international developers, for their previous proven experience in the development of mega projects, their knowledge of the area and social setup. EMAAR was able to bring together an experienced team within a week from the signing to work on the development, master planning, traffic study, environment and updating market research and commencement of ground work. Furthermore, the preliminary license was obtained and the EMAAR team is working closely and in co-ordination with the Jeddah municipality.
The centrepiece of the 100 billion riyals (26.6 billion dollar) project will be a 1,000 metre-high (3,280 feet) needle-like skyscraper, taller than any building completed or under construction in the world.
The current tallest building, the Burj Dubai, which towers over the Dubai emirate to the east of Saudi Arabia at a current height of 800 metres (2,624 feet) while still not completed, is being built by Emaar.
According to industry reports Bechtel pulled out early this year.
Friday, 1 May 2009
S&P puts Dubai-based government-related entities on CreditWatch
From Standard & Poor's website, 30th April '09
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Standard & Poor's Ratings Services today said it had placed the ratings on the following Dubai-based government-related entities (GREs) on CreditWatch with negative implications:
1. DIFC Investments LLC,
2. DP World Ltd.,
3. Jebel Ali Free Zone (FZE),
4. Dubai Multi Commodities Centre Authority (DMCC),
5. Dubai Holding Commercial Operations Group LLC (DHCOG), and
6. Emaar Properties PJSC (collectively, "the Rated GREs").
In addition, we have placed the notes issued by Thor Asset Purchase (Cayman) Ltd. (Thor), which are securitized by cash flows from a revolving pool of existing and future receivables originated by Dubai Electricity and Water Authority (DEWA; not rated), as well as the notes issued by JAFZ Sukuk Ltd. (collectively, "The Notes"), on CreditWatch with negative implications.
------------------------------------
Standard & Poor's Ratings Services today said it had placed the ratings on the following Dubai-based government-related entities (GREs) on CreditWatch with negative implications:
1. DIFC Investments LLC,
2. DP World Ltd.,
3. Jebel Ali Free Zone (FZE),
4. Dubai Multi Commodities Centre Authority (DMCC),
5. Dubai Holding Commercial Operations Group LLC (DHCOG), and
6. Emaar Properties PJSC (collectively, "the Rated GREs").
In addition, we have placed the notes issued by Thor Asset Purchase (Cayman) Ltd. (Thor), which are securitized by cash flows from a revolving pool of existing and future receivables originated by Dubai Electricity and Water Authority (DEWA; not rated), as well as the notes issued by JAFZ Sukuk Ltd. (collectively, "The Notes"), on CreditWatch with negative implications.
"The CreditWatch placements reflect our opinion of the likelihood of downgrades of the Rated GREs and The Notes if the potential for extraordinary government support to the Rated GREs and The Notes is not affirmed by the government of Dubai," Standard & Poor's credit analyst Farouk Soussa said. "The need for Dubai government support is potentially increasing in the face of deteriorating fundamentals for some of the Rated GREs."
"The action results from our learning that a review of debt strategy at Nakheel (not rated), a material subsidiary of government-owned Dubai World (also not rated) and a key Dubai-based GRE, may include the possibility of a debt exchange. Recent media reports indicate that Nakheel is opening a dialogue with existing holders of its $3.5 billion sukuk coming due in December 2009, with a view to restructuring the debt."
Standard & Poor's has discussed these reports with Dubai World and has been told that "all options" in dealing with outstanding liabilities are being considered as part of an ongoing review, including a restructuring.
Standard & Poor's has also invited comment from the government of Dubai, which has declined to either refute the possibility of a debt restructuring at any of its Rated GREs or to provide clear assurances that all debt obligations of the Rated GREs will be met in a full and timely manner as per their original terms.
The primary reason the mere possibility of a debt restructuring in an unrated Dubai-based GRE has been sufficient to trigger a review of all our Rated GREs and The Notes is due to the fact that such a possibility stands at odds with our prior expectation that the government of Dubai is committed to providing extraordinary support to its key GREs, including the Rated GREs, in order to allow them to service their respective obligations in a full and timely manner. This expectation is based in part on repeated representations to Standard & Poor's and to the public by senior government officials and other highly placed individuals, that the government of Dubai is committed to providing such extraordinary support.
