Lord Mayor: bulk of cash owed to UK firms resolved
Most of $2.3 billion debt to UK contractors now paid, says Lord Mayor
Dubai developers have paid off the bulk of a reported $630million in trade debts to British contractors, the Lord Mayor of London said on Monday.
“[The dispute] is not to the extent it was,” Mayor Alderman Michael Bear said. “There is a tail that needs to be sorted out but the main part has been resolved.”
UK contractors were left with millions of dollars in unpaid fees when more than half of planned real estate projects in Dubai were delayed or cancelled in the wake of the financial crisis.
Debt-hit developers ran out of funding as property prices across the emirate plunged 60 from their 2008 peak.
UK trade body, the Association for Consultancy and Engineering (ACE), said in 2008 its members were owed £400m ($630million) by Dubai developers, and were lobbying the British government to intervene.
Mayor Alderman, who is also managing director for construction firm Balfour Beatty Property Limited, said the issue was still on the agenda for trade meetings in Dubai.
“[I’ve] been asked to make sure that [the non-payment issue] is high on the agenda,” he said. “It hasn’t so far come up in high level meetings… [but] if it does I am well briefed,” he said.
Nakheel, the state-backed developer behind the Palm project, said in January it had paid off a total of AED3.8bn ($1.06bn) to its trade creditors.
The developer, which is in talks to delay some $10.5bn of debt, is seeking to secure the agreement of trade creditors representing 95% of the debt by the end of the first quarter.
Under the terms of the deal, creditors would receive a 40% cash payment upfront, and a 60% payment through an Islamic bond with a 10% return.
Dubai’s government said in March it will provide $8bn in cash to Nakheel to repay trade debts and complete outstanding real-estate projects.
The Lord Mayor’s visit to the region is part of a ten-day trade delegation to the region, which will include visits to the UAE, Qatar and Saudi Arabia.
The 17-man team has been tasked with increasing bilateral trade between the UK and the UAE and the wider Middle East region.
“I have been charged by the Prime Minister, amongst others, to increase trade in the area by 60 percent by the year 2015 to £7bn ($11.3bn) a year to £12bn ($19.3bn) a year. That is the UAE and we have similar aspirations in the region generally,” he said.