Posts Tagged ‘United Arab Emirates’
Wednesday, June 16th, 2010
State-owned holding company Dubai World is in talks to renegotiate $26 billion of debt and asking its banks for approval to defer loan payments. The banks are hoping to avoid a haircut – taking less money than they are owed. Dubai’s government also might provide a guarantee to the banks that are owned money. Dubai World and its Nakheel PJSC and Limitless LLC property units used the loans to finance development of palm tree-shaped islands off the emirate’s coast. When the financial crisis hit in 2008, Dubai World ran into difficulty refinancing its real estate loans.
Saud Masud, Dubai-based head of Middle Eastern research at UBS AG, said “The proposal will be a meaningful one. I would highly doubt that what they come out with will be accepted and everyone moves on.” Meanwhile, Dubai World advisors Deloitte LLP and Moelis & Co. have asked the Dubai Financial Support Fund for help funding their interest payments on the loans. Dubai World is relying heavily on asset sales to finance the payments.
Dubai World plans to consult with the government of Abu Dhabi and the United Arab Emirate’s central bank, which was one of three institutions that lent Dubai $20 billion last year to support the state-owned firms during the credit crisis. The once ambitious Dubai World’s development plans leave the holding company owing money to more than 90 banks.
To hear Rochdi Younsi’s recent podcast about real estate in Dubai, click here.
Tags: Abu Dhabi, Deloitte LLP, Dubai Financial Market General Index, Dubai Financial Support Group, Dubai World, Limitless LLC, Moelis & Company, Nakheel PJSC, UBS AG, United Arab Emirates
Posted in Development, Economics, Financing | No Comments »
Thursday, May 27th, 2010
Foreign governments are a growth engine for New York City commercial and residential real estate at a time when many cash-strapped European nations are facing financial crises. For example, Sri Lanka’s Permanent Mission to the United Nations has $8 million to spend and is looking at Manhattan office space. Laos recently paid $4.2 million in cash for a five-story townhouse in the Murray Hill neighborhood. Writing in the Wall Street Journal, Anton Troianovski notes that “Even the Western Hemisphere’s poorest country – Haiti – was gearing up to bid on a Second Avenue office condominium when the earthquake struck and derailed its plans.”
Foreign governments “are almost the only game in town,” according to Ken Krasnow, managing director with Massey Knakal. During the boom years, foreign governments looking to buy real estate for consulates and U.N. missions found stiff competition from private developers. Since last year, however, Senegal, Singapore, South Korea and the United Arab Emirates have purchased prime properties for redevelopment. Additionally, governments are paying top dollar – usually in cash – for office space or land sites that are within walking distance of the United Nations. Troianovski notes that “This trend underscores the bench strength of New York real estate: When certain buying groups move to the sidelines, others are waiting to take their place.”
Dealing with foreign governments means that the transaction typically progresses at a glacial pace. Philips International spent three years in negotiations with the Ivory Coast to close on an $8 million office condominium at 800 Second Avenue. The transaction, which closed last September, spent 377 days in escrow.
Tags: CoStar Group, Haiti, Ivory Coast, Manhattan, Massey Knakal, Murray Hill, New York City, Philips International, Senegal, Singapore, South Korea, Sri Lanka, Turtle Bay, United Arab Emirates, United Nations
Posted in Economics, Office, Residential | No Comments »
Thursday, February 4th, 2010
Capital is flowing out of the Middle East and being invested in real estate across the globe, according to Nicholas Maclean, Managing Director, CB Richard Ellis, Middle East. “The outflow of capital from the Middle East to be invested into real estate properties worldwide has been higher than the influx of global capital into real estate properties in the Middle East. The UAE, in particular, has been looking to diversify its investments and part of the reason has been the lack of transparency within this region.”
Europe and the Far East have received the lion’s share of Middle East investment, with India and China perceived as strong growth markets. Additionally, United Arab Emirates capital is being infused into Abu Dhabi’s office and hospitality sectors. “Capital spent as FDI into real estate within the Gulf Cooperation Council represents only 11 percent of the total. Cross-border activity in the world has exceeded 50 percent and so we have a great opportunity to be the recipient of more investment,” Maclean said.
In terms of where the Middle East is placing its investment dollars globally, “London, Paris and Germany have been the largest recipients in Europe while Hong Kong, Singapore and Australia saw the largest inflows in the regions in the Far East. Knowledge and liquidity have been the key driving forces for the Middle East investors transferring capital to these areas. Institutional investors from the Middle East are investing in commercial developments in these markets while individual investors are looking at residential properties in the UK,” Maclean said.
To learn more about the Middle East and its real estate market, listen to Rochdi Younsi, director in the Middle East and Africa practice of Eurasia Group, analyze the major players in real estate and the new investment opportunities in the Middle East.
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Tags: Abu Dhabi, CB Richard Ellis Middle East, Dubai, Gulf Cooperation Council, Jumeirah, Middle East, Offshore real estate funds, Saudi Arabia, Sheikh Zayed Road, United Arab Emirates, Zawya
Posted in Development, Economics, Office, Residential | No Comments »
Monday, December 7th, 2009
Dubai World has entered into discussions with its banks to restructure its $26 billion worth of debt, including $3.5 billion owed by its property unit, Nakheel. Dubai World is Dubai’s flag bearer in global investments. As a holding company it operates a highly diversified spectrum of industrial segments and plays a major role in the emirate’s rapid economic growth. Dubai World’s investment spans four strategic growth areas of 21st century commerce: Transport & Logistics; Drydocks & Maritime; Urban Development; and Investment & Financial Services.