"In accordance with our published criteria, a GRE is rated between the inclusive bounds formed by the GRE's stand-alone credit profile and the government rating, with the placement along this rating spectrum a function of our assessment of the potential for extraordinary government support (see "Rating Government-Related Entities: A Primer," published on June 14, 2006, on RatingsDirect). All of the Rated GREs reflect government creditworthiness more than stand-alone credit profiles, though this may shift should the government's support commitment ebbs. In our view, the consideration of a debt restructuring in any key GRE, particularly if it were deemed to be "distressed", increases the uncertainty as to Dubai's intention to provide adequate support in times of stress. "
"At this stage, we have not had confirmation as to Nakheel or the government's intentions with respect to Nakheel's outstanding sukuk. The CreditWatch placement will hold for the duration of our review, which will focus on confirming these intentions, and then assessing the impact this may or may not have on our view of the likelihood of extraordinary government support with respect to The Notes, and each Rated GRE and its respective obligations," Mr. Soussa said. "We will resolve the CreditWatch placement once the analysis is complete. There is a significant likelihood that the review may result in the downgrade of one or more Rated GREs or The Notes by one or more notches, depending on our assessment of the likelihood of support on a case-by-case basis, and on the stand-alone creditworthiness of each Rated GRE and its respective obligations."
Tuesday, 31 March 2009
After the gold rush: Getting paid in Dubai
This article from the UK construction industry magazine "Building" dated 27 March '09 is the first to talk openly about the failure of Dubai developers to pay their bills resulting in staggering amounts being owed to the large constructions companies.
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It is claimed that the average contractor is owed £50m, while some consultants’ fees are being slashed in half.
New signs of the desperate state of Dubai’s developers are emerging every day. To look at the top three of them is telling: Union Properties has admitted it would welcome a merger after shelving its flagship £320m Formula One theme park in Dubailand. Emaar recently announced yet more cancelled projects: Asmaran (a 70 million ft2 , £17bn mixed-community scheme billed as “a jewel in the desert”), Maysan (three residential towers, also covering 70 million ft2) and Warsan (500 villas covering 3.4 million ft2). Meanwhile, Nakheel is facing a fraud investigation and has put its £2bn mall expansion plan on hold. It has also been hit by the halving of property prices on its celebrated Palm Jumeira project. Four-bedroom garden homes on a frond are going for £1.2m compared with £2.6m in July.
What went wrong?
The first problem was that many developers were reliant on bank credit rather than oil revenue, as is often thought. Abu Dhabi, the capital of the UAE, has about 10% of the world’s oil, but Dubai has almost none. Banks were happy to keep lending to its developers as long as property prices were going up, and could act as collateral for more lending and more construction. But when property prices started tumbling, this virtuous circle turned vicious and clients ran out of money to pay consultants and contractors.
Contractors across Dubai are having to renegotiate tenders, typically resulting in 15-20% being lopped off their money. The senior contractor says: “Contractors here had been enjoying margins of seven, eight or nine per cent. Now clients are trying to get us to take margins as low as three or even one per cent. They also want to lengthen programmes so that cash flow is less onerous. It’s chaos.”
More pain for consultants is arriving in the form of deferred payment plans. Mark Prior, head of the Middle East for EC Harris, says: “We are discussing deals that would mean we will be paid in six months’ time – or half of what we’re owed in three months and the rest in six.”
Other companies are understood to have been forced to accept payment in the forms of stakes in a development. George Grant, operations director for infrastructure at M&E specialist Drake & Scull, says: “We have no experience of taking equity instead of cash but we would consider it. Our view is we want to work with the clients if it means that work goes ahead.”
Meanwhile, the old model of developers paying contractors with money from sales of units in buildings before it has been completed is a thing of the past. Projects launched on this model are being refinanced. Under the new deals institutional investors are brought in and contractors are forced to accept deferred payments.
Anderson says: “The previous model based on off-plan sales is no longer viable, so total financing is being done by investment, and selling is happening when the building is under construction.”
As a result, development is less gung-ho, he adds, which in turn means people are earning lower fees over a longer period. Developments are being built in phases. “Before, a developer would build three high-rises at once; now they are building them one by one. They build a tower, sell it, then use the proceeds to build the next one.”
He says at the moment you have the best chance of being paid if you are needed to help with the process of putting a project on hold. “If you are not essential – that is, if you are not putting remedial works in place so the client can put work on hold – you will not get paid.”
He may be right, but the question of when they will pay is still causing UK firms to fret. Emaar, to take one developer, has just had its debt downgraded by Standard & Poor, the ratings agency, from –A to BBB+. It made a loss of 1.6bn dirhams (£304m) in the last quarter of 2008. Meanwhile, the government has warned that the economy may shrink in the second half of 2009.
