Dubai developer raises cash by ‘credit notes’

Nakheel, a troubled real estate developer owned by the government of Dubai, is quietly raising cash by processing what people are calling “credit notes” in respect of developments it has delayed or cancelled, according to brokers and executives.

Dubai Waterfront, a development that was planned to be twice the size of Hong Kong island, and Palm Jebel Ali, an offshore island, are the main projects where Nakheel is offering its customers consolidation deals on selected properties.

The growing use of these transactions comes as the developer, arguably the most high-profile victim of the Dubai property crash, seeks to raise $4bn needed to settle a $3.5bn Islamic bond, plus profits, due in December, and to meet invoices from contractors and suppliers. Thousands of “credit notes” have been issued since April, as the developer seeks to shrink its $80bn project portfolio and to cut expenditure, the brokers say.