Dubai developer Georg Recker wanted over alleged Hotel fraud

source TheNational

Authorities in Germany are seeking the arrest of a German national on
suspicion of a multimillion-euro fraud in connection with a Dubai hotel
project that was never built.

A court in Dortmund issued an
arrest warrant in November for the developer Georg Recker, who is in
Dubai and has denied any wrongdoing.

Investors are said to have
provided about €25 million (Dh123.7m) for Mr Recker’s Dubai 1000 Hotel
Fonds towards building a 1,050-room, four-star hotel in Dubailand.
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and
from the archive...... 7starsdubai

Spiegel online Auf fen Spuren eines 107 Millionen Euro Phantoms
or
Manager Magazin part I
part II , part III

Dubai - Ali Rashid Ahmed Lootah new chairman of Nakheel

source Wall Street Journal
The government here replaced Sultan Ahmed bin Sulayem as chairman of
Nakheel, the property developer that the city-state is restructuring
along with its one-time parent Dubai World.
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Another property case filed at DIFC Court - Union Properties Dubai

source EmiratesBusiness24-7

Investors have filed a breach of contract case against Union
Properties (UP) for the non-delivery of units of the Index Tower.

The 328-metre property, currently under construction at the DIFC,
should have been completed two years ago, the suit claims.

Union Properties sold some units of the Index Tower to the claimants
and although the forms did not provide any specific date of delivery, it
was the common intention of both parties that the developer would
deliver the units in late 2008, according to court papers filed at DIFC
Courts.

The delivery date, which was to be recorded in a sale and purchase
agreement (SPA), has also not been issued. "The respondents' continuing
failure to deliver the units and the failure of the respondent to issue
SPA in a timely manner is a breach of its contractual obligations,"
claim the document seen by Emirates Business.

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Waterfront development Dubai - Court Disputes - Corruption - Investor Disappointments - Sunland, Omniyat, Defines Properties, ACI Real Estate and others

original source The National / reported by Bradley Hope
extract of the story


....The state of the Waterfront project is in some ways emblematic of the delays and disputes that have proliferated amid the decline of the property sector in Dubai during the global downturn, analysts say. It was the biggest project ever announced by one of Dubai’s biggest state-owned developers, an expression of the emirate’s ambitions. As Nakheel rethinks its largest projects and negotiates with banks over how it will repay money borrowed to finance such developments, much of the Waterfront is in a kind of limbo, Nakheel is struggling through its debt load, developers are in turn hesitant to build awaiting Nakheel’s fate, and investors are suing developers with dimming prospects for their investments.

Nakheel has made progress on two areas of the project, Veneto and Badrah, where the company was building villas. It has nearly finished a large canal that would form a central feature of the first phase, the Madinat al Arab. Individual plots of land facing the sea, where developers have said they would build high-rise luxury towers, are mostly undeveloped.

Investors who put their money with Omniyat Properties, a Dubai-based developer that bought land in the Waterfront and planned a project there, tell a common story. Attracted by Omniyat’s marketing machine – the company spent millions of dirhams advertising apartment buildings there – they poured money in during the run-up to the crisis, betting that Dubai’s soaring property market would keep rising. Now they are locked in a battle with the developer over how much construction it is contractually obliged to complete before demanding any more payments from them.

One of Omniyat’s projects, the Beachfront Living tower, sold more than 200 apartments and collected Dh314.7 million, according to an official review of the project’s escrow account by Caliber Middle East, a consultancy that advises Dubai’s Real Estate Regulatory Authority. Of that money and other funds Omniyat invested in the project, Caliber’s review shows, the company spent Dh237m on land payments and Dh101.6m on marketing expenses. Just Dh738,866 was spent on construction. The project has yet to move past the initial stages.
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Damac Properties 140 Million Dollar suit under way at Dubai International Financial Centre Court

original source Emirates Business24-7

Lawyers representing a German investor, Dr Lothar Ludwig Hardt, said the developer allegedly used the money from other property projects to construct Park Towers, the only development that appears to be ongoing out of the five that Hardt had signed up in February 2007.

