Tuesday, Feb 03, 2009

(Adds price fall details.)

By Stefania Bianchi

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)--The United Arab Emirates is delaying or canceling real-estate projects worth more than $260 billion amid falling demand and deteriorating market conditions, according to a new report by investment bank Morgan Stanley (MS).

The bank, citing data from Zawya.com, says $263 billion worth of projects in the U.A.E. have been delayed or canceled, "with all the recently announced mega projects, including Meraas Jumeirah Gardens, valued at about $98 billion and NakheelNakheel's Harbour project, estimated at $38 billion, put on hold."

The report, released earlier this week, says lower oil prices, the global recession, tighter liquidity, job cuts and the absence of speculators have all put pressure on the sector, forcing developers to review project requirements.

"All of these factors have resulted in a worse than expected performance in the U.A.E. property market, especially in Dubai, which is also facing potential oversupply," the report says.

"In the fourth quarter of 2008, property prices corrected sharply downwards, rental rates eased in Dubai and there was an increase in the rate of announced projects delays/cancellations," it adds.

At the end of 2008, approximately $1.25 trillion worth of construction projects were underway in the U.A.E., according to London-based Middle East Economic Digest.

However, as the region's once-booming real estate market slumps amid falling prices and a growing number of layoffs in the construction and financial sector, some of the Emirates' leading developers are being forced to review project requirements.

Morgan Stanley says property prices in Dubai have fallen by an average of 25% and 20% in Abu Dhabi since their peak last September. "The biggest drop has been in the high-end property segment, with average prices down 1% in 2008 and 35% since the peak," the report says.

Last week, HSBC (HBC) said Dubai is delaying or canceling almost 60 projects worth $75 billion, particularly in high-end residential and commercial developments.

In its note on Arabtec HoldingArabtec Holding (ARTC.AI), one of Dubai's largest construction firms, HSBC lists 59 projects that are currently under review, including eight that have been canceled.

According to Morgan Stanley, government-owned developer NakheelNakheel has five projects on hold, including the Nakheel Harbour & Tower, a one-kilometer-tall tower slated to be the world's tallest, announced at Dubai's Cityscape event in October. NakheelNakheel is slowing construction of three palm-tree-shaped islands off the Dubai's coast.

The report also lists Meraas Development's Jumeirah Gardens City project, also announced in October, on hold.

Five projects at the $110 billion DubailandDubailand development, which was billed to be the pinnacle of the Dubai's tourism draw, are on hold or canceled, including the $2.2 billion Universal City development that was destined to be one of the world's largest theme parks.

The HSBC report said The Falcon City of Wonders project that was to include a replica of The Eiffel Tower, The Tower of Pisa and The Taj Mahal amongst other "wonders" of the world has been canceled.

The following is a list of U.A.E. real estate projects that have been delayed or canceled, according to Morgan Stanley's Jan. 30 U.A.E. property report:

  
   Project                         Developer Value                 ($Mln)  
  
   Jumeirah Gardens City           Meraas Development              95,000  
   Mohamed Bin Rashed Gardens      Dubai Properties                55,000  
   Nakheel Harbour & Tower         Nakheel                         38,000  
   Mudon Development               Dubai Properties                21,000  
   Culture Village                 Dubai Properties                13,600  
   Palm Deira                      Nakheel                         12,500  
   Al Salam City                   Tameer Holding                  8,300  
   Al Burj Tower                   Nakheel                         8,160  
   Universal City                  DubailandDubailand                       2,200  
   Emerald Gateway                 Abu Dhabi Municipality          1,907  
   Meydan Racecourse               Meydan Development              1,300  
   Waterfront Living               Omniyat/Investate               953  
   Aqua Dunya                      DubailandDubailand                       900  
   Al Falah                        Aldar                           724  
   Royal Bay                       VIP Waterfront                  490  
   Crystal Towers                  Dubai Properties                462  
   Al Kaheel Park                  DubailandDubailand                       436  
   Bristol Towers                  Deyaar                          408  
   Dusit Emirates Saray            Al Osaimi                       408  
   Trinity Heights                 Pavillion Holding               215  
   Marjan Island Hotel,Residential AAKAR                           163  
   Warsan Estate                   Emaar                           163  
   A1 Tower                        Ali Moosa & Sons Group          90  
   Great Dubai Wheel               DubailandDubailand                       70  
   Dubai Promenade                 Nakheel                         NA  
   Dubai Waterfront/Badrah Devt    Nakheel                         NA  
   Global Village                  DubailandDubailand                       NA  
  
 

-By Stefania Bianchi, Dow Jones Newswires; +971 4 3644967; stefania.bianchi@dowjones.com Copyright (c) 2009 Dow Jones & Co.

(END) Dow Jones Newswires

03-02-09 0809GMT