Dubai debt won't harm real estate, says developer

Dubai’s recent US $26 billion debt restructuring announcement will not affect the emirate’s real estate market, a leading property developer said on Monday.

“It will have no significance because restructuring is a normal word,” Abdul Majeed Ismail Al Fahim, chairman of Dubai Pearl, told Arabian Business.

Residential property prices in Dubai increased by 7% during the third quarter, the first increase since they started plummeting last year amid the downturn, according to Colliers International

Dubai Pearl was taken over by a consortium of investors by the Al Fahim Group in 2007 following delays led by the Dubai Technology, e-Commerce & Media Free Zone (Tecom), the zone in which the project is located.

Al Fahim said he had restructured payments for the project’s end-users amid the downturn. “We have done two things for our investors,” he said. “We have reduced the aggregate amount and also extended timing [of payments] over a longer period of time. “

The mixed-used development, overlooking the Palm Jumeirah, was originally valued at $2.5 billion (AED 9 billion) but is now valued at $4 billion.

In May, MGM Mirage said it would run three hotels including a 250-room Bellagio hotel and a 350-room MGM Grand Hotel on the development.

In October 2008, Dubai Pearl paid $27.2 million for Archangel, a 1.6 million sq ft island located on Nakheel’s World development. Once complete, the island will be for the exclusive use of Dubai Pearl residents, according to the firm.