"These close links show the other four properties are connected to Park Towers… which should have been finished two years ago," Ludmila Yamalova, legal consultant and partner at Al Sayyah Advocates and Legal Consultants, told Emirates Business. She said Hardt has invested $9.7 million on five properties which, in addition to Park Towers include the two cancelled projects – Lotus Residences and Wildflower; Ocean Heights, which was scheduled for completion eight months ago; and Water's Edge, where construction hasn't been started yet.

The German investor is thus demanding refund of $9.7m and is seeking damages and lost profits caused by the developers' breach of contract and other violations of the UAE, Dubai and DIFC Courts. Yamalova estimates that damages, loss of profits plus all the legal fees could go up to $140m.

"As of today, defendants have not delivered any of the properties and have not complied with any of the contractual obligations to claimants," a claim form seen by Emirates Business said.

"Defendants have committed a series of violations of UAE, Dubai and DIFC Laws in connection with properties such as enticement and unfairness, illegal sale, failure to obtain necessary approvals, failure to commence construction timely, failure to timely register developer and obtain necessary license, mismanagement of escrow funds and violation of trust account regulations, unfair contracts of adhesion, fraud and deception… illegal competition, bribery, trickery, breach of trust, cheating in commercial transactions, money laundering and accomplice liability," said the claim form.

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Dubai World`s Debt - If banks and contractors are not properly dealt with, engaged and given comfort, then I think we will be facing a further crisis

original source The National

Top officials from the US and British governments are calling for
transparency in the settlement of Dubai World’s US$22 billion (Dh80.8bn)
debt restructuring, intensifying diplomatic pressure to conclude a deal
with creditors.

Neal Wolin, the deputy secretary of the US
Treasury, said he would call on officials during his visit to Dubai
today to ensure openness in the restructuring of the emirate’s
companies.

“I think it’s important that, as they work through these
restructurings and these issues, that it be done in a way that is
transparent so that we can all understand what’s going on,” Mr Wolin
said.
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The big next question in Dubai - Layoff at Limitless and Nakheel

Dubai, February 14, 2010
original source  Blog Crane Country The National by Bradley Hope

Dubai World property developers have undergone a new round of lay-offs, as chief restructuring advisor Aiden Birkett cuts the companies down to size and reduces costs.

Limitless has laid off about 20 per cent, or 55, of its staff. It currently has 220 employees, according to former staff. The company had about 500 staff at its peak.

"Limitless has reorganised and streamlined its operations as part of its ongoing strategy to reduce costs while continuing to maximise productivity," a spokeswoman said. "Regrettably, this has impacted jobs."

A Nakheel spokesperson said the company "continues to readjust its current business objectives and the resources to match as part of the restructuring process". The company has previously let go of more than 1,000 people. It had 3,500 people at its peak.

The fate of these two property developers is the next big question in Dubai. They owe billions of dirhams in debt to banks and contractors. And they have giant, unfinished projects that need new capital to ever be complete. Nakheel's Palm Jebel Ali - which is even larger than the finished Palm Jumeirah - comes to mind.

As does the Arabian Canal, which was a planned 75km waterway through the desert outside Dubai. A short visit to the site this weekend found it completely abandoned, although the company did impressively dig several kilometres of it. (Check out the original multimedia package The National did on the canal here.) More pictures of the current state of the canal here.

Some analysts believe they will be merged together after selling off some assets to become a new Dubai developer with a new brand. Others believe that at least one of them will simply be liquidated. Another optimistic camp believes they will be restructured and continue operating. Either way, there are major changes afoot.

Dubai Apartment prices will fall 20 per cent this year

10 February 2010 DUBAI

original source Khaleej Times UAE

Sale prices and rents for villas, apartments and offices in Dubai will continue to decline through the first quarter of 2010 because of supply glut, with apartment prices likely to take the biggest hit and falling as much as 20 per cent in the next 18 months, property consultants Landmark Advisory said on Tuesday.

Landmark said that Abu Dhabi’s residential property prices, in the first quarter of the year, are likely to remain stable on average, with some upticks in select localities. But rents are likely to maintain a downtrend.

