Nakheel has offered investors in the stalled Palm Jebel Ali development alternative homes on other projects, casting further uncertainty over the future of the vast reclaimed island.
People who bought waterfront properties on Palm Jebel Ali, where prices have tumbled by almost 50 per cent from their peak in the third quarter of 2008, are now being asked to transfer their investments to projects that include Al Furjan and Jumeirah Heights, which are both under construction.
While land reclamation on the development, the second of Nakheel’s Palm island trilogy, is complete, infrastructure work was stalled late last year. Construction has yet to start on 1,300 villas originally planned on the development. Palm Jebel Ali buyers were told in January the handover date had been delayed by four years from the original completion date of June 2008.
6 November 2009
Analysis and Forecast: increasing risk
Nakheel is a Dubai-government owned developer responsible for some of the emirate’s most ambitious projects. Their financial health is a direct indication of the health of the Dubai economy in general and of the government in particular. Their latest move has not been wholly unexpected but has confirmed concerns that Nakheel is unable to meet all its obligations, and that it will have to cancel work it has already spend billions on.
The move also shatters confidence in the off-plan real-estate culture that has been the main driver of the recent Dubai boom.