Nakheel to start selling Palm Jumeirah houses
Developer has plans to spend $381.1m completing nine projects in 2012
Nakheel PJSC, the Dubai developer bailed out by the government in 2009, will start selling townhouses on Palm Jumeirah next month in its first new residential project since the property market crashed in 2008, its Chairman Ali Rashed Lootah has said.
The company will develop mid-range homes on its Palm Jumeirah artificial island, alongside the apartments and villas already built there. Nakheel, Dubai’s biggest developer by assets, announced a plan to construct 102 townhouses on the island in September.
“Not everyone wants a villa or an apartment,” Mr Lootah told newswire Bloomberg. “There’s demand for townhouses on the beach, but we’re being careful not to increase the density on the palm.”
The Palm Residence project will test the demand for property in a market where prices have plunged by more than 65% since their mid-2008 peak. The slump forced Nakheel to write down the value of its real estate by $21bn and prompted the bailout.
Most of the Palm project will be financed by sales agreed before construction begins, a method that was common before the property slump. Mr Lootah, who declined to comment on the expected cost of the development, said it won’t be financed through bonds or loans from international banks.
Nakheel plans to spend $381.1m this year to complete nine projects across Dubai that had been suspended after the property crash, according to an Islamic bond prospectus. The document also showed that Nakheel plans to complete 7,982 homes in 2012.
"My main challenge is to deliver to buyers the homes they bought,” Mr Lootah said. “The banks and the contractors made a lot of money off us during the boom days, but the buyers have been patient and we want to deliver the homes they paid for and dreamed of. That’s my main goal.”
Nakheel settled $1.7bn of claims related to property sold in projects that were halted indefinitely, Mr Lootah said. The buyers have been offered alternative homes in projects nearing completion or credit notes that can be redeemed in five years. Nakheel has about $925m of claims left to settle, he said.
Revenue from retail will probably double by 2014, lifted by an additional 278,709m2 of space, Mr Lootah said. The company has reported revenue of $408m for the first half and is due to release its 2011 results in March.