High-end units in Abu Dhabi saw their rents fall up to 15 per cent, but it was low-end units that fared the worst, Landmark said in its Q1 
Real Estate Report.

The report said that after increasing in the third quarter last year, villa prices in Dubai stagnated with a marginal increase of 0.2 per cent in the fourth quarter. A price bifurcation is emerging with coastal villa communities (along Sheikh Zayed Road) stabilising, while inland villa communities experience further declines, it said.

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Technorati-Tags: Dubai Apartment Prices 2010, Dubai Real Estate Crisis

Dubai legal System an Trial - German Investor filed five motions in response to Damac Properties, including a motion for judgement by default and an award of damages of over $132 million

original source 7Days Dubai

DAMAC Properties has filed a motion to stop an investor’s lawsuit being heard in the Dubai International Financial Centre (DIFC) courts, and has also moved to strike the case entirely, the lawyer for the investor told 7DAYS yesterday.

German investor Lothar Hardt, who has invested in around dhs100 million worth of properties from Damac, filed a suit against the firm in December with the DIFC Courts, alleging breaches of contracts in the form of delays, misrepresentation of properties, fraud and improper use of funds, among other claims.

Hardt has invested in Lotus Residences and Water’s Edge in Business Bay, Park Towers at DIFC, Wildflower in Jumeirah Golf Estates and Ocean Heights in Dubai Marina.

He filed the suit with the DIFC Courts because Park Towers is located at DIFC and Damac is a DIFC-listed company.

Ludmila Yamalova, a partner at Al Sayyah Advocates and Legal Consultants, which is handling the suit, previously told 7DAYS that having the case heard at the DIFC Courts has a number of advantages over the Dubai Courts, including the fact that DIFC operates under British law, which has had more experience of property disputes in comparison with Dubai law.

Yamalova said yesterday that Damac was contesting the jurisdiction of the case and was also moving to strike out the case due to a lack of “reasonable grounds”.

However, she said Hardt had filed five motions in response to Damac, including a motion for judgement by default and an award of damages of over $132 million because Damac failed to support its motion with proper statements and failed to file its defence, and defences for individuals named in the case, on time.

The requested damages include actual damages of about $44 million  in lost profits and legal expenses, and punitive damages, which can be  up to three times the value of actual damages in the DIFC Courts.

The motions of both Hardte and Damac will be heard at DIFC Courts later this month.

Hardte told 7DAYS in January that if DIFC Courts decided jurisdiction belonged with the Dubai Courts, he would still pursue the suit.

“First I am hoping that I will regain my money and the second thing is, while I have been negotiating with Damac I’ve seen so many people in the situation where all the money they had was in one apartment and they stand to lose it all… so I see myself also as being the spearhead for these people,” he said.

Read also: An interesting case to watch - German Investor is suing Damac Properties

More than fith of construction projects in Dubai have been put on hold or canceled

original source The National

DUBAI // As an amateur photographer and property investor, Imre Solt found himself visiting construction sites throughout Dubai to document the progress of the rising skyline of Dubai on a daily basis. Now he is lucky to find a significant change at a project once a month.

“Sometimes I don’t take any photos at all because there is no progress,” says the Hungarian-born Mr Solt, who has captured the city’s growth in what he estimates are 100,000 pictures taken from the tops of tall buildings, helicopters and even a biplane. “There are a few buildings that have made very good progress, but I think more projects are on hold than before. Sometimes, there are just a few workers there.”

The numbers bear him out. More than a fifth of construction projects in Dubai have been put on hold or cancelled in the past year, with the remainder severely delayed, said Proleads, a construction information provider. Proleads also estimates that the number of construction workers in Dubai has declined 45 per cent from the peak of the property boom in 2008 to last month, a further sign of the city’s post-boom state.The problems are not isolated to Dubai, with projects in Abu Dhabi, Ras al Khaimah and Ajman similarly stalled.

“You have this stalemate,” says Andrew Charlesworth, the head of capital markets at the property consultancy Jones Lang LaSalle. “We are not seeing any distressed sales come through. Banks are reluctant to foreclose. Buyers can’t make payments and developers can’t build.”

