PETALING JAYA: The financial crisis that has hit Dubai is unlikely to have an impact on the property development being jointly undertaken by UEM Land Holdings Bhd and Dubai World, the investment arm of the Dubai government, analysts said.
Recent news that Dubai, a country known for its flashy lifestyles and the world’s tallest building, was deferring its debt payments has rattled investors.
“We believe the market has overreacted,” said UOBKayHian in a research report yesterday.
UEM Land signed an agreement in late 2007 with Limitless Holdings Pte Ltd (a subsidiary of Dubai World) for the setting up of a special purpose vehicle (SPV) to jointly develop Nusajaya’s Residential North precinct in Puteri Harbour, Iskandar Malaysia.
Limitless has a 60% stake in the SPV, known as Haute Property Sdn Bhd, with UEM Land taking up the balance 40%. Haute Property will develop the 111-acre Residential North precinct at Puteri Harbour with an initial investment of RM241.8mil.
According to previous reports, the estimated gross development value of the precinct, to be completed by 2013, is about RM1.5bil.
“We understand that Limitless does not intend to pull out from the project, but is not topping up its RM125mil project equity,” UOBKayHian said.
An analyst at a local bank-backed brokerage concurred that Limitless was unlikely to “pull out” from the project.
“Limitless has already invested in the project, so financing will not be an issue. However, future funding (from Limitless) could be a problem,” he said.
UOBKayHian said UEM Land could always seek funds from its parent company, Khazanah Nasional Bhd, should the need arise.
Another analyst concurred, saying: “Going to Khazanah is a valid option. Worst-case scenario, Khazanah could even take over Limitless’ place in the SPV.
“However, there could be a delay in the project if Limitless pulls out. But we don’t see that happening.”
Further, UOBKayHian said the debt situation in Dubai would not have a significant impact on Malaysian contractors.
“None of the major contractors has any business exposure in Dubai. While Sunway Holdings Bhd and WCT Land Bhd have high construction work exposure in the Middle East, the works are concentrated in the financially staid countries like Abu Dhabi, Qatar and Bahrain.
“More importantly, we do not foresee other Middle Eastern companies, such as Mubadala Development Co, Aldar Properties PJSC and Kuwait Finance House, pulling out of their joint ventures with Khazanah in Medini, Iskandar Malaysia,” it said.
By The Star (by Eugene Mahalingam)
Posts
1 comment:
nice post. thanks.
Post a Comment