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August 16, 2009
Damac Properties, the Dubai-based developer, is running into
challenges with its Dh55 billion (US$14.97bn) Tarin Hills project in
Iraqi Kurdistan, government officials in Iraq say.
Herish
Muhamad, the chairman of the Kurdistan regional government’s board of
investment, said the government was “facing some difficulties” with
Damac over the project because “nothing has started on the ground”. He
said the project could be cancelled.
“My team and I will discuss all possible scenarios before taking the
last decisions,” he said. “However, our decision might not be
pre-consulted with them.”
The company launched the project in
June last year at a ceremony that included the prime minister of the
Kurdistan regional government, Nechirvan Barzani.
The project
was hailed as a major pledge of foreign direct investment into a region
that had only recently began developing its economy after years of
sanctions and brutality against its population by Saddam Hussein.
Damac executives said at the time that sales for the 170 million
square foot project would start last summer and construction would
start by December 2008. But there has been no activity on the project
since the announcement, government officials said.
Niall
McLoughlin, a spokesman for Damac, said the company was adjusting the
project’s timeline and plans because of the global financial crisis.
“Damac
has taken the sensible step of reviewing the construction timetable
with a view to rescheduling some projects,” he said. “It simply makes
good business sense for us at this time to focus on those construction
sites where we are at a more advanced stage.”
Mr McLoughlin said the company was in negotiations with the board of investment.
Plans
for the Tarin Hills project, located 18km from the Kurdistan regional
capital of Erbil, showed a mixed-use development with housing and
facilities for a population of 50,000.
GCC property developers
have been hard hit by the global economic downturn. Many are now
delaying or cancelling developments, starting with some of the projects
in other countries.
During the boom times, many developers signed deals to build
projects in exchange for free land in countries without experienced
development companies. These deals have started coming under pressure
now that the companies are having difficulty financing construction.
In
June, Damac sold 60 per cent of its massive development projects in New
Cairo, Egypt, to Egypt’s Housing and Development Bank. Another Damac
project in Egypt, the Dh60bn Gamsha Bay, is on hold.
Damac is facing especially difficult challenges in the wake of the
financial crisis because of its large portfolio of unfinished projects.
The
company launched 75 projects since it was founded in 2003. So far, it
has finished just seven buildings. Another 11 have reached significant
levels of construction. However, 43 projects have not started
construction and 14 have only completed either fencing around the site
or basic piling, according to an analysis of the construction updates
on Damac’s website.
Source: The National
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