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Protection for Dubai Property Investors - New Law

New Dubai Land Law - Property refunds
original source The National / by Bradley Hope

Property investors in Dubai will be eligible for refunds or replacement property if they fall victim to unscrupulous or failing developers, under laws planned for this year.

And developers will face new financial penalties if the buildings they promise are not delivered on time, or to agreed specifications.

Details of the proposed laws were revealed in a newsletter from the law firm Al Tamimi and Company, which ran a dialogue between Lisa Dale, the head of the firm’s property practice, and Emad Eldin Farouq, a senior legal adviser at the Dubai Land Department.

“There are lessons to be learnt from the crisis and we are emerging with a new legal regime,” said Mr Farouq. “Loopholes in laws are being dealt with and things will become more organised in 2010.”

As more buyers default on their payment plans and developers fail to deliver buildings on time, legal disputes are expected to remain a dominant theme in the UAE this year, lawyers say.

“2010 is still the year of fighting,” said Michael Lunjevich, the head of the property practice at Hadef and Partners. “It will be about consolidations, legal claims, liquidations and insolvencies. The market needs to clean itself out.”

The most significant elements of the proposed legislation in Dubai relate to the protection of property investors, including the refund or replacement property for buyers where the developer delivers a defective property, and financial penalties for late delivery.

The laws would also establish the grounds on which a purchaser can demand cancellation of the contract if, for instance, the developer refuses to link payment plans with construction milestones.

“The investor protection law is being proposed to deal with some specific issues identified last year, where investors needed further assistance in dealing with errant developers,” Ms Dale said.

Another element of the legislation would allow Emiratis with land granted to them by the Government to convert it to a freehold title, allowing them to sell it to another Emirati or GCC national, or mortgage the property, she said.

“The granted land system is a tradition in the UAE, enabling nationals to have access to lands for the purpose of building their home or business premises,” Ms Dale said.

“However, the system is quite limiting, as there are restrictions on transacting with such land. If you upgrade your title from granted to freehold, you can sell the property to other UAE or GCC nationals, or you can put it into a property fund or mortgage it. It becomes a much more flexible asset.”

The Dubai Land Department also plans to begin regulating property valuers and conveyancers by requiring them to obtain licences, and to create a law to oversee property brokers who handle trust accounts for property deals, Ms Dale said.

The department has created a draft law that would provide a regulated structure for establishing and managing property funds, which would “potentially provide a boost to the Dubai real estate market by generating an increased level of collective investment activity”, she said.

Mr Farouq said in an interview yesterday that the Dubai Land Department was seeking to raise its number of lawyers to 15 from 10, and bring on board more property experts to help deal with the overflow of cases that have arisen from the slowdown in the property sector.

Planned laws welcomed, b4

But the wider problem for clearing the system of legal disputes is the relatively uncertain nature of property legislation in Dubai.

Last year, the authorities announced Law No. 9 as a definitive system for determining what happens in the event of a buyer default, but the regulations spelling out the specifics of the law have yet to come out.

Alexis Waller, the head of the property practice at Clyde and Company, said developers and investors in Dubai faced a “change-of-law risk”.

“You could do something today that could be impacted by a new law later,” Ms Waller said. “We are operating in a jurisdiction where there are a lot of grey areas.”

House prices in Dubai could fall a further 30 percent

original source Arabian Business


House prices in Dubai could fall a further 30 percent from current levels and up to 150,000 homes could be lying empty by the end of 2011, UBS has said.

"We reiterate our view that by end of 2011 Dubai property oversupply on residential and commercial properties may reach roughly 40-50 percent and house prices may decline another 30 percent from current levels," analyst Saud Masud said in a research note.

"We estimate total Dubai housing supply by end of 2011 to be roughly 360,000 with oversupply potentially at 150,000 residential units," he added.
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Project Maritim Hotel Dubai Land - DUBAI 1000 Hotel Fund - Arrest Warrant against Georg Recker

DUBAI 1000 Hotel Fund - Warrant of Arrest against Georg Recker

Based on research by German newspaper "Westfälischen Allgemeine", since a couple of weeks a warrant of arrest has been issued by Dortmund Court of Justice (Germany) against German Georg Recker (36), initiator of "Dubai 1000 Hotel Fund".

