Dubai: Nakheel will focus on development activity where it already has raised significant infrastructure, according to its top official. This means a revised Palm Deira figures on the radar, and where the developer plans to announce new hotel projects, while Palm Jebel Ali is not as “it still needs a lot of infrastructure”.
At the same time, the company has put in deep freeze any move to divest any of the assets it holds. As part of its restructuring the earlier plan had been to divest assets to the tune of Dh6.8 billion. “That situation does not exist any longer,” said Ali Rashid Lootah, chairman.
Existing communities such as Jumeirah Islands and Jumeirah Village as well as Al Furjan also figure in the plans. “Infrastructure is a costly affair and we will move according to the market; but it will be done cautiously,” said Lootah. “We will announce more projects this month capitalising on the prime locations we own and in cash-generating assets.
“We were the first developer to launch in Dubai after the crisis with the Palma Residences [on the Palm] and our target is to grow our annual profit by 15 per cent annually; of course we hope that the actual result will be even better.”
As of now, Dh10 billion worth of residential development — totalling 3,500 new homes — have been added to the Nakheel pipeline. The company has been an obvious beneficiary from the ongoing momentum in Dubai’s realty marketplace, with its projects scoring in both off-plan and secondary market transactions.
Since 2010, 7,225 units have been handed over by the developer and another 1,575 is to get to that point in 2014-15.
A key strategic thrust also extends to retail and hospitality. On the latter, which is now a key focus for Nakheel, the plans for three more hospitality projects to add to the one it has already announced. For retail, hospitality and leasing related new activity, the developer estimates Dh4.7 billion in new projects. This includes the massive Dh1.6 billion on the Nakheel Mall (with a leasable area of 1.13 million square feet.) But these estimates do not cover the new hotels planned for Palm Deira.
According to market sources, hospitality is central to medium-term planning at all of Dubai’s leading developers. The hospitality sector had been one of the quickest to emerge from the downturn and the forecasts are for plain sailing in the years leading up to and during Expo 2020. Retail too makes perfect sense for Nakheel given its ranking as a community developer.
“Our key focus will be on improving operational cashflow and emerge as a debt-free company as soon as we meet all the existing obligations,” said Lootah. In 2013, Nakheel’s cash collections improved significantly to Dh7.1 billion from Dh3.7 billion in 2012 and Dh2.3 billion the year earlier.
It is clear that the developer wants to use own funds to back up its new project activity as much as possible.
On whether an IPO would make sense in the immediate future, Lootah said: “Everything is possible.”