The rest of Dubai World’s liabilities are described as being on “a stable financial footing”. Excluded from the negotiations will be debts from subsidiaries such as Infinity World Holding and Istithmar World Ports & Free Zone World, according to a Dubai World statement. Currently, Dubai is trying to defer payments on less than half of $59 billion of its total liabilities.
Sheikh Mohammed Bin Rashid Al Maktoum – Dubai’s ruler and Prime Minister of the United Arab Emirates – said the debt that Dubai World plans to restructure includes approximately $6 billion of Islamic bonds sold by Nakheel. “Initial discussions have commenced with the Banks of Dubai World and are proceeding on a constructive basis,” said a Dubai World spokesman. “It is envisaged the restructuring process will be carried out in an equitable way for the overall benefit of all stakeholders.”
Dubai’s government said its Financial Support Fund will lead Dubai World’s workout process, and named Aidan Birkett of Deloitte LLP as the chief restructuring officer. Dubai World plans to seek an extension of its loan maturities to May 30, 2010, at the very earliest.
According to Nick Chamie, an analyst with RBC Capital Markets in Toronto, “Now that they’re saying $26 billion, it reduces some of the panic that built up in the last few days. This is positive. The market was feeding on its own concern and there were talks of $60 billion debt that would need to be restructured.”
Tags: Aidan Birkett, credit default swap, Deloitte LLP, Dubai, Financial Support Fund, Infinity World Holding, RBC Capital Markets, United Arab Emirates
Posted in Development, Economics | No Comments »
Tuesday, September 22nd, 2009
With 28 million people and a $376 billion economy, Saudi Arabia provides its citizens with subsidized goods, services, healthcare, housing and education to assure a stable political system and long-term allegiance to the House of Saud, according to Rochdi Younsi, director in the Middle East and Africa practice at the Eurasia Group. An expert on the Gulf Cooperation Council, Younsi has been featured on CBS’ “60 Minutes” and on National Public Radio.
Thanks to its oil revenues, Saudi Arabia is building new cities such as the $26 billion King Abdullah Economic City, and hiring American contractors and consultants to construct this sustainable metropolis on the Red Sea. The vision: to create modern cities in which various major corporations will be headquartered. The payoff: approximately 1,000,000 new jobs for Saudi nationals.
Cash-rich Kuwait, which recently invested $800 million buying the Chrysler Building, has a $138 billion economy and $200 billion in reserves. According to Younsi, Kuwait is fascinating because it depends heavily on oil production and export to finance its Kuwait Investment Authority, which was established in the 1950s. The nation’s democratic system of government can be both an impediment and an advantage because it includes a parliament with real legislative powers and the ability to redesign the emirate’s economic strategy – which can mean gridlock.
Dubai, by contrast, has a $37 billion economy and is $100 billion in debt, following its building boom to establish itself as the Middle East’s financial hub. Younsi says it is important to not think of Dubai as an independent nation because it is one of seven emirates comprising the United Arab Emirates. Dubai lacks energy resources and is dependent on revenues it receives from the larger and wealthier Abu Dhabi, which is rich in oil and gas.
Eurasia Group is the world’s leading political risk and consulting firm that helps corporations make informed business decisions in countries around the world.
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Tags: Africa, consultants, contractors, deomocratic system, Dubai, education, Healthcare, House of Saud, housing, Kuwait Investment Authority, Middle East, oil revenues, parliament, political system, Saudi Arabia, subsidized goods, United Arab Emirates
Posted in Economics, Financing | No Comments »
Wednesday, July 29th, 2009
The Watergate Hotel – the site where the “third-rate burglary” that sparked the biggest political scandal in American history and brought down Richard M. Nixon’s presidency was plotted — is now a distressed commercial property that failed to find a buyer at a much-anticipated auction.
The 251-room hotel, with its spectacular views of the Potomac River, was taken back by its owner, PB Capital, a subsidiary of Deutsche Postbank AG after no bidders expressed interest in purchasing and rehabbing the property in an auction held by Alex Cooper Auctioneers. Monument Realty, which in 2004 bought the 12-story hotel with financing from the now-bankrupt Lehman Brothers, owes PB Capital $44.3 million and is in default on the property. In addition to paying off the loan, the new owner would have to rehab the Watergate, which has been closed for several years. Built in 1967, the legendary hotel needs an estimated $100 million in renovations to bring it up to 21st-century standards.
David Furman, an attorney with Gibson Dunne, is not surprised that the hotel did not interest bidders. “Lenders usually win in these kinds of auctions because they have the ability to credit bid the full amount of their loan. There is usually a negotiated settlement before or after the auction. It is rare that there is an upset at a foreclosure sale.”
According to Monument principal Michael Darby, he has commitments from new investors to restore the Watergate as a five-star hotel. Another developer, Robert Holland, wants to buy the Watergate and is in talks with the United Arab Emirates-based luxury hotel chain, Jumeirah, to operate it.
Tags: auction, burglary, David Furman, Deutsche Postbank AG, developer, distressed commercial property, Gibson Dunne, Jumeirah, Lehman Brothers, Luxary hotel chain, Michael Darby, Monument Realty, PB Capital Corporation, political scandal, Richard M. Nixon, Robert Holland, United Arab Emirates, Washington DC, Watergate, Watergate Hotel
Posted in Development, General | No Comments »