Most developers are declining to comment on the payment issue, including Nakheel. A spokesperson from developer Limitless did speak to us and insisted that all creditors would be paid. She said: “We’re renegotiating some payment plans, but not all, as part of our overall response to the global situation.”
An Emaar spokesperson also sent the following statement: “Payments for contractors and consultants are based on a credit cycle and set deliverables agreed with them. All payments that meet the criteria have been honoured and will continue to be cleared, in line with our agreements.”
But for those still waiting to be paid and suffering, what recourse is there? Another source says: “Historically, if you’re not getting paid here, you don’t rock the boat; the last thing you do is resort to litigation. But now people are getting highly emotional. If you’re working on a huge project and you recruited a huge team to do it, and you’re owed millions, well maybe it is time to sue.”
He adds that he expects to see “some big disputes in the next three months”, which is perhaps ironic considering that Dubai is aiming to become a regional dispute resolution centre. Prior is among those who admit that “litigation is an option we have our eye on”. It’s a statement that would have been unthinkable in Dubai a year ago.
As the legal cases loom (see box below,it’s clear that relations between clients and project teams are strained to the limit. The head of another UK consultancy, who asked not be named, revealed a conversation he had with a senior emirati working for a big developer. “I said to him, if I don’t get my money, I will sue. He said, you will never work in Dubai again. I said, why would I want to?”
-------------------------------------------------
It is claimed that the average contractor is owed £50m, while some consultants’ fees are being slashed in half.
Dubai is looking more and more like a place with a great future behind it. You can see that most clearly on the billboards erected beside empty sites and motionless tower cranes. “Ordinary is for other people” says the one where the Trump Tower was to have gone. Well, nemesis follows hubris: at least half of the emirate’s construction projects are “on hold” according to research firm Proleads, and nobody knows when, or if, they will start again.
New signs of the desperate state of Dubai’s developers are emerging every day. To look at the top three of them is telling: Union Properties has admitted it would welcome a merger after shelving its flagship £320m Formula One theme park in Dubailand. Emaar recently announced yet more cancelled projects: Asmaran (a 70 million ft2 , £17bn mixed-community scheme billed as “a jewel in the desert”), Maysan (three residential towers, also covering 70 million ft2) and Warsan (500 villas covering 3.4 million ft2). Meanwhile, Nakheel is facing a fraud investigation and has put its £2bn mall expansion plan on hold. It has also been hit by the halving of property prices on its celebrated Palm Jumeira project. Four-bedroom garden homes on a frond are going for £1.2m compared with £2.6m in July.
Where does all this leave the British consultants and contractors who count these developers among their top clients?
The short answer is, cash-strapped. Some are seeing their fees slashed – a Building survey of more than 150 people working in the UAE found that two-thirds of them have been asked to drop their prices recently. Others have been waiting for payments for six months and many are considering legal action.
What went wrong?
The first problem was that many developers were reliant on bank credit rather than oil revenue, as is often thought. Abu Dhabi, the capital of the UAE, has about 10% of the world’s oil, but Dubai has almost none. Banks were happy to keep lending to its developers as long as property prices were going up, and could act as collateral for more lending and more construction. But when property prices started tumbling, this virtuous circle turned vicious and clients ran out of money to pay consultants and contractors.
Abu Dhabi’s $10bn (£7bn) loan to Dubai announced in February appeared to offer a glimmer of hope, especially when the Dubai government said this money would mainly go to state-linked developers. But questions are being raised about how far it will go. For one thing, Dubai has declared that it owes at least $80bn (£56bn), of which almost a quarter falls due for repayment this year. The boss of a UK consultant with a large presence in Dubai says: “The $10bn won’t even cover developers’ interest payments.” He adds that compounding this is the fact that Dubai has so few ways to make money. Last year, 65% of its GDP was from real estate. He adds: “And there is no oil, no exports, no tax and 80% of the population are expats, many of whom are leaving.” Now the fee cuts are spreading to Abu Dhabi, where developer Aldar has written to consultants to ask them to cut fees – on live projects by up to 20%.
Late payments and fee cuts
So how bad has it got for UK firms? Certainly there is no sign that the government cash is filtering through. A senior source at a UK contractor in Dubai is fuming. He says: “The average contractor here is owed about £50m.”