For Recker an international quest is conducted, assuming that he is staying since longer time now in Dubai. Recker is under suspect of embezzling from German investors an amount of approx. 25 Million Euros.
State Attorney Dr. Ina Holznagel from Dortmund Public Prosecution did reject on request any information since when the warrant is already issued. But she confirmed that prosecution against Gerog Recker is ongoing since early 2008.

Meanwhile prosecutors have been able to freeze five bank accounts in Germany with deposits in the amount of roughly 1Million Euros. A drip on hot stone with view to approx.
25 Million Euros collected by Recker from more than 900 investors.

Up till now, just 2 claimants took seizing action against these accounts: one investor and one former employee. "For us it will always remain indistinct, how lame especially German investors are acting if they face fraud and embezzlement with regards to their own moneys," says Martin Kraeter, Principal of KLP Group Emirates.

Law firm KWAG from Germany represents just 50 out of 900 investors with claims of approx. 1Million Euros. They try to seize blocked funds now, as long as there are remaining funds on the accounts.
All other investors seem to preferably follow Recker’s lawyer Mr. Eckehart Heberlein from Munich: Heberlein seriously states frequently that the investment object of the fund - a MARITIM Hotel in Dubai Land - will soon be built and that there is constant progress on the construction site . . .

Recker‘s "Group of Companies" in Hamm (Germany) already has been restructured in October 2009: New CEO of "Travel-Dubai AG" is now since 22.10.2009 Mr. Ben Neuendorf (45). He is seen as Recker’s right-hand - by this prosecution is also running against him.
Recker himself is not reachable, of course. Remaining employees in his „Enterprise Group“ back in Germany are advised not to give any kind of relevant information.
Source (in German language)

Empty office space in Dubai totals 10 million sq ft

original source Arabian Business Monday 30 November 2009

About 40 percent of Dubai’s office space is lying empty after the emirate’s construction boom outpaced demand, broker Knight Frank LLP has said.

Empty office space totals 10 million sq ft (929,030 sq m) in Dubai, the firm said in a note on Monday, reported by Bloomberg news agency.

The vacancy rate for office space in the UAE capital Abu Dhabi is six percent, the broker said.
read the full report

Gambles Dubai with its financial reputation ?

original source Zawya

When you start building a third island shaped like a palm tree, intending it to be as big and crowded as Manhattan, you are crying out for a sober voice to bark: "Stop!"

But when that island is just one atoll in an artificial archipelago that would reconfigure the Persian Gulf coast into a thicket of trees, a map of the world, a whirling galaxy, a scythe and a sun that looks like a spider, what you need is some corporate restructuring. That, we learnt on Wednesday, was exactly what holding company Dubai World, the parent of Dubai's chief coastal developer Nakheel, would get.

Last year, Robert Lee, one of Nakheel's executives, showed me a map of the future Dubai Waterfront as his company put the finishing touches on the more modest Palm Jumeirah, the skyscraper- and villa-crammed island that started the trend.
"That's crazy!" I said.  "Bold," countered Mr Lee.
Bold is probably not the word that the number-crunchers at Deloitte are muttering as they pore over the company's books.

The Dubai government's decision to postpone repayments on $3.5bn in Dubai World debts - seen by investors as the litmus test of the emirate's creditworthiness - is the clearest sign yet of the dire state of its economy. Dubai's fanciful island reclamation, a doubtful investment in an era of rising sea levels, was just one of the gambits that ushered this tiny emirate into the world's consciousness.

Thankfully, many of these ideas wound up on the scrapheap. There is the cancelled Snowdome (although the city's indoor ski slope lives on), part of a gargantuan amusement district that was to be larger than the city of Orlando it intended to rival. Also scrubbed is the $11bn Arabian Canal, a 75km moat that would have ringed the city. Enough of these sorts of schemes were built to make Dubai and the United Arab Emirates the holder of the world's largest percapita environmental footprint.

Until Wednesday, investors were largely content to give Dubai the benefit of the doubt, given that ruler Sheikh Mohammed bin Rashid al-Maktoum had assured the world that his emirate was good for its debts.

