Leading Dubai master developer Nakheel has surprised the market by offering to repay part of its debts well in advance. After a deal stuck with its creditors after the global crash, the troubled developer of the Palm Jumeirah and several other major landmark mega projects in Dubai ended up with total obligations of Dh12.5 billion and several projects stalled.
Therefore it was encouraging when Ali Rashid Lootah, chairman of Nakheel announced that the company is ready to pay the first tranche of Dh2.35 billion by February and another Dh1.65 billion later this year, rather than wait till the repayments were officially due in 2015. It is also important that Nakheel has reported that while its revenues are substantially more than expected, its costs are a lot less than feared. As a result, although it was given committed equity funds of Dh16.6 billion, it has only used Dh1.4 billion of this money and has no plans to change that, according to Lootah. In addition, it is good that it wants to focus on projects that already have the necessary infrastructure, rather than taking on the costs of building infrastructure from nothing.
This encouraging news from Nakheel is an important marker of Dubai’s general return to economic good health, and is a significant indicator of the business community in the UAE and Dubai recovering its confidence.