Full extent of Dubai debt becoming clearer as statement shows developer Nakheel’s position

Dubai based master builder Nakheel, owned by debt ridded Dubai World, suffered first half losses this year of 13.4 billion dirhams (£3.65 billion), it is claimed.

The troubled property developer, famous for its palm tree shaped islands off the emirate’s coast, is currently seeking to renegotiate its debt, but the extent of its losses are only now coming to light.

Just a year ago it made a profit of 2.65 billion dirhams but its newest financial statement, published by Bloomberg, for the six months to June 2009 shows the drastic effect of the global economic downturn and the Middle East property slump which has seen up to 50% wiped off real estate values.

Revenue fell 78% to 1.97 billion dirhams, the statement shows.

Nakheel had total assets of 147 billion dirhams at the end of June, compared with 155.5 billion dirhams at the end of December, the document shows.

It had liabilities of 73.3 billion dirhams, including term loans of 16.3 billion dirhams.

A spokesman for Dubai World, Nakheel’s parent, declined to comment.
It is trying to restructure $26 billion of debt, including a $3.52 billion Islamic bond of Nakheel maturing next week.
The figures are a stark reminder of how Dubai has gone from being the world’s best performing property market to the worst within a year.
Analysts are predicting that property prices are going to fall another 30% in 2010.

‘They are in a very difficult position right now and a successful restructuring of the sukuk will be necessary, With the market where it’s today, this dive in sentiment and with more property supply in the pipeline, any near term recovery in the real estate market is unlikely,’ said Roy Cherry, an analyst at Shuaa Capital.

Nakheel’s other projects in Dubai include The World, a series of manmade islands in the shape of a map off Dubai’s coast, the Discovery Gardens residential project and shopping malls, Ibn Battuta and Dragon Mart.

Nakheel creditors may win the right to seize a strip of barren waterfront land the size of Manhattan if the company defaults on its $3.52 billion bond.