Nakheel: Nakheel’s accounts look optimistic. The troubled Dubai property developer reckons its assets fell just 5 per cent in the first half. But property prices, in general, in the emirate dropped about 25 per cent. And Nakheel’s assets — such as the ostentatious Palm Island which is apparently now sinking by 5 millimetres a year — may well be sinking in value even faster.
Creditors may want to take Nakheel's accounts with a pinch of salt. The figures are unaudited. Although that is typical for the developer's half-year results, it does raise a question over how rigorously Nakheel has calculated its fair-market values. The numbers are also six months old in what continues to be a rapidly falling market. Dubai property prices are estimated to have fallen 50 percent so far in 2009, according to analysts at Colliers International.
But even on its own reading, Nakheel's accounts show how devastatingly late the property developer left it to try to restructure its liabilities. Nakheel only announced its intention to restructure its liabilities of roughly $20 billion as the repayment of a $3.5 billion bond on December 14 loomed. But during the first half, revenues had fallen 78 per cent compared with the first half of 2008. What's more, there was virtually nothing left of the $1.8 billion cash balance Nakheel had at the end of last year.
If the company’s creditors have a sinking feeling, who can blame them?