Nakheel offers investors consolidation option

Nakheel, the real estate arm of Dubai World, has offered an investor the option of consolidating his investment in The World for plots in either Palm Jumeirah, Jumeirah Village, or the Marina Residence properties, according to documents seen by Emirates Business.

Silver Heights, a Dubai-based developer and broker, said Nakheel offered “replacement properties” valued at about Dh26 million in exchange for its investment in The World Island.

“We bought the Dh153m ‘Island 86’ in The World, paying only the initial 15 per cent down payment on the land, which amounted to about Dh23 million. Due to the slump in the real estate sector and the financial crisis, we decided to cancel our investment there. Instead Nakheel asked us to pay an additional Dh3m and offered us plots on Palm Jumeirah, Jumeirah Village or the Marina Residence,” said Samir Ahmed Munshi, Managing Director, Silver Heights.

Munshi said he decided to take four plots on the Palm Jumeirah as a replacement.

Silver Heights had initial plans to build 150 residential apartments and water homes on the island across 460,000 square feet area. “Most of our feasibilities to build in ‘The World’ was based on off-plan sales which is now completely frozen at the moment.”

The World comprises 300 islands in the shape of the world’s continents, created off the coast of Dubai and expected to add more than 232 kilometres of new beachfront to Dubai’s coastline.

According to Nakheel, land reclamation on The World had been completed in 2008. “Progress on The World continues at great pace. Reclamation of the original 300 islands on The World was completed in January last year, since which time the master plan has been revised to accommodate the concept design of each individual project that seeks to merge islands, resulting in a total of 240 islands that will comprise this mixed-use development. Handover of 33 islands is complete, with early ground works already commenced,” said the spokesperson.

In an emailed response to this newspaper, Nakheel confirmed that the master developer is offering its investors a consolidation on their projects that have been deferred by Nakheel.

“We are currently working with our customers to assist them in meeting their contractual commitments and find adequate solutions where possible, given the current global economic climate. Investors in projects that have been deferred have the option of consolidation if they own other properties within the Nakheel portfolio. The consolidation options are only available to owners and are non-transferable and non-transactional. Owners agreeing to a consolidation option will sign a new agreement with Nakheel. The existing agreement related to the deferred development becomes null and void,” said a Nakheel spokesperson.

“The advantage to the investor is that Nakheel is able to hand over property to the owner sooner than it might on a deferred project and help investors reduce their financial exposure.”

Nakheel said if customers choose to resell their properties, they can do so on the condition that all outstanding payments contractually due to Nakheel are settled in full. 

The master-developer refused to reveal the number of consolidation options it was currently handling in light of the downturn in the real estate sector. “We respect our business exchanges with investors and we are not obliged to disclose the consolidation options offered to our customers.”

Nakheel said it has not cancelled the Dubai Waterfront development.

“Dubai Waterfront has not been cancelled. Our current focus at Waterfront is on Badrah, Veneto and Madinat Al Arab. Work continues to make good progress at these sites. We look forward to handing over our first homes at Badrah and Vento next year. The majority of plots at Madinat Al Arab have been handed over with some third party developers already mobilised on-site,” said a spokesperson for the master developer.

Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.

Follow Emirates 24|7 on Google News.