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Ali Rashid Lootah, the Nakheel chairman, says the financing scheme for the proposed project will be a repeat of the model of Dragon Mart. Sarah Dea / The National
Ali Rashid Lootah, the Nakheel chairman, says the financing scheme for the proposed project will be a repeat of the model of Dragon Mart. Sarah Dea / The National

Nakheel seeks private finance to build Palm Jumeirah shopping mall

Nakheel is seeking private finance to build a Dh2.5 billion shopping mall on the Palm Jumeirah as the developer moves further into the retail and leisure sectors.

Nakheel is seeking private finance to build a Dh2.5 billion shopping mall on the Palm Jumeirah as the developer moves further into the retail and leisure sectors.

The Nakheel chairman, Ali Rashid Lootah, said yesterday that the company hoped to issue a tender for the 424,000 square metre shopping centre in the centre of the Palm Jumeirah by the end of the year.

He said the company was looking to develop the multibillion dirham scheme through a build, operate, transfer mechanism - a form of privately financed construction that is currently being used by Nakheel and its private finance partner, New Mall Limited, to build a 177,000 sq metre extension to the Dragon Mart shopping centre in Dubai.

"Financially it will be repeating the model of Dragon Mart," Mr Lootah said. "The construction costs without the land could be I think Dh1 billion - that's excluding the hotel."

A tender for the main contract is expected to be issued by the end of the year and construction is likely to take two and a half years.

Nakheel said it was looking to move further into the retail and hospitality sectors in an attempt to diversify away from the cyclical property market. The company is developing two budget hotels at its Dragon Mart and Ibn Battuta mall extensions and will be developing a five-star luxury hotel as part of the Nakheel Mall.

The long-awaited Nakheel Mall will comprise about 200 shops, including a 4,200 sq metre supermarket and two anchor department stores, a nine-screen cinema and six medical clinics. There will also be an outdoor roof plaza with cafes and restaurants. The mall will include almost 100,000 sq metres of shops, 4,000 parking bays, a 1,000 sq metre indoor garden and a 180-metre high viewing deck with panoramic views of the Palm Jumeirah and the Dubai skyline.

In February, Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, endorsed the project and Nakheel's other retail and leisure project on the Palm Jumeirah, the Pointe, which has stalled as the developer concentrates on delivering projects and servicing its debt.

Despite posting a set of positive results for the first half of 2013 showing a 57 per cent jump in net profits to Dh1.2bn, Nakheel is still struggling under the weight of debts, Dh8bn of which fall due in 2015.

Mr Lootah said that the company was negotiating with three banks, comprising both local and international lenders, over the Dh8bn loan.

"We're still working on that. We're having serious discussions. It will be a loan with an extended period and better terms," he added. "We're not desperate. We have enough resources to substantiate our loan. We have plenty of time. We have two years. People were questioning why we are starting talking early. We don't want to be in a desperate position in 2015. That's why we started talking early."

 

lbarnard@thenational.ae

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