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Dubai developers can utilise $2.2bn escrows

Dubai, February 26, 2009

Dubai developers have access to up to $2.2 billion from escrow accounts to cover construction commitments, the emirate's property regulator said in a strategy report.

Several Dubai-based contractors have said they are owed hundreds of millions of dirhams by state-linked developers and some may face bankruptcy as credit dries up.

Several developers have cancelled or scaled back projects after the real estate sector, a key pillar of the Gulf emirate's economy, slumped following a six-year boom.

Dubai's Real Estate Regulatory Agency (RERA) said 8 billion dirhams ($2.18 billion) was the "total available amount in the escrow accounts after RERA supervised and agreed to issue payments from these accounts to cover construction works in the projects".

It said availability of the funds was linked to "the ratio of project completion", adding it was also conditional to commitments for finishing current projects, but did not give specific details.

Dubai developers can weather the downturn without drawing on the government's $20 billion bond programme, RERA's chief executive Marwan bin Ghalita told Al Arabiya television.

"Developers are able to overcome the crisis by restructuring and (through) amounts in escrow accounts," said Ghalita, who is also on Dubai's economic crisis committee.

On Wednesday, Nasser Al-Shaikh, the head of Dubai's Department of Finance, said the property sector, could be among the main beneficiaries of state aid.

Al-Shaikh said the $10 billion Dubai received from selling bonds to the United Arab Emirates central bank would be enough for now to help local companies pay off debts and restructure to deal with a real estate slump.

About $75 billion worth of projects in the UAE have been suspended or cancelled altogether, an HSBC report issued in January showed. - Reuters




Tags: Dubai | property | Escrow |

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