Real estate prospering in UAE due to economic boom

Two major real estate firms in the United Arab Emirates (UAE) said they would settle outstanding debt months ahead of maturity. On Saturday, Dubai state-owned developer Nakheel said it would pay four billion Dirham or 1.09 billion dollars worth of debt in 2014. The sum represents more than half of debt worth 6.8 billion Dirham (1.8 billion dollars) which matures in Sept. 2015. Nakheel's flagship developments are the man-made islands Palm Jumeirah and the Palm Jebel Ali whereas the latter is still under construction. Earlier last week on Dec. 30, Ras al-Khaima (RAK) Properties said it settled a loan worth 22.33 million dollar (81.77 million dollars). The loan was granted by the Investment and Development Office Government of Ras al-Khaima and is due in July 2014. RAK Properties which runs a number of tourism, residential and commercial developments in the UAE's northern emirate said he opted for settling the loan and for paying an early settlement fee. It is the first since the global financial crisis hit the UAE heavily in 2009 that developers announced pre-payment of outstanding debt. Thanks to an economic boom, real estate is prospering in the Gulf state which lures investors, businesses and tourists also due to its political stability. The International Monetary Fund expects the UAE gross domestic product to grow by 3.9 percent in 2014. As a direct reaction to Naheel's announcement, Emaar Properties, the biggest developer in the UAE gained 1.27 percent at the local bourse Dubai Financial Market, closing at 7.98 Dirham or 2.17 dollars. Emaar shares briefly rose during trading on Sunday above 8 Dirham, a first in the post-crisis era. Back in Nov. 2009, Nakheel nearly defaulted on an Islamic bond with a nominal value of 3.52 billion Dirham (960 million dollars) in the wake of the global financial crisis and the following real estate crash. Only an emergency loan of the oil-rich neighbor emirate of Abu Dhabi, also the UAE capital, saved Nakheel and the Dubai government from bankruptcy. At the time of restructuring, in August 2011, Nakheel had a total bank debt of 7.9 billion Dirham (2.15 billion dollars), due for repayment in 2015, 2016 and 2018.