So how bad has it got for UK firms? Certainly there is no sign that the government cash is filtering through. A senior source at a UK contractor in Dubai is fuming. He says: “The average contractor here is owed about £50m.”
A source at a UK project manager says some payments from Dubai developers are up to six months late; Mace and EC Harris are saying openly that it is taking at least three months to get paid. WSP is estimated to have set aside £4m to cover bad debts and project management consultancy Blair Anderson now employs someone full-time solely to chase payments in Dubai.
Meanwhile, the head of a British specialist working on a major project that stopped in October says his firm was paid 20% of what it was owed in January. He said he has no idea when he will get the rest, although he believes it will come through eventually, as his client is linked to the Dubai government.
Meanwhile, the head of a British specialist working on a major project that stopped in October says his firm was paid 20% of what it was owed in January. He said he has no idea when he will get the rest, although he believes it will come through eventually, as his client is linked to the Dubai government.
Then there are the fee cuts, which are affecting most firms. Evan Anderson, group director of Blair Anderson, says the firm’s fees are between 20% and 30% lower than six months ago. But he is still better off than many architects, whose fees Anderson is renegotiating on behalf of clients. He says: “We are doing a lot of reverse briefing of designers. We’re asking them to cut their fees by up to half and to change the materials they’re specifying to bring down costs by about 30%.”
Contractors across Dubai are having to renegotiate tenders, typically resulting in 15-20% being lopped off their money. The senior contractor says: “Contractors here had been enjoying margins of seven, eight or nine per cent. Now clients are trying to get us to take margins as low as three or even one per cent. They also want to lengthen programmes so that cash flow is less onerous. It’s chaos.”
More pain for consultants is arriving in the form of deferred payment plans. Mark Prior, head of the Middle East for EC Harris, says: “We are discussing deals that would mean we will be paid in six months’ time – or half of what we’re owed in three months and the rest in six.”
Other companies are understood to have been forced to accept payment in the forms of stakes in a development. George Grant, operations director for infrastructure at M&E specialist Drake & Scull, says: “We have no experience of taking equity instead of cash but we would consider it. Our view is we want to work with the clients if it means that work goes ahead.”
Others are more wary. Anderson has refused payment in shares: “They offer you 1% of a development that you have had no involvement on and no idea how it works. If you invest in something you want to do detailed research on it.”
Meanwhile, the old model of developers paying contractors with money from sales of units in buildings before it has been completed is a thing of the past. Projects launched on this model are being refinanced. Under the new deals institutional investors are brought in and contractors are forced to accept deferred payments.
Anderson says: “The previous model based on off-plan sales is no longer viable, so total financing is being done by investment, and selling is happening when the building is under construction.”
As a result, development is less gung-ho, he adds, which in turn means people are earning lower fees over a longer period. Developments are being built in phases. “Before, a developer would build three high-rises at once; now they are building them one by one. They build a tower, sell it, then use the proceeds to build the next one.”
Such is the state of the market that those who are actually getting paid do not want to admit it. Speaking on condition of anonymity, the head of a British architect’s Dubai office said: “I would rather you didn’t put my name in your article because if other people working for my client find out that I’ve been paid, they’ll be demanding that the client pays them too, and then I’ll have to answer to the client.”
He says at the moment you have the best chance of being paid if you are needed to help with the process of putting a project on hold. “If you are not essential – that is, if you are not putting remedial works in place so the client can put work on hold – you will not get paid.”
Will developers ever pay?
The gravest concern of all is caused by rumours that some developers are about to go bust. Despite their government links, there is no guarantee the state will step in to save these firms. A source at a project manager in Dubai says: “It’s impossible to say whether the government will pay developers’ debts or not. State sponsorship is relatively loose here. Nobody knows whether certain developers are going to be mothballed, merged or go bust.”
The gravest concern of all is caused by rumours that some developers are about to go bust. Despite their government links, there is no guarantee the state will step in to save these firms. A source at a project manager in Dubai says: “It’s impossible to say whether the government will pay developers’ debts or not. State sponsorship is relatively loose here. Nobody knows whether certain developers are going to be mothballed, merged or go bust.”
Drake & Scull’s Grant, a Middle East veteran, says: “There’s no doubt some clients have run out of money and will disappear. Not the big names though, they need to renegotiate their finance deals but they will carry on.”
He may be right, but the question of when they will pay is still causing UK firms to fret. Emaar, to take one developer, has just had its debt downgraded by Standard & Poor, the ratings agency, from –A to BBB+. It made a loss of 1.6bn dirhams (£304m) in the last quarter of 2008. Meanwhile, the government has warned that the economy may shrink in the second half of 2009.
