Dubai Real Estate Giant Gets Backing Of Creditors
Nakheel, a division of indebted state-owned conglomerate Dubai World, has been trying for meeting to convince its creditors to accept new terms of payment in at least 10 thousand 500 million debt. Nakheel hoped to complete the process by the end of the year, but now it seems very unlikely to get it.
The company is negotiating with financial creditors such as banks, creditors and dozens of businesses, including contractors and suppliers who are still awaiting payments due in a while.
The goal is to get the support of at least 95% of its business creditors by the end of the year so that way you can proceed with the restructuring. Nakheel has offered business creditors full payment of its debts, but not all cash. The developer is offering 40% cash and the rest in bonds.
In September, the chief executive of Nakheel, Chris O’Donnell, told The Associated Press that he hoped to complete the restructuring of the entire company’s debt by the end of the year. On Wednesday, a company spokeswoman could not say how much progress had been made in negotiations with the financial creditors.
Solving the debt problems of Nakheel, it would be a considerable progress in efforts to alleviate financial pressures suffered in Dubai. In October, Dubai World managed to secure the full support of creditors for its debt of 24 thousand 900 million dollars, but the real estate division has been more problematic, given the crisis in the sector that has seen them drop to half the prices of home in Dubai.
There is a real opportunity to encourage high-net-worth individuals from the West to live in Dubai with its popular lifestyle and to escape punitive high taxation in their home countries to finance the massive quantitative easing programs over the coming decades.
However, to restore confidence and attract this demographic pool of wealthy buyers, it is necessary to keep pushing hard for credibility across the entire industry offering business professionals to buy Dubai property. This means regulating real estate practitioners in addition to implementing meaningful and practical real estate legislation, including a foreign residence visa type permit for buyers, which of course must respect UAE government strategies going forward. The main criteria for most foreign buyers is to be recognized as ‘non resident for tax purposes’ by their country of origin and the regulations to achieve this status is clearly set out in each jurisdiction.
Despite claims from the government that there are mounting signs that to buy Dubai property market is stabilizing across many parts of the emirate, various estate agents project that prices could continue to plummet for another two years. Landmark Advisory estimates that property prices across some parts of the emirate could fall by up to 20 per cent by the end of next year, due to a glut of homes on the market.
Those who are planning to buy Dubai property must keep in mind that property market is still suffering from the adverse impact caused by the global credit crisis and a general oversupply of residential properties. Despite a fall in new supply of home in Dubai, there are still too many rent apartments Dubai coming onto the market with further properties planned.
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