74 Nakheel investors write to Dubai ruler over stalled Palm Jebel Ali projects

A letter signed by 74 investors in Nakheel’s Palm Jebel Ali project has been sent to the office of Dubai ruler, Sheikh Mohammed bin Rashid Al Maktoum, highlighting the uncertainly and negative impact the delay in delivering the project has had on the group, reported Arabian Business.

The letter, addressed to His Excellency Mohammed Al Shaibani, chief executive of Dubai Investment Corporation and director general of The Ruler’s Court, was also forwarded to management at Nakheel, the master developer behind the project.

“We purchased our homes on the Palm Jebel Ali between 2003 and 2008 because we are excited to be part of this world class development… Since 2003, we have all paid between 30 percent and 50 percent of the price of our homes to Nakheel and many of us have paid far more than this via the secondary market,” the letter, which was seen by Arabian Business, stated.

“The lack of certainty as to when our homes will be built has caused, and is causing, tremendous financial and emotional suffering for us and our families and many of us continue to endure on-going mortgage and rental costs whilst we are waiting. Many of us have invested our life savings into the Palm Jebel Ali,” it added.

Construction on Palm Jebel Ali began in 2002 and it was due to be 50 percent bigger than Palm Jumeirah, the first of three palm-shaped manmade islands off the Dubai coast and the only one currently occupied.

It was due to include six marinas, a water theme park, a boardwalk and homes built on stilts above the water. Work stalled in mid-2008 as the Dubai property crisis took hold as nearly half of projects were cancelled or delayed and prices fell by around 60 percent.

In 2011, developer Nakheel confirmed it had begun offering refunds to investors. Buyers on the project, where five and six-bedroom villas sold for around AED16 million ($4.35 million) at their peak, were given the option of credit swaps or receiving a refund.

“Long-term project customers are invited to swap their funds into available inventory or consolidate their funds. A long-term refund option is also available as part of the overall Nakheel restructuring,” a Nakheel spokesperson told Arabian Business.

Investors were reportedly being invited to swap their funds to units in Palm Jumeirah, receive a credit note to be offset against an alternative Nakheel project, or a full refund in 2015.

Last year, Nakheel chairman Ali Rashid Lootah reportedly pledged that the Palm Jebel Ali project will be built – but not in the short term.

In an interview with Arabic daily Al Ittihad, Lootah ruled out dropping the project and said the company was committed to completing all of its announced projects on a schedule that responds to market needs.

Nakheel announced in October a net profit of AED2.60 billion for the first nine months of 2014 – higher than the company’s profit for the whole of 2013.

It also represented an increase of 47 percent on a profit of AED1.77 billion in the same period last year.

During the nine months ending September 30, Nakheel added that it handed over 956 units to customers.

Nakheel’s current portfolio of developments in Dubai includes Palm Jumeirah, The World, Deira Islands, Jumeirah Islands, Jumeirah Village, Jumeirah Park, Jumeirah Heights, The Gardens, Discovery Gardens, Al Furjan, Warsan Village, International City and Villas at Nad Al Sheba.

Together, these span more than 14,000 hectares and provide homes for over 200,000 people. Retail developments include Dragon Mart, Ibn Battuta Mall, Nakheel Mall and Hotel, The Pointe at Palm Jumeirah, Deira Islands Mall, Jumeirah Village Triangle Mall and a growing number of neighbourhood malls. Nakheel is also developing hotels at Palm Jumeirah, Deira Islands, Ibn Battuta and Dragon Mart.