In a region where a man's word already carries outsized weight, the blunt-spoken sheikh's charisma had been built on the credibility of his pronouncements. It must be painful indeed for him to be seen as backtracking.

Sheikh Mohammed, whose family has run the emirate with astonishing stability since 1833, faces an acute test of his leadership and the clearest threat yet to his dreams for the city.
The ambitious sheikh wants Dubai to become the financial centre for a quarter of the globe, the under-served and fast-growing markets between Singapore and Frankfurt.

Wednesday's announcement makes that goal less likely, damaging Dubai's reputation among the investors and financiers it has worked so assiduously to court. "Naturally they are not amused," says Eckart Woertz, chief economist at the Dubai-based Gulf Research Centre. "It will be a case of once bitten, twice shy should Dubai try to tap international markets again."

In the longer term, the news could make Dubai's rivals more attractive, persuading international companies to decamp to, say, Doha or Abu Dhabi. Unlike Dubai, those cities have sound, energy-based economies.
But for now they do not offer the same level of western lifestyle, nor can they match Dubai's services in shipping, logistics, banking and air travel.

The emirate's inability to repay also casts a shadow on the Maktoum family's vital relations with its cousins who rule Abu Dhabi, the al-Nahyans, who seem to be letting their poorer kin sweat it out in public.
One wondered what price Abu Dhabi might demand for a full bail-out.

One plausible option was a tighter union among the seven UAE states, with maverick Dubai forced to trim its embarrassing ties with Iran and Israel. Dubai might also have been asked to merge its independent customs service into the federal bureaucracy.

Sheikh Mohammed may be calculating that Dubai's foreign policy freedom is more valuable than its financial reputation.

There is logic in this.

The bankers in London and New York have been important in nurturing Dubai's growth.

But the emirate's ties with the region - Karachi, Mumbai, Riyadh and Tehran - are those that will make or break this city.

The writer is the author of City of Gold: Dubai and the Dream of Capitalism
By Jim Krane

Secenario - Why Dubai`s Debt Matters

original source Forbes from Oxford Analytica

If Abu Dhabi doesn't mount a serious rescue operation, creditors are likely to seek legal redress against the defaulting Dubai government.

Dubai's heavily foreign investment-dependent economy began to unravel in September 2008 following the global credit crunch. Property prices fell steeply, share prices in publicly listed companies collapsed and confidence was badly shaken in the emirate's ability to survive the crunch. By the close of 2008, government-backed companies responsible for Dubai's development had accrued debts of more than 80 billion dollars.

Abu Dhabi bailout.
In February this year, following Dubai's difficulty in refinancing a $3.8 billion loan, the United Arab Emirates (UAE) Central Bank, backed by Abu Dhabi, subscribed to a $10 billion bond, with interest rates set at 4%. However, earlier this month, it became apparent that Dubai would need a much bigger capital injection, especially given that its largest property developer--Nakheel, a subsidiary of Dubai World--was due to refinance a $3.5 billion Islamic sukuk bond on December 14.

Article Controls
On November 24, it was announced that Abu Dhabi had provided an additional $5 billion loan:

--Significantly, insiders indicated that this loan came with strings attached, and that it was to be used to pay disgruntled foreign contractors rather than to re-finance the Nakheel debt.

--While little is known about Abu Dhabi's reasons for these limits on its assistance, it may have been reluctant to be associated with Nakheel, a company with problems considered to be too big to solve through loans.

Sovereign default ?

Although not technically an example of a sovereign default, the request has been viewed as such. The agencies have thus downgraded most government-backed Dubai companies and entities either to below investment grade or to junk status.

The credit default swap rate on Dubai debts rose by more than 100 basis points, taking it to 434 points.
As a result, the emirate's ability to seek additional credit on international markets has been sharply curtailed.

Political collapse ?

If Abu Dhabi does not mount a serious rescue operation, creditors are likely to seek legal redress against the defaulting Dubai government:

--In this scenario, 'Dubai Inc.' will be widely regarded as bankrupt and the ruling Al-Maktoum family held responsible, due to the 'blurred lines' between the government and the wealth of the ruling family.

