Arabian Business Weekly Update 24 November 2004

Nakheel has announced its latest mega-project. But is it too ambitious?

  • E-Mail
By  Anil Bhoyrul Published  November 24, 2004

Big ambitions, big risks|~||~||~|Just when you thought the ambitions of property developer Nakheel couldn’t grow any bigger, think again. The company has just confirmed the launch of The Palm, Deira, arguably its most ambitious project yet. But does the vision match reality and demand? Firstly, Nakheel deserves congratulations on even attempting such a project. The Palm, Deira, will be the third in the Palm series and at 80 square kilometres, also the biggest. It will have 8,000 upscale villas, shopping malls, sports facilities, clubs, public services and other luxury amenities. It will measure a massive 14 kilometres in length from the land to the tip of the crescent, and 8.5 kilometres from crescent to crescent. The size of The Palm, Deira, will be larger than Greater London. But who will live there? The company says that residential units will open for purchase to individuals of every nationality on a freehold basis. The potential buyers have plenty of choice: two other Palms, The World, Jumeriah Beach Residence…the list goes on. Let’s not forget that none of these megaprojects have even been built yet, but prices are rocketing. Industry experts suggest that only 20% have been sold to end users, the rest going to property speculators who are making a killing as prices keeps rising. Can the market sustain such growth without a crash, or a correction at the least? The current boom has remarkably similar signs to the dot-com era that took off in 1997 and came crashing down three years later, leaving many individuals and companies bankrupt. The big test will come next year, when it is expected that US interest rates will rise. Regional central banks will follow suit. Property speculators will find their borrowings rising and may be forced to sell out. The potential fallout is unthinkable. Nakheel, as with other property developers, is simply doing what it does best: developing world-class projects. But its success will depend on factors outside its control. ||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code