Projects in Dubai Cancelled or on Hold – Dubai Crash Update

Dubai's major developers are canceling or delaying projects until such times as the property market returns to boom time

Nakheel have canceled all sales on Palm Jebel Ali until further notice. Ali Mansour, project director, said,

"We will definitely reassess sales strategies in the light of the current market conditions. Everything is under review now and we have no new plans for the near future. There are no sales on Palm Jebel Ali happening as of now. The only sales that happened were in the year 2003-2004.

Thus far, despite aggresive marketing, Nakheel have only sold 52 of the 1,800 plots on the crescent "A". We are assuming this means a delay on the Jebel Ali harbor development also.

Limitless have cancelled a launch of the Arabian Canal which was planned to run from the Dubai Marina, around the new airport and back to the Palm Jebel Ali.

Rufi Real Estate have canceled two residential towers that had been planned on The World and Meydaan, although a spokesman for the company stated that they were 'optimistic that real estate prices would pick up by mid-2009." Not optimistic enough to put their money where their mouth is apparently.

Tamweer has already fired 50% of their staff, both of Dubai's major mortgage providers have had to be bailed out by Abu Dhabi's real estate bank, Damak have cancelled a number of projects in Tunisia, India, Pakistan, Algeria and Morocco, Bonnington Land have cancelled three developments at Jumeirah village, although these were canceled due to lack of electricity rather than financial issues.

Other News from Dubai

Burj Dubai

In an attempt the stave off a complete collapse of the property market, Dubai's government has decided to release information regarding the actual amount of debt in the emirate. Until yesterday, this was a closely guarded secret, and some i felt that this secrecy was one of the reasons behind the dramatic reversal of fortunes in Dubai. The phrase "shutting the barn door after the horse has bolted," comes to mind, but -

According to Emaar chairman Mr. Mohamed Alabar, who is also a member of Dubai's executive council, the level of debt owed by the government is $10 billion, with a further $ 70 billion owed by state-owned companies. Dubai's GDP is $54 billion, which puts Dubai's debt to GDP ratio at 148%. Draw your own conclusions from that.

Mr Alabbar, who was speaking at the Dubai International Financial Centre (DIFC) conference, added that the Government would support companies that got into financial difficulty because of the credit crisis. Mr Alabbar is head of a committee that has been set up to handle Dubai's response to the global economic crisis and his comments are effectively a government guarantee. Mr Alabbar also said that Dubai's debt of $10billion compared with sovereign assets of $90billion while its companies owed $70billion against assets of $270billion. Whether these are pre- or post-crash valuations was unclear.  "The Government can and will meet all its obligations going forward," he said. "Dubai's borrowing is not being used to cover expenditure or to provide subsistence, it is funding our long-term infrastructure development."

The UAE Government is dominated by Abu Dhabi, the richest of the emirates, and its involvement is thought to be a signal to worried banks and investors that the vast wealth of Abu Dhabi is now implicitly supporting Dubai.

Mr Alabbar also said that Dubai's largest companies would have to work together to find a way through the economic difficulties, particularly in the property sector.

Mr Alabbar's Emaar, which is building the Burj Dubai, the world's tallest building, will collaborate with Nakheel, which built the palm islands off the Dubai coast, and Dubai Holdings, the Government's property unit. The three companies control 70 per cent of Dubai's property development industry, but will be allowed to work together to limit supply and prevent the market from being flooded with new apartments, in the hope of keeping prices inflated.

Mr Alabbar said: "We have to recognize the reality on the ground and work differently. We have to collaborate and in time, in the future, we can be competitors again."

After pressure from small investors eager to dispose of off-plan property, Emaar have also waived a clause that required a payment of 30% of the property value before a sale was permitted.