--There would also be political ramifications. It would be unfeasible for Sheikh Mohammed or Sheikh Hamdan to remain in power following such a massive loss of prestige.

If, on the other hand, Abu Dhabi does agree to provide more credit, there will also be significant implications:

--It will do so only under very strict conditions, since it will be reluctant to pour money into rescuing failed projects.
--It will thus begin to dictate terms to Dubai, and almost certainly seek to centralize power in the UAE federation and rein in Dubai's autonomy.
--However, given the political culture of the Gulf states, such moves are likely to be made discretely, in order to allow the Dubai ruling family to save some face.

Outlook.
Dubai World's decision to delay paying its creditors is a serious miscalculation, since, by trying to restructure some of its largest debts, it has placed itself under close international scrutiny. This will make it extremely difficult for the company to acquire fresh credit, and increase the risks of further defaults. Only oil-rich Abu Dhabi is in a position to stage a financial rescue, but even if it does, Dubai is likely to emerge chastened, and to adopt a different approach towards economic development.

To read an extended version of this article, log on to Oxford Analytica's Web site.
Oxford Analytica is an independent strategic-consulting firm drawing on a network of more than 1,000 scholar experts at Oxford and other leading universities and research institutions around the world.
For more information, please visit Oxford Analytica here

Shocking - Dubai`s main investment fund seeks debt payment delay

original source BBC

The government-owned investment company behind Dubai's rapid development drive has asked its creditors for a six-month delay on repaying its debts.

Dubai World, which has total debts of $59bn (£35bn), is asking creditors if it can postpone its forthcoming payments until May next year.

Dubai World has also appointed global accountancy group Deloitte to help with its financial restructuring.

The company has been hit hard by the global credit crunch and recession.

'Shocking'

The Dubai government said in a statement that the request to delay debt repayments also applied to property developer Nakheel, a Dubai World subsidiary.

"It's shocking because for the past few months the news coming out has given investors comfort that Dubai would most probably be able to meet its debt obligations," said analyst Shakeel Sarwar, of SICO Investment Bank.

Dubai is one of the seven self-governing emirates or states that make up the United Arab Emirates.

Analysts say the Dubai government has paid the price for a flamboyant economic model centred on foreign capital and giant construction projects.

Some have speculated it is likely to turn to the more economically conservative Abu Dhabi emirate to bail it out.

The Dubai World announcement was made on the eve of the Eid al-Adha Muslim festival, which will see many government agencies and companies close in Dubai until 6 December.

see also: Bloomberg Reuters WallStreetJournal

Dubai property prices may drop as much as 30 percent more

original source Bloomberg

Nov. 18 (Bloomberg) -- Dubai home prices may take at least a decade to recover and increasing supply and a shrinking population will leave 25 percent of the sheikdom’s houses empty next year, according to UBS.

Prices may drop as much as 30 percent more, UBS analyst Saud Masud said in a note today. They have already fallen by more than 50 percent from the peak last year, making Dubai the worst-hit market in the global real estate slump.

Dubai’s construction boom petered out in the third quarter of last year after banks tightened lending and speculators left the market. UBS’s research contrasts with a Deutsche Bank report this month that said the market is “bottoming out” with slowing price declines and an increase in transactions. Masud said the market will probably reach its bottom in 2011.

Consolidation in the industry will result in asset writedowns, limiting the benefits of a possible merger of Emaar Properties LLC and three state-owned companies, UBS said. Emaar, the United Arab Emirates biggest real-estate developer, is in talks to join with state-controlled competitors Dubai Properties LLC, Sama Dubai LLC and Tatweer LLC.

Dubai’s population, which is 90 percent expatriate, may drop by 8 percent this year and another 2 percent in 2010, Masud said. Nearly half the workforce is employed in real estate or construction.

Banks in the United Arab Emirates have understated their non-performing loans and the total may grow to around five times the 27.8 billion dirhams ($7.57 billion) reported by the central bank in September, the Dubai-based analyst wrote.

