The developer behind some of Dubai’s most extraordinary property projects revealed on Monday that it had resorted to taking funding from the emirate’s department of finance to help pay invoices.
Nakheel, the government-owned developer of projects such as the Palm Jumeirah island constructed out of reclaimed land to resemble palm fronds, received funding from the emirate’s $5bn disbursement of funding aiming to help state-linked companies.
The company confirmed it had received an injection of cash from the government, without revealing the amount, adding that it was restructuring some payment plans with suppliers.
Last month, the government said it had loaned $5bn from the $10bn federal loan to help state developers pay outstanding invoices.
The announcement sheds light on the way a $10bn bail-out loan to Dubai has been distributed. Dubai, one of seven members of the United Arab Emirates, received the funds from the federal central bank in February.
Nakheel, part of the same Dubai World holding group that includes ports operator DP World and investment company Istithmar, initially downplayed the impact of the crisis but has since had to slash staff and postpone landmark projects, including the Trump Tower on Palm Jumeirah.
Nakheel’s projects has been hit by the property crash that has seen prices collapse by more than 40 per cent just in the last quarter.
Its woes are compounded by the maturity of a $3.5bn sukuk – a bond structured to comply with Islamic principles – in December, regarded by analysts as the government’s main headache as it manages its overall debt pile of more than $75bn.