Shocking! Atlantis Hotel to be sold for debt repayment
Atlantis Hotel, the flagship resort on the emirate’s Palm Island, and one utility provider are set to be sold by Dubai World’s investment arm, Istithmar, to raise cash ahead of a $5.5 billion repayment due to the conglomerate’s lenders in September 2015, the Financial Times has reported.
The deals mark another statement of intent to pay down debts, the FT report said, adding that the IMF estimates that Dubai has $85 billion of debt that will mature by 2017.
Dubai's Water & Electricity Authority is expected to sign a deal to buy Palm Utilities in the coming days, which includes the district cooling company for Palm Island and other developments linked to Dubai World and its debt, for around $500 million.
Investment Corporation of Dubai, the state holding firm that controls state assets such as the fast-growing Emirates Airlines, is also in talks to purchase the Atlantis, which opened as the emirate’s real estate market was collapsing in 2008.
A price for the bustling resort has yet to be determined. Last year, Istithmar took full control of the property when it paid for $250 million for a 50-percent stake held by Kerzner International. The hotel refinanced its debt with a $880 million loan led by Abu Dhabi Commercial Bank earlier this year.
Meanwhile, the International Monetary Fund warned Dubai that the emirate might need to intervene in its property market to prevent another boom-and-bust cycle of the kind which brought it close to default four years ago.
Over-inflated Dubai real estate prices crashed by more than 50 percent in 2009 and 2010, triggering a corporate debt crisis which unsettled financial markets around the world.
The economy and the property market are now recovering, but so strongly that the IMF worries another bubble could form. Because Dubai’s debt has continued to rise, it might have difficulty coping with fresh instability.