Bank lending tied to real estate may be 35 to 40 percent of the total when including personal loans used for property investment. Central bank regulations cap real estate lending at 20 percent of a bank’s total. The loans could be 350 billion dirhams to 400 billion dirhams, almost double the stated 204 billion dirhams, UBS said.

Provisions for bad loans may grow to more than five times their current levels over the next 12 to 18 months, Masud wrote. Net provisions stood at 29 billion dirhams by the end of October, central bank data shows.

“We expect to see greater consolidation, higher provisions for non-performing loans, an increase in investor delinquencies and relatively lower end user demand for residential and commercial property,” Masud wrote.

Banks will face pressure to provide liquidity and late payments will probably present a continuing risk for contractors and subcontractors, he said.

To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net

Dubai developers Cirrus and Kaizen disappear - Investors worried

original source Construction Week Online Dubai, 14 November 2009

Confusion has broken out over the whereabouts of international real estate firms Cirrus Developments and Kaizen Developments.

Both developers are responsible for hundreds of millions of dollars worth of developments in Dubai and across the region, including Cirrus’ Aquarius Gate in the Waterfront area, and Kaizen’s Equinox Residences at Palm Jebel Ali.

Websites for the companies are no longer active, while phone numbers listed on their brochures have not connected.

Cirrus Developments had been developing Celestial Heights – a mixed-use project of three towers, in the Downtown Jebel Ali master development, but the project is now being looked after by a firm called Catalyst Project Consultants, Construction Week has learned.

“Cirrus was part of phase one of Celestial Heights, then the owners appointed Catalyst,” Catalyst Project Consultants’ director Israr Ahmed told CW.

“Cirrus have downsized and moved offices, but they handed over all work related to the project over a two month period.”

Ahmed also said that Catalyst was “not at all” related to Cirrus Developments but it did have links to Kaizen Developments whose logo featured on early Celestial Heights marketing materials.

The last number he had for Cirrus could not be connected.

Dubai’s Real Estate Regulatory Agency (Rera) confirmed to CW that a developer by the name of Kaizen One Investment Limited was an approved developer, but the phone number it had registered for Kaizen now belongs to a general trading company.

Significantly, the registered website that Rera had for Kaizen One Investment Limited was www.cirrusdevelopments.com, which is now defunct.

Construction Week eventually managed to reach Cirrus Developments’ brokerage number where a receptionist said: “Due to the [financial] crisis, we have suspended the brokerage”, but insisted that despite not appearing on Rera’s list of approved developers, the development side of the company was still in operation.

Both public relations firms which represented Kaizen and Cirrus in the past confirmed that they were no longer their clients.

Kaizen Developments is unreachable.

Do you work for Kaizen or Cirrus? Have you invested in their projects or have you worked on their projects? Please contact constructionweek online

Dubai Nakheel Palm Jebel Ali Home Buyers stay united

People who bought waterfront villas on Palm Jebel Ali, where prices have tumbled by about 45 per cent from their peak in the third quarter of last year, are now being asked to transfer their investments to projects that include Al Furjan and Jumeirah Heights, which are both under construction.

But the move has been criticised by investors, who expected to move into their new homes last year.

“Nakheel has called investors and given them this option,” said Saqib Iqbal, who bought a villa in the development in 2006.

“But most investors would like them to complete Palm Jebel Ali. People have paid premiums on top of what they paid originally, it’s a disaster to be asked to move somewhere else.”

Palm Jebel Ali was the second artificial island project to be launched by Nakheel and was designed to accommodate up to 250,000 people and add 70km of beachfront to the emirate.
“Further work on Palm Jebel Ali has been delayed until market conditions allow recommencement of these phases of the development, and customers are being given a range of options within the wider Nakheel portfolio to transfer their investment,” said Nakheel.

In an letter sent to Marwan bin Ghalita, the chief executive of the Dubai Real Estate Regulatory Authority (RERA), investors said: “This is not what was sold to us. The apartments being offered are much smaller, with no beachfront or private pool, and are at a much higher price.”

The investors, most of whom have paid 30 per cent towards their purchase, have called on Nakheel to instead resume construction of Palm Jebel Ali, register their plots with the Dubai Land Department and officially agree to link further payments with construction milestones.

original source The National read the full article.......