Sunday, Oct 05, 2008
By Stefania Bianchi
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Dubai-based Nakheel shrugged off concern Sunday that the credit crunch will crimp the emirate's real estate boom by announcing plans to build a kilometer-tall skyscraper that will surpass the world's highest tower that's nearing completion in the Persian Gulf enclave.
"I'm sure most of you are asking why we're launching this and you'd be mad not to question it," Nakheel's Chief Executive Chris O'Donnell told reporters at a press conference late Sunday.
The announcement of the gigantic tower project comes as many leading analysts start to question whether Dubai's $300 billion real estate boom can survive the unfolding global economic downturn.
Morgan Stanley forecast in August that Dubai property prices will fall 10% by 2010 and the central bank of the United Arab Emirates was forced to pump $13.6 billion into the banking system last month to kickstart banks lending to one another.
O'Donnell dismissed concerns about the timing of the project given the global economic downturn and tighter lending restrictions by banks.
"The project will be built over ten years and we'll have many more cycles before then. We'll monitor the markets closely during that time and make decisions appropriately. The world will be a different place by the time it's built," he said.
When complete the project will house more than 55,000 people and provide office space for another 45,000, the company said, without giving the exact height and value of the tower.
Rival developer Emaar Properties PJSC (EMAAR.AI) is close to completing its Burj Dubai skyscraper, which currently stands over 700 meters in height.
Emaar, the Middle East's largest property developer by market capitalization, hasn't announced the final height of the structure, part of its $20 billion Burj Dubai Downtown development. Construction of the tower, which started in 2004, has failed to bolster Emaar's shares, which are down over 20% this month.
To be sure, cushioned by record oil earnings, real estate prices in the Persian Gulf have so far been largely impervious to the global credit crunch that has claimed victims such as U.S.-based Lehman Brothers Holdings Inc. (LEH) and American International Group Inc. (AIG).
O'Donnell said he is confident that Nakheel will secure the required funding for the development, which will be financed through a combination of "pre-sales and project funding".
The Universe
Nakheel sits at the heart of the multibillion business empire of Dubai's ruler Sheikh Mohammed bin Rashid Al Maktoum and is a cornerstone of his plan to make the sheikdom an international business hub to rival New York and London.
In January, the developer announced plans to build The Universe project, also off the coast.
The multi-billion dollar real estate project will create a cluster of large islands in the shape of planets and the Milky Way in the Persian Gulf off Dubai's coast and opposite Iran.
The company is currently developing three palm-shaped projects reclaimed offshore Dubai, which will add a combined 1,000 kilometers to the emirate's coastline. It is also developing The World project which is made up of islands in the shape of countries of the world.
The real estate firm hopes that Nakheel Harbour & Tower will become the "capital of Dubai" and will rival the Emaar's Burj Dubai tower, due for completion in September 2009.
-By Stefania Bianchi, Dow Jones Newswires; +97-1-4- 364-4967; stefania.bianchi@dowjones.com
Copyright (c) 2008 Dow Jones & Company, Inc.
(END) Dow Jones Newswires
05-10-08 1648GMT
