Arab Today, arab today nakheel wrote off 214bn after dubai property crash
Last Updated : GMT 10:54:55
Arab Today, arab today
Arab Today, arab today

Nakheel wrote off $21.4bn after Dubai property crash

Arab Today, arab today

Arab Today, arab today Nakheel wrote off $21.4bn after Dubai property crash

Dubai - Arabstoday

Nakheel, Dubai’s biggest developer, told creditors it wrote down AED78.6 billion ($21.4 billion) from the value of its real estate as property prices in the emirate crashed. The Dubai government-owned company wrote off AED301.4 million in the first half of last year, AED73.8 billion in 2009 and a further AED4.44 billion in 2008, according to its Islamic bond prospectus issued last month and obtained by Bloomberg News. After the write-offs, the company’s share capital dropped to AED10.6 billion in June 2010 from AED87.1 billion in 2008. Nakheel declined to comment. Dubai’s property market had one of the world’s biggest reversals of fortune following the global credit crunch three years ago, with Deutsche Bank AG saying home prices slumped 64 percent since their peak in mid-2008. Nakheel was forced to reduce staff and halt work on projects including the man-made islands of Deira and Jebel Ali. Dubai World, Nakheel’s former parent and one of the emirate’s three main state-controlled holding companies, roiled global markets in November 2009 when it sought to stop repayments on about $25 billion of debt. The company signed an agreement with its creditors in March to restructure the debt. Nakheel had a profit of AED58.9 million in the first half of 2010 compared with a loss of AED13.4 billion a year earlier, according to the prospectus. The company had a loss of AED76.6 billion in 2009 and a profit of AED505.3 million in 2008, according to the document. The company said August 24 it would issue AED3.8 billion of Islamic bonds to its contractors and suppliers as the last step in restructuring $16.1 billion of liabilities. Nakheel plans to issue an additional AED1 billion of the bond as part of the AED8.5 billion programme that it has set up. The bonds, known as sukuk, pay a profit rate of 10 percent and are being used to pay 60 percent of what’s owed to contractors and suppliers. The remaining 40 percent is being paid in cash.Nakheel has total assets of AED77.5 billion as of end of June 2010. Emaar, Nakheel’s competitor and developer of the world’s tallest tower in Dubai, has assets of AED61.9 billion across 15 countries, according to the company’s financial statement ending June 2011. To reduce costs, the developer cut its workforce to 986 in March 2011 from 3,818 in October 2008, according to the prospectus. It’s also delaying some projects such as the Waterfront and Palm Deira. Nakheel expects to spend AED7.4 billion this year and another AED1.4 billion in 2012 to complete nine projects across Dubai, according to the prospectus. Nakheel said August 24 it plans to complete building 7,982 homes in the 12 months ending December 2012. The value of its properties under construction was 52.3 billion dirhams at the end of June 2010. Dubai’s property prices are expected to drop further as 54,000 homes will come onto the market from 2011 to 2015, Jones Lang LaSalle Inc. estimates. That’s about 15 percent to 20 percent of the existing supply, according to the real-estate broker.

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