Dubai's Nakheel Completing Short Term Project as Debt Settlement Nears

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(DUBAI, UAE) -- One of the big questions in the wake of Dubai World's agreement with big creditor banks has been what will happen to Nakheel, the developer of Palm Jumeirah and The World artificial islands along Dubai's coast. Nakheel owes what may be as much as $10.9 billion to banks and another $1.1 billion to contractors.

Yesterday Chris O'Donnell, Nakheel's CEO, provided some answers. "We've had good discussions with the banks and consolidations, restructuring should be pretty much completed by the end of the year," he said, quoted in today's Gulf News daily newspaper.

O'Donnell spoke to reporters during a visit to Al Furjan, one of Nakheel's short-term projects where work has resumed following an agreement. The contractor, Al Shafar Transport and Contracting (ASTC), is going ahead to complete 300 villas near Emirates Road in Dubai.

O'Donnell said he expect this to be the first of several agreements with contractors. "We should have all the agreements with contractors in place by the end of October to restart construction at all of our eight short-term projects," he said.

According to Tarek Zoabi, managing partner of ASTC, 63 villas are due to be completed during the first quarter of 2011; the remaining 237 will be ready by the end of 2011.  "There has been a short delay due to economic conditions. But we got paid for the first phase in accordance with the restructuring plan and expect the rest of the payment by the end of the year," said Zoabi. He said the contract for 300 villas is worth $156 million.

The other short term projects that Nakheel will try to finish are Jumeirah Park, Jumeirah Village South, Jumeirah Heights, Jumeirah Islands, Veneto and Badrah at the Waterfront, and, "the park adjacent to the Golden Mile on Palm Jumeirah," explained O'Donnell.

What will happen to Palm Jebel Ali and Palm Deira, other sets of artificial islands planned by Nakheel, isn't clear although O'Donnell said the developer is continuing to monitor the dredging work already completed. Investors who bought into the islands on faith have been offered properties in other Nakheel projects like Al Furjan.

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