Giant estate developer Nakheel, at the centre of Dubai’s debt crisis, has reported a loss of over 13 billion dirhams (USD 3.64 billion) in the first six months of 2009, after a massive writedown of asset values.

The company said its total liabilities for the period rose by 7.2 per cent to touch almost 73.3 billion dirhams, turning the Gulf’s leading developer to lose a staggering 13 billion dirhams.

The company, which developed Dubai’s extravagant palm-shaped islands, said its revenue fell from 9 billion dirhams to just 1.97 billion dirhams for the period.

Nakheel’s parent company, state-run Dubai World is also in the midst of financial woes and has announced undertaking a massive restructuring.

The two real estate Gulf majors’ financial trouble came as Dubai’s largest stock exchange plunged for the third day today falling by 6.48 per cent with financial papers reporting that the emirates is struggling to halt the spread of an alarming debt crisis.

Dubai’s financial market’s main index was trading down 106.12 points at 1,531.93 at close.

Nakheel’s request for a freeze on the payment of the Islamic bond or ‘sukuk’ have raised fears of a debt default in entire Dubai as well as in the adjoining emirates.

The impairment charges were primarily related to the writedown in the value of land to current fair market levels plus the writedown of certain properties under construction relating to projects that have been delayed or scaled back, the company said in a statement posted on the Nasdaq Dubai website.

“The Dubai real estate was impacted and as a result Nakheel sales volumes and transaction activity remained low,” the statement said, adding that the company’s assets decreased to 147.01 billion dirhams at the end of June, compared to 155.52 billion dirhams in December 2008.

“Nakheel has continued to take steps to reduce its operational and overhead expenditure. The Group’s cost base is regularly reviewed to ensure that Nakheel is appropriately sized to meet market opportunities and challenges,” the statement added without elaborating on the number of job losses in 2009.

The developer added that its “immediate priority” was to ensure the completion of projects under construction.

“Management remains focused on maximising collections while controlling capital and operating expenditure.

Debt maturities occurring in the coming 12 months are being addressed in conjunction with support from Nakheel’s parent Dubai World,” the company said.

Meanwhile, the Dubai World is looking to protect some of its prized assets for going under the hammer as pressure mounts on the debt-saddled company.

Dubai World today said in a statement that its ship-building and repair arm Drydocks will not be included in the restructuring announced last month.

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