Arabtec is to receive its first major cash payment from Nakheel since the Dubai World-owned developer revealed its plans to restructure about US$10.5 billion (Dh38.56bn) of debt.
The payment could pave the way for work to restart on 1,500 homes in Dubai.
The exact amount of the payment has not been disclosed but the country's biggest builder is to receive 40 per cent of what it is owed by the developer of the Palm islands.
The news comes just over a week after Nakheel said it had reached an agreement with 75 per cent of its trade creditors and would settle Dh4bn of claims within two weeks.
"We're delighted to report that the transfer has been made and it will probably reach our account today [Thursday]," said Riad Kamal, the chief executive of Arabtec.
The payment means Arabtec will soon be able to restart work on the stalled housing development Al Furjan.
"We never doubted for a minute that our dues would not be settled and will be delighted to continue with the project once we have been instructed to do so," Mr Kamal said.
The payment is part of an offer made to trade creditors in March when the Dubai Government said it would pump $8bn into Nakheel.
Under the deal, contractors were offered 40 per cent in cash and 60 per cent in the form of tradable securities, with a 10 per cent yearly return.
Nakheel needed to secure the approval of 65 per cent of its trade creditors to start paying its major creditors under the terms of the offer.
The developer also needs to have 95 per cent of all its trade creditors on board before it can start the second phase of payments in the form of tradable securities.
Ali Rashid Ahmed Lootah, who was appointed the chairman of Nakheel in March, replacing Sultan Ahmed bin Sulayem, said last week this "would happen soon".
The company, which did business with more than 1,000 contractors, suppliers and subcontractors, has also started paying its smaller creditors that are owed Dh500,000 or less.
"It undoubtedly helps confidence in the market and it's a good sign that Nakheel is sticking to its promise," said Nicholas Maclean, the regional head of CB Richard Ellis, a property consultancy.
Other major construction companies, including the UK's Halcrow and WS Atkins, have signed the deal.
"We have signed the document. It's gone back to Nakheel," said David Yaw, the managing director of Halcrow for the Middle East. "We're waiting for payment, which we hope to get within the month of July."
Keith Clarke, the chief executive of WS Atkins, which designed the Trump International Hotel and Tower, said last month that his company had been among the "early signers".
Dozens of Nakheel projects came to a standstill at the onset of the financial crisis, leaving contractors struggling to get paid.
Al Furjan, a villa community on which Arabtec stopped working in January, is among six priority projects that Nakheel said would resume soon.
Arabtec was awarded a Dh2.99bn contract to build 1,500 villas at the development in June 2008, and had built 550 when work stopped.
The company's shares rose 1.1 per cent yesterday, closing at Dh1.73.
Nakheel will also restart work on Jumeirah Park, Jumeirah Village, Jumeirah Islands Mansions, Jumeirah Heights Clusters and Al Badrah.
Still, while the news that Nakheel is paying its contractors is good for confidence, the developer continues to face funding pressures.
The Singapore transport company SMRTsaid yesterday the developer had terminated its contract for the operation and maintenance of the Palm Monorail, which connects the base of Palm Jumeirah with the Atlantis hotel.
Saud Masud, the head of property research at UBS in Dubai, said Nakheel's payments to contractors would not be a "game changer" for overall conditions in the construction sector.
"It's a good thing that they're getting paid but the issues are bigger," Mr Masud said. "There are backlog challenges and other customers that need to pay."
@Email:agiuffrida@thenational.ae
Game Of Thrones Season Seven: A Bluffers Guide
Want to sound on message about the biggest show on television without actually watching it? Best not to get locked into the labyrinthine tales of revenge and royalty: as Isaac Hempstead Wright put it, all you really need to know from now on is that there’s going to be a huge fight between humans and the armies of undead White Walkers.
The season ended with a dragon captured by the Night King blowing apart the huge wall of ice that separates the human world from its less appealing counterpart. Not that some of the humans in Westeros have been particularly appealing, either.
Anyway, the White Walkers are now free to cause any kind of havoc they wish, and as Liam Cunningham told us: “Westeros may be zombie land after the Night King has finished.” If the various human factions don’t put aside their differences in season 8, we could be looking at The Walking Dead: The Medieval Years.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”