How the global downturn took its toll on the Waterfront

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In a city of huge projects, the Waterfront was to trump them all.

At a ceremony revealing the plans in 2005, executives from Nakheel, the Dubai World subsidiary that created Dubai’s Palm islands and The World archipelago, described the project that would balloon into a 130 square kilometre piece of land that would one day have enough homes and offices for 1.5 million people. It would be a new city that would unify two other massive projects: the reclaimed Palm Jebel Ali and a 75km waterway through the desert called the Arabian Canal. It would cost Dh100 billion (US$27.22bn).

Not only was the Waterfront Nakheel’s largest project, but it also formed the backbone of the company’s multibillion-dollar financing strategy. Waterfront land valued at Dh7.6bn was used to secure three Islamic bonds issued by Nakheel with a total value of $5.25bn. The sprawling project will play a major part in Dubai World’s restructuring proposal to creditors in the next few months as the conglomerate weighs which phases will be built and which should be scaled back or redesigned in the aftermath of the property decline.