Dubai creditors in a world of pain
Property in Dubai doesn’t come more exotic or ambitious than The World Dubai, a project conceived and developed by the state owned company Dubai World.
The project itself ground to a halt during the economic crash, but now in the aftershock the company is in the process of negotiating with its creditors. An announcement is expected shortly on how it plans to restructure $26 billion worth of debt.
Creditors who brought investment to the table at the peak of the market have a lot to thank Abu Dhabi for as the emirate bailed out Dubai World to the tune of around $10 billion. Instead of the muscle power they flexed over real estate in the UAE back in 2006-2007, creditors are far more timorous beasties and are negotiating patiently.
Creditors realise it’s better to ask than to demand these days. As talks continue, there is the sign that some creditors may have to wait up to nine years before their debt is cleared and as such, are asking that interest is added to the outstanding balance.
Faced with the possibility of losing it all, creditors can at least be thankful that a plan is forming.