ABU DHABI // The flagship property project of National Bonds, the Sharia-compliant investment scheme, will be delivered a year late while a second creekside development has been put on hold indefinitely and will not generate any returns in the near future, it has emerged. The delays come as consumers who have invested in the savings scheme await news on whether they will receive any dividends for last year.
Bondholders received profits of 7.07 per cent for 2008 and 6.03 per cent in 2007. The company said last week that "the annual profit rate for 2009 will be announced shortly". National Bonds Corporation, which is owned by the Government of Dubai, Emaar Properties, Dubai Bank and Dubai Holding, uses the proceeds from selling Dh10 bonds to make investments. It pays out a profit at the beginning of each year based on the performance of those holdings in the previous year. It also holds a weekly draw with a top prize of Dh1 million (US$272,000). As of March last year, it had assets of about Dh3 billion.
National Bonds's first property project, the Dh1.5bn Skycourts, was sold out in 2006 but it has since been delayed by a year and has yet to be delivered to buyers. The six-tower development comprised 2,300 homes. After rising in 2007 and 2008, prices for apartments in Skycourts have fallen back to their original levels, sales listings on property websites show. Deyaar Development, a proper developer that is managing the construction of National Bonds' property projects, said last week the apartments would be delivered to customers by the third quarter of this year.
"There have been some inevitable circumstances that have led to minor delays in completion timelines, which mostly includes the development of infrastructure and authorities' approvals," Deyaar said. In 2008, National Bonds sold out its second development, the Dh800m Flamingo Creek project at The Lagoons. No substantial construction work has been carried out and the project has been put indefinitely on hold.
"Flamingo Creek is definitely in our project pipeline," Deyaar said. "We remain committed to the project. Construction will begin soon. We can't commit on a delivery timeline yet because the resources still need to be put in place. - The delay is due to the lack of adequate infrastructure, which is the responsibility of the master developer. The circumstances that have led to the delay are beyond the control of Deyaar."
National Bonds declined to comment on the projects or any profit rate. Ron Hinchey, a partner at the property consultancy Cluttons, said the sales market for properties had declined to the point where unbuilt projects could not sell and ready properties were selling at discounts. "There is some movement for completed properties in the market," he said. "But it has to be given away at a large discount. For buildings that are not out of the ground, no one in the right mind is going to buy it."
National Bonds is also exposed to the property sector through an investment in BCS Strata Management, a company that manages jointly owned properties in apartment buildings and villa developments. The Dubai Land Department has not yet issued the regulations for the Strata Law, preventing home-owner associations from forming and hiring strata management companies. National Bonds puts half of its funds in short-term Sharia-compliant investments such as sukuk and other funds. The other half is invested in infrastructure and development projects.