The company behind Dubai’s palm-shaped islands said the final trade creditor sukuk payment this week marked the end of a process that began in August 2011.
It represents a major milestone for a developer often associated with both the highs and lows of the emirate’s turbulent property market.
“Officially as of today we have no debt,” Ali Rashid Lootah, the chairman of Nakheel, said in Dubai.
The repayment of the sukuk effectively paves the way for the developer to raise more bank borrowings to fund a massive construction programme across the emirate.
“We will be going to the market,” said Mr Lootah. “Banks are very much interested in financing our projects. We are in serious discussions with different lenders.”
Nakheel had to be bailed out by the government after amassing billions of US dollars in debt during a property boom that turned to bust in late 2008. The developer was at the heart of the ensuing 2009 Dubai World debt crisis, which rocked global financial markets. The bailout, along with Nakheel’s previous debt, was restructured in 2011.
Aidan Birkett, the British financier who led the Dubai World restructuring, recognised that Nakheel was key to the overall success of the plan.
“If you fix Nakheel, you fix the real estate sector and you go a long way to fixing the Dubai economy,” he told The National in March 2010.
Almost seven years on from the Dubai World debt crisis, Nakheel has rebounded from its loss-making years, generating a steadily increasing profit that reached Dh4.3bn last year from Dh1.2bn in 2011.
Nakheel has also switched focus from hugely capital-intensive artificial island building to creating less cyclical recurring revenue from shopping malls and hotels.
In addition to the 21,000 homes it has either under construction or planned, its retail project portfolio covers more than 16 million square feet. It also has 14 hotel and serviced apartment projects around the city.
Nakheel is emerging from years of financial restructuring at a time of economic uncertainty in the emirate.
Property sales are in the doldrums and the strong dollar, to which the dirham is pegged, is hurting retail sales and hotel bookings.
JLL recently revised its forecast for a revival in the Dubai property market to early next year from halfway through this year. Cluttons expects further market softening into next year.
Still, Mr Lootah believes that while the property market is not as buoyant as it was, there are enough people still moving to the emirate to sustain the thousands of new residential, retail and hotel units being built. He expects the market to start moving again soon.
“There was a slowdown after 2014 but there was no panic in the market,” he says. “More and more people are moving to Dubai – we see that from our leasing.
“The speculation is not there in Dubai any more, and that is healthier.”