Most developers are declining to comment on the payment issue, including Nakheel. A spokesperson from developer Limitless did speak to us and insisted that all creditors would be paid. She said: “We’re renegotiating some payment plans, but not all, as part of our overall response to the global situation.”
An Emaar spokesperson also sent the following statement: “Payments for contractors and consultants are based on a credit cycle and set deliverables agreed with them. All payments that meet the criteria have been honoured and will continue to be cleared, in line with our agreements.”
But for those still waiting to be paid and suffering, what recourse is there? Another source says: “Historically, if you’re not getting paid here, you don’t rock the boat; the last thing you do is resort to litigation. But now people are getting highly emotional. If you’re working on a huge project and you recruited a huge team to do it, and you’re owed millions, well maybe it is time to sue.”
He adds that he expects to see “some big disputes in the next three months”, which is perhaps ironic considering that Dubai is aiming to become a regional dispute resolution centre. Prior is among those who admit that “litigation is an option we have our eye on”. It’s a statement that would have been unthinkable in Dubai a year ago.
As the legal cases loom (see box below,it’s clear that relations between clients and project teams are strained to the limit. The head of another UK consultancy, who asked not be named, revealed a conversation he had with a senior emirati working for a big developer. “I said to him, if I don’t get my money, I will sue. He said, you will never work in Dubai again. I said, why would I want to?”
Disputes in Dubai
Dubai’s legal system is facing a sudden rush of disputes, and there are doubts about how well it is going to handle them. The first problem is the absence of adjudication. Paul Taylor, a partner at lawyer HBJ Gateley Wareing, says: “Unlike in the UK, there is no quick fix in Dubai. Here, arbitration and litigation, are the only ways to get your money.” Even worse, arbitration in Dubai takes up to two years – even longer than in the UK.
Another problem is certification. Of course, getting an engineer’s certificate proving you have done the work and are therefore entitled to be paid is an important piece of ammunition in the fight for your fee. However, in Dubai, Taylor says many contracts include a clause saying that an engineer cannot approve a piece of work without the client’s sign off. “These clauses are being disputed, but it’s still tough.”
People are looking at alternative methods of resolving disputes. Next month a “mediation centre” is being set up that will fast-track dispute resolution through an independent party. Taylor says it is a mid step between amicable settlement and arbitration and could resolve a dispute in two or three weeks. The problem, though, is that it will only work if both parties voluntarily accept the verdict.
Most projects are on the FIDIC contract. The 1999 version contains a clause that allows the use of a dispute resolution board, which can take six to 12 weeks. Earlier versions of the contract do not tend to offer this option.
Even if you do resolve a dispute to your satisfaction, then you have the problem of enforcing the decision. Taylor recommends a “more commercial” way of tackling a dispute. “Knock on the client’s door and try to explain your difficulties face to face. And get your local sponsor to act as an intermediary.” As a last resort, you can threaten to terminate the work you’re doing for the client – an approach that will only work if the project is continuing.
Dubai’s legal system is facing a sudden rush of disputes, and there are doubts about how well it is going to handle them. The first problem is the absence of adjudication. Paul Taylor, a partner at lawyer HBJ Gateley Wareing, says: “Unlike in the UK, there is no quick fix in Dubai. Here, arbitration and litigation, are the only ways to get your money.” Even worse, arbitration in Dubai takes up to two years – even longer than in the UK.
Another problem is certification. Of course, getting an engineer’s certificate proving you have done the work and are therefore entitled to be paid is an important piece of ammunition in the fight for your fee. However, in Dubai, Taylor says many contracts include a clause saying that an engineer cannot approve a piece of work without the client’s sign off. “These clauses are being disputed, but it’s still tough.”
People are looking at alternative methods of resolving disputes. Next month a “mediation centre” is being set up that will fast-track dispute resolution through an independent party. Taylor says it is a mid step between amicable settlement and arbitration and could resolve a dispute in two or three weeks. The problem, though, is that it will only work if both parties voluntarily accept the verdict.
Most projects are on the FIDIC contract. The 1999 version contains a clause that allows the use of a dispute resolution board, which can take six to 12 weeks. Earlier versions of the contract do not tend to offer this option.
