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| 20 September, 2018

Nakheel's UAE investments surpass $13.6bln; no IPO plans

Nakheel already has more than 28,000 international customers with investments of $34bln

Nakheel invests AED15 million in new marinas at Dubai’s Palm Jumeirah

Nakheel invests AED15 million in new marinas at Dubai’s Palm Jumeirah

Nakheel/Handout via Thomson Reuters Zawya

Dubai –   Dubai master developer Nakheel recently announced plans for Dubai expansions and investments. While the company's projects are focused in Dubai, Nakheel does have a project in neighbouring Sharjah and is in talks with other emirates for new projects.

Nakheel also has joint ventures with companies from Spain and Thailand. Since the start of 2018, Nakheel has announced construction contract awards totalling AED 6 billion. Nakheel CEO Sanjay Manchanda speaks to Mubasher about the company's investments, profit guidance, financing, among others in an exclusive interview.

Q- What is the size of your plans in the hotel sector and establishment?

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Nakheel’s AED 5 billion ($1.3 billion) hospitality expansion covers more than 6,600 rooms across 18 hotels and resorts in Dubai. Our first two hotels, at Ibn Battuta Mall and Dragon Mart, opened in 2016 and have 623 rooms between them. We currently have six hotels under construction (Centara Deira Islands, Avani Ibn Battuta, Premier Inn Dragon City, St Regis Palm Tower, RIU Resort Deira Islands, Hilton Jumeirah Village) with the rest under development.

Q- How much is Nakheel's investment in projects inside and outside Dubai?

Currently, almost all of our projects are in Dubai, with one project in the neighbouring Emirate of Sharjah. The combined estimated investment in these projects is more than AED 50 billion ($13.6 billion). This year alone Nakheel has signed construction contracts worth more than AED 6.3 billion ($1.7 billion).

Q- Do you seek new partnerships in the coming period of 2018 as you did months ago with Centara and Sharjah Property Authority?

We continue to explore new collaborations with the UAE and international partners. We currently have confirmed joint ventures with Spain’s RIU Hotels & Resorts, Thailand’s Centara Hotels & Resorts and The Sharjah Investment and Development Authority (Shurooq), with more under negotiation.

Q- What are Nakheel's expectations for profits and revenues at the end of this year and in the next five years?

We expect to meet our profit and revenue targets this year. In the next five or so years, we expect to remain profitable with increasing contributions from our non-development businesses of retail, leasing, and hospitality as more assets under these business verticals become operational.

Q- Is Nakheel considering offering its shares on the local stock exchange, as is the case with Emaar?

This is not something we are considering at this time.

Q- Do you seek loans or facilities from banks in the coming period?

We have a number of options, including cash resources and bank finance, open to us.

Q- What are the funding sources for your giant projects? How much funding do you need to complete your projects in the coming years?

Nakheel has AED 50 billion ($13.6 billion) worth of projects under development, to be funded through various resources.

Q- What is the size of your investments in Deira Islands? And what is the size of your participation in the Expo 2020 projects? What is the expected impact of this event on the sector as a whole?

Deira Islands is our new, 15.3 square kilometres waterfront city that will turn the area traditionally known as ‘Old Dubai’ into a world-class hub for tourism and retail. We have already invested AED 8.8 billion ($4.4 billion) in infrastructure and construction contracts there, and this figure will increase to AED 10 billion in 2019. Nakheel is building a whole range of retail, hospitality and residential projects at Deira Islands, including Deira Mall, The Night Market, Deira Central, the RIU Resort Deira Islands and the Centara Deira Islands Beach Resort Dubai, with a new waterfront residential project to be announced soon.

Q- Note that many investors are starting to move to the stock markets away from the real estate, can we say that the stock market stole the lights from the investment property?

Real estate continues to be a popular investment option. Nakheel already has more than 28,000 international customers, with investments of AED 125 billion ($34 billion), and we continue to see interest in the real estate sector. Dubai is one of the world’s fastest-growing cities, with tourist numbers set to hit 20 million a year by 2020 and the population expected to reach 5.2 million by 2030. These people will need homes to live in, hotels to stay at and places to shop, dine and spend leisure time. All this adds up to significant opportunities for investors who want to be part of Dubai’s exciting real estate future.

Q- What are your views of the financial sector and the stock market and its relationship to what is happening in the real estate sector?

With the rising interest rates and GDP growth, the financial sector in the UAE is doing well. This will continue for the remainder of 2018. While UAE stock markets have declined compared to last year, as a reflection of the general decline in global emerging markets, the real estate sector continues to mature and find its own equilibrium.

Q- What are your expectations and insights for the real estate sector in the coming years?

In Dubai, the real estate sector will continue to develop and grow in line with Government goals.

Q- Are the official procedures of the recent decisions to open the ratios of ownership and others will revive the real estate sector in your opinion?

Recent announcements relating to business ownership and longer-term visas is a step in the right direction that will have a positive effect on the UAE economy, including the real estate sector.

Q- Do you think that the interest rate and expected increase will affect the sector's internal trading in the UAE?

Any increase in the cost of doing business will impact business activity. However, with the GDP growth and investor-friendly policies of the UAE, the impact is likely to be manageable with overall economic growth achieved during 2018.

Source: Mubasher Exclusive

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