DUBAI, (Reuters) – Dubai’s Emaar Properties said on Thursday it will consider a petition from investors to cancel or postpone projects worth more than $24.5 billion as the emirates suffer from a real estate downturn.
Some 200 investors have called on Emaar, which is building the world’s tallest tower in Dubai, to hold off on dramatic expansion plans after house prices fell by at least 25 percent from peaks last year.
“Emaar Properties has received a petition from investors regarding some of its projects and will consider their proposals seriously,” an Emaar spokeswoman said in a statement.
The petition by individual property buyers who call themselves the “Emaar investor group” calls for the cancellation or postponement of the Warsan, Asmaran and Maysan projects in Dubai launched in mid-2008.
Dubai residential real estate prices have fallen by an average of 25 percent since a peak of September, Morgan Stanley said last month, adding some $263 billion of projects had been cancelled or put on hold in the United Arab Emirates.
The petition is the latest setback for the property developer after being hit hard by the global financial crisis.
Emaar posted a loss of 1.77 billion dirhams ($481.9 million) in the fourth quarter due to writedowns from its U.S. unit.
Robert McKinnon, managing director of equity research at Al Mal Capital said the cash-strapped developer would have difficulties paying back deposits should it cancel the projects.
“Depending on the scale of any rebates, Emaar may not have the cash to give back at the moment given their already strained working capital.”
Dubai’s Arabtec ARTC.DU, which was awarded the contract by Emaar to build more than 500 villas at the 3.4 million square foot Warsan development in July 2008, is still working on the project, its Chief Executive Riad Kamal told Reuters.
“We haven’t received any notification. We are still working on it.”
A cancellation of the contract would be another blow for Arabtec, the region’s largest listed contractor, which is seeking at least $460 million with Malaysian engineering firm WCT Bhd in compensation for a Dubai race course contract that was cancelled in January.
Asmaran is a 70 million-square-foot hospitality development worth 90 billion dirhams launched by Emaar Bawadi, a joint venture between Emaar and Dubai developer Tatweer’s Bawadi unit.
The Maysan project, also launched by Emaar Bawadi, comprises three high-rise apartment towers within the Asmaran development.
The Emaar spokeswoman said the firm was committed to upholding the interests of all its customers and stakeholders.