Dubai's Versace needs $60m funding - sources

Elizabeth Broomhall , March 29th, 2012

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Developers of Dubai’s $626m Palazzo Versace have promised to deliver the project by the end of 2013, despite construction having slowed considerably.

Enshaa Services Group refused to comment on whether the project was being affected by liquidity woes, but said it was being partly hindered by a lack of water and electricity on site.

The Dubai Creek development has so far missed its original completion date by four years, and is still not being constructed at full speed.

Sources close to the project, which asked not to be named, told CW's sister title Arabian Business it needs to find $60m to complete by the given target.

“Technically it has never stopped construction, so if you pass by you will always see something. But it is like many projects in Dubai, just ticking along at a very, very slow rate.

“In order to complete by next year the developer needs to find $60m. If they can find the money this is achievable. Otherwise it is more likely to be 2014.”

When asked for comment by Arabian Business, a spokesman from Enshaa said construction had been purposely slowed in order to keep pace with the surrounding infrastructure developments, but would open next year.

He added that developers did not want to run the development on generators because of the high cost.

“Since assuming control of the development... Enshaa has been targeting the soft opening of the hotel in summer 2013 and with the grand opening in the last quarter of 2013,” he said.

“The development cannot be completed without the services infrastructure... and [Enshaa] is currently exploring alternatives to obtaining services including the running of chilled water pipes from a district cooling plant across the creek, and running cables to an alternate power distribution station other than the one which will eventually serve our development.

“The delivery dates of the development are per the provisions in the sales and purchase agreement.”

However, the spokesman declined to comment on suggestions that the project was being stalled due to funding issues.

Palazzo Versace Dubai was launched in 2006 by Emirates Sunland Group, a 50:50 joint venture between Enshaa’s subsidiary firm Emirates International Holdings (EIH) and Australian developer The Sunland Group.

The design included two Versace-branded residential buildings comprised of 169 units, and a Versace-designed hotel with 217 suites.

The project was located in the master development Dubai Culture Village, being overseen by Dubai Properties Group.

UAE-based Enshaa at the time had a 50% stake in Palazzo Versace Gold Coast in Australia, a Sunland-developed property which had been open for around a decade.

In October 2011, Enshaa Services Group, another subsidiary of Enshaa, took control of the project as part of a swap deal.

Under the agreement, Enshaa agreed to relinquish its stake in the Australian property in exchange for full ownership of the Palazzo Versace in Dubai.

Sources say the project has encountered a series of delays since its launch due to different issues, including problems with a nearby dhow ship yard and a complete project redesign.

In the wake of the recession, they said developers also tried to bring in a second construction firm Kele Contracting to replace the original main contractor Arabtec, but have since reinstated Arabtec as the project manager.

Kele was allowed to retain the main construction contract for the nearby D1 tower, which is part of the same development.

When contacted by Arabian Business, Kele declined to comment.

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