Apparently there’s concern in Dubai that there’s more that’s sinking than the value of debt…
Nakheel, developers of The World, has denied that The World islands are sinking.
“Speculative reports suggesting that The World islands are sinking are wholly inaccurate,” said a company statement.
Yes, that’s right. Dubai World and its Nakheel subsidiary created a development called The World. Just like the Palm development, only this one is shaped like, well, the world.
Here’s the photo:
If there’s any one that needs a lesson in liquidity, it’s Dubai. Yes these developments are unique. Yes, they offer out of this world experiences, I’m sure.
But that’s part of the problem. In a world that is overflowing with liquidity, you can find all sorts of people willing to pay the price for that experience. But we’re not in that world anymore and there are a lot fewer people that want what a development like this has to offer.
And the risk of course is, that a liquidity issue is just masking over a solvency issue.
But Nakheel, adamant as ever, insists there’s nothing wrong with either the physical or financial aspects of this project. Pointing “to the fact that the islands are as solid as the rock they are built upon,” all I could do was chuckle.
Because sinking islands would be the least of Nakheel’s – and Dubai World’s – problems at this point. The deafening silence about Dubai World’s restructuring is still very much front and center.