Even if you do resolve a dispute to your satisfaction, then you have the problem of enforcing the decision. Taylor recommends a “more commercial” way of tackling a dispute. “Knock on the client’s door and try to explain your difficulties face to face. And get your local sponsor to act as an intermediary.” As a last resort, you can threaten to terminate the work you’re doing for the client – an approach that will only work if the project is continuing.
Tuesday, 2 December 2008
The economic tsunami hits the sandy shores of Dubai.
In the past couple of months the world seems to have shifted on its axes (yep, that's the plural of axis). The tsunami that is the world economic downturn has arrived on the sandy shores of the UAE. A couple of weeks ago, the Dubai government announced that it has debts of $80 billion. Abu Dhabi has stepped in with loans to Dubai, but at what cost nobody seems to know, though there are some interesting rumours on the street which involve the future of Emirates Airlines. Several of the major developers here have put what were considered flagship developments "on hold", and redundancies are now happening on a daily basis: 500 people were let go from Nakheel last week, 400 from Emaar, and 70 from the World Trade Centre Real Estate division. There have also been redundancies at Omniyat, Al Ghurair, Damac and Better Homes amongst others.
Meraas has also made a number of staff redundant and their 350 billion dirham Jumeirah Gardens is one of the developments now on the backburner or in CorpSpeak "....we are reviewing...the phasing and roll-out of the Jumeirah Gardens project...". It was the proposed development of Jumeirah Gardens which caused us to be evicted at speed from Satwa by our landlord (Al Ghurair). In the past few months huge sections of Satwa's housing area have been bulldozed and it now seems that those piles of rubble will remain into the foreseeable future as silent monuments to greed gone mad. Still, if the deferral of Jumeirah Gardens means a reprieve for the best Pakistani restaurant in the known universe then its a good thing. Schon Properties developers of the Lagoons have announced they are 'scaling back'. Trump Tower is on hold as of yesterday with resulting redundancies here in Dubai. Australia's largest construction firm Leighton Holdings Group was involved in the building of Trump Tower through its connection with Al Habtoor Engineering. Despite the announcement that Nakheel will cover all Al Habtoor Leighton's costs, Leighton's share price in Australia has dropped 7.3%. All the redundancies referred to are expats but of course the labourers from the sub-continent will be effected immediately too: No work=go home.
The government in the UAE is closed for business for the next 10 days due to Eid so there's no official visa or employment related information available. The websites are no help. I imagine sales of the latest issue of UAE Labour Law at McGrudys have rocketed as a result. There's a growing number of people facing redundancy who can’t find the answers to some very important questions.
1. Once a person is made redundant they and their family have 30 days to leave the country before their visas are cancelled. If they are lucky, they might get 3 months notice period or their employer may hold off cancelling the visa until the employee finds a new job or makes arrangements to move back to their country of origin. 30 days isn't very long to find another job or failing that, organise flights home, pack up a household etc. As the holiday season is close, flights to most Western destination are heavily booked.
2. My understanding is that many of the people being made redundant will also be banned for 6 month from working in UAE. This is a blanket action but the ban can be “bought off” for 1,000 dirhams by the next employer (if there is one…..).
3. How do you get your rent back when its been paid 12 months in advance and you have 30 days to leave the country?
4. Can you get a refund on school fees paid in advance?
5. There is a justifiable fear that the bank accounts of people who’ve been made redundant will be frozen. This happens in Dubai.
6. Will an exit visa system (like that in Saudi) be introduced so no expat resident can leave Dubai unless they can produce a letter from the bank stating that their debts are cleared?
If someone has purchased a property here and, worst case scenario can’t get another job in Dubai, how do they pay the mortgage? Renting is the obvious answer but while rents aren’t going down as yet, the number of renters will fall eventually.
7. What if you’ve bought “off plan” and the development has now been put on hold? In Dubai, the purchaser pays the full price of the unit before they move in, but what if there’s nothing to move into? Residential units in the Lagoons which were initially scheduled for completion by December 2007 are now expected to be ready in 2011.
8. Rumours of increasing numbers of loan defaults are starting to circulate; people who are ‘cutting and running’.
9. As of last week, you cannot get a credit card in Dubai unless you have worked for the same employer for 2 years earning 20,000+ dirhams per month (this from Barclays Bank and confirmed by a contact at HSBC)
10. No loans to lease a car available from any of the banks, strict criteria for loans for vehicle purchase now in place.
I’m no expert and if anyone can help answer any of these questions it’d be appreciated as there are some very worried people searching anxiously for answers.
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