Tourism may be lifeline for Nakheel’s World

The first island on Nakheel’s The World is on track to open by the year-end, in a move that may signal a potential new direction for the troubled offshore project. The luxury beach club on the island of Lebanon has already attracted the interest of travel agents and tourists keen to book events on the man-made island, said operations manager Reza Sinnen. “We’re the first commercial development on The World,” he said. “We’ve already had an enquiry from one individual who wanted to book the island for December 31. “We want to run weekend events with promoters.” The project includes a 100-seat restaurant, cabanas, a lounge area and entertainment facilities, and is owned by Indian entrepreneur Wakil Admed Azmi, who bought the island in 2008. Membership to the beach club could cost up to AED40,000 a year and – with a pontoon that can accommodate up to 80ft yachts – the company is keen to tap the lucrative yachting community. The success of the club’s launch could be a bellwether for developer Nakheel’s own plans to resuscitate the offshore project by launching tourist trips to the islands. The developer, which is restructuring some AED59bn ($16.1bn) of liabilities, is in early talks with a company to offer day tours for visitors from Palm Jumeirah out to the islands.  “We are trying to develop a new tour and cruising business to The World islands from Palm Jumeirah, we see a lot of demand for tour agencies for such things,” Nakheel chairman Ali Rashid Lootah said in August.  “We have a lot of people who come to Dubai for short stays and people asked us to develop that… for some packages for short-term tourism.” The islands could prove a hit among wealthy locals and tourists eager to secure a unique hideaway for events, said Basel Abu Alrub, managing partner at Dubai-based agency U Travel.  “It will generate interest for private functions that are high-end and are unique,” he told Arabian Business. “I had a recent inquiry from a wealthy Indian family looking to book an island for use for a 60th birthday party.” Alrub said operators would need to be “travel agent-friendly” and offer incentives and discounts in order to make it viable for travel companies to promote the islands profitably. If they do, he said it would be “very interesting” to potential clients. Announced at the height of Dubai’s real estate bubble, Nakheel’s ‘The World’ epitomised the city’s boom-time ambition but quickly ran aground in the wake of the global financial crisis. Construction on the offshore project ground to a virtual standstill in the wake of the downturn, which saw real estate prices in Dubai fall more than 60 percent from their peak. Almost all buyers on the project have failed to begin construction, with Lebanon’s World Island Beach Club the only island where active work is ongoing. Nakheel is embroiled in more than 10 lawsuits relating to the islands. Nakheel has claimed a number of buyers are in default, while a source told Arabian Business in July the developer had changed terms on payment schedules previously agreed with buyers of islands to fast-track the collection of fees. The new demands were allegedly issued after a revamp of Nakheel’s chairman and board in March 2010, as the developer sought to restructure millions of dollars of debt. Nakheel has said 70 percent of the 300 manmade islands are sold and that building work is the responsibility of the owners. Any attempt to reshape the project as a tourism destination would be hindered by the cost of construction and of transporting supplies to the islands, said Matthew Green, head of research at real estate consultancy CBRE. “Developers will have issues making it feasible,” he said. “[Tourism projects] will generate a lot of interest but people will take a wait-and-see approach and see if they can be successful.