MILAN — Dubai’s pressing real estate and financing troubles are causing delays in many Italian fashion houses’ projects throughout the city, among the woes of the struggling emirate.
To help ease the financial strain, the Dubai government this week launched a $20 billion long-term bond program. The Central Bank of the United Arab Emirates bought the first issuance, amounting to $10 billion, according to an official Dubai statement.
This infusion will provide the Dubai government with the necessary cash flow to make up for money that has dried up globally in the last 12 months, the statement said, and accordingly “meet all upcoming financial obligations and continue its development program.”
This underscores the depth of the economic problems facing Dubai, which relies on real estate investment for its financial well-being, unlike some of its Arab neighbors, which are oil-rich.
The opening of Giorgio Armani’s first hotel has been pushed back to 2010 from the slated date of next September, according to sources, although the residence portion of the project is still scheduled to open this fall. Palazzo Versace will also open early next year, not in 2009, as confirmed by a spokeswoman.
Armani’s project in Dubai is through an agreement with real estate giant Emaar Properties, whose sales and property prices have been impacted by the industry’s slowdown. In 2008, Emaar recorded a 15 percent drop in net operating profits to 5.57 billion United Arab Emirates dirhams, or $1.52 billion at average exchange, on a 10 percent drop in annual sales to 16 billion dirhams, or $4.35 billion, compared with 2007.
“Emaar is concentrating on completing all the projects that have commenced construction and has put new projects and launches on hold to [help] reduce the real estate property supply in Dubai,” Emaar said as it posted its financial results this month.
Chairman Mohamed Alabbar said, “Our primary focus in the last quarter of the year was to mitigate the negative impact of the global financial crisis by facing up to the new economic realities and identifying innovative strategies to sustain businesses.”
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