Dubai: This is the time of reckoning for Escan as it finalises which projects it should go ahead with and which ones it should shelve given the market reality.
The company holds Dh2 billion in assets and has a share capital of Dh1 billion, about half of which is in cash and the rest through land holdings according to its December 2009 financial statement.
It earlier purchased a multi-unit building from Tamouh Investments on Reem Island in Abu Dhabi. But since there has not been any development activity on it, Escan may seek repayment of its nearly Dh50 million advance, comprising a 10 per cent down payment and premium.
"We're still in the negotiation stage, either we get a special discount or they have to show us some construction there," Saeed Al Muhairi, board member and acting CEO of Escan Investment and Real Estate Development told Gulf News. "Because of the crisis they stopped some of their projects."
Sold out
A similar situation surrounds its Dh88 million investment into 80 villas in the Hydra Village development, also in Abu Dhabi. Escan assumes it will go ahead but isn't entirely sure and is still waiting for a progress report, Al Muhairi said.
Regarding its exposure in Dubai, Escan remains confident that Nakheel will delay further land payments for a plot it owns at one of the master-developer's islands. For this one, Escan has already paid 30 per cent, amounting to Dh14.1 million, the company's fin-ancial statement says.
Escan is involved in four projects in Dubai, two of which are in Business Bay. Of these, the Renaissance Tower is sold out, but the developer has since sold the land to another company, said Al Muhairi.
The second one, Escan Tower, was to be built in partnership with ACI Real Estate. Its construction value is estimated at Dh598 million, but work is yet to start.
ACI had advanced around Dh62 million to Escan for the sale of 43 floors on the high-rise development, which was launched in 2008. But ACI went on to resell the units at a higher price and Escan is awaiting payment, according to the financial statement.
Escan, in the meantime, is keeping the land as an asset and looking for a new investor to partner and build the project. "The end-users didn't buy from us directly, but ACI," Al Muhairi added. "So we don't have a contact and aren't sure what is happening to them,"
Construction of Escan's Dubai Marina Tower, valued at around Dh332 million, had started, but was halted last December after a few floors were completed.
According to Escan's 2009 financial statement the tower was sold to Al Tharwa Investment, a Saudi company, and was twice cancelled.
Al Muhairi, however, said Al Tharwa is the current owner again. "We sold the tower a month ago. We completed 90 per cent of construction and the new owner will take care of the rest."
Construction at its development in Dubai Silicon Oasis, the Aurora Tower, jointly owned with the company's former CEO, is progressing.
"The project is 90 per cent sold out and 30 per cent of the construction is ready," Al Muhairi said. "We expect it will take another year to complete."
But Escan is making better progress in the northern emirates. It has two projects in Fujairah, the Al Fanar Towers in Fujairah City which is in the piling and sales stage, and the Golden Sands Resort in Dibba where foundation work has started.
The developer is also working closely with the Fujairah government to complete the masterplan for Wurayah Valley.
This puts Escan's properties under development at a value of around Dh1.5 billion, with Hamptons International providing the valuation. Many were announced in 2007 or earlier, but not sold.
"Fujairah is growing, it is better for the end-user as well to start construction before starting to sell," said Al Muhairi. "We're planning to do the same for all other projects."
