Arabian Business Weekly Update 13th July 2004

There seems to be no stopping property giant Nakheel from conquering Dubai, the Gulf and maybe the entire world. Every project it gets involved in quickly turns into something spectacular. It has emerged as the leading player in the property sector, with projects worth US$15 billion, nearly half the total value of all construction projects in Dubai.

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By  Anil Bhoyrul Published  July 12, 2004

Editorial Leader|~||~||~|

Time for change

There seems to be no stopping property giant Nakheel from conquering Dubai, the Gulf and maybe the entire world. Every project it gets involved in quickly turns into something spectacular. It has emerged as the leading player in the property sector, with projects worth US$15 billion, nearly half the total value of all construction projects in Dubai. And much of the credit rightly must go to Nakheel’s Executive Director Wahid Attalla. He is a man of great vision and determination. But in between taking pats of the back, maybe Attalla can put a couple of issues straight. So far, nearly 50% of all Nakheel properties bought up – largely by foreigners – have been quickly re-sold. Nobody has moved in, but plenty of cash has been changing hands, in some cases so speculators can make a quick buck and in other cases because of wider market uncertainties. And right in the middle of the cash loop is Nakheel. It charges a chunky 2% of the total sale price as commission, each time a Nakheel property is re-sold. The Palm has 5,000 residential villas, many being bought and sold for well over $1 million each. The average price of a luxury apartment in Nakheel’s developments is $200,000, and the premium on re-selling can be as much as 40%. All of which means that Nakheel may have banked in the region of $10 million thanks to speculative buying. A great deal for the developer, but not such a good one for investors. Any construction delays on Nakheel properties will force some long term buyers into a quick sale. Their misery will be Nakheel’s fortune. Nakheel is a world-class operation, and Attalla is a dynamic executive. He should do the right thing and scrap the 2% re-sale charges. And he should do so now. ||**||

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