Nakheel reports 7.2-per cent rise in debt, shrinking assets

Dubai World property unit Nakheel, which is seeking to renegotiate debt, said its total liabilities rose 7.2 per cent to 73.3 billion UAE dirhams ($20 billion) in the first half of 2009, while total assets fell to AED147 billion from AED155.5 billion.

Nakheel said in a statement on Wednesday that it made a first-half loss of AED13.4 billion ($3.65 billion) as revenues fell and it wrote down the value of land and property.

It added that took first-half impairment and termination charges of AED13.2 billion. "The impairment charge primarily relates to the writedown in the value of land to current fair market levels and the writedown of certain properties under construction relating to properties that have been delayed or scaled back," it said.

Government-owned Dubai World, which controls Nakheel, is in talks with creditors to restructure $26 billion of debt, including a $3.52 billion Islamic bond of Nakheel that matures 14 December. In January this year, the state-owned developer said it halted work on a 1-km tall tower in the emirate.

The builder of the man-made island in the shape of palms off the coast of Dubai said first-half revenue fell to AED1.97 billion from 9 billion in the 2008 period. Nakheel said it was halting construction on two of its palm island projects.

Nakheel said "sales and volumes and transaction activity remained low" during the first half of the year due to the downturn in Dubai's property market. "Whilst the management and shareholders remain optimistic, the outcome of such a request cannot currently be determined," it added.