Nakheel rejected Centro buyBrought to you by Turi Condon | May...

Nakheel rejected Centro buyBrought to you by


Turi Condon | May 08, 2008

ONE of the world's biggest privately owned developers, Dubai-based Nakheel, looked at the Centro Properties Group but rejected buying the debt-plagued shopping centre owner, according to Nakheel chief executive Chris O'Donnell.

"We certainly had a cursory look, but it was all too hard," said Mr O'Donnell, who ran Investa before moving to Dubai two years ago to head Nakheel.

"It seemed very hard to unravel -- what was real and what wasn't -- so we didn't spend a great deal of time looking at Centro."

Mr O'Donnell said Nakheel -- which is of one of the world's richest holding companies, the ruling family-owned Dubai World -- was deluged with investment "bargains" following the credit crisis.

"After the credit crunch, I can't tell you how many investment bankers turned up in Dubai with huge booklets showing us all the best bargains that were available around the world," he said.

"Literally, pretty much every REIT (real estate investment trust) in every market was presented by investment banks, which is a ridiculous situation.

"When you are being barraged with that sort of information, my experience is you are best to do nothing because something that looks good value today isn't necessarily the right thing to buy into, at this point."

Mr O'Donnell said Nakheel was researching possible acquisitions but would not buy quickly.

"I think we'll want to see the markets settle just a little bit longer," he said.

Nakheel, known internationally for its enormous residential projects The Palm Trilogy, The World and Dubai Waterfront, will undertake about half of all Dubai's development over the next 10 years.

The city state with a current population of 1.7 million expects to have 4 million people by 2020.

Six months ago, the company, which has $US80 billion ($84.5billion) of assets/projects, decided it would pursue an international expansion strategy with a target of 65 per cent of assets in Dubai and 35 per cent in international investments in 10 years, Mr O'Donnell said.

Also in its strategy for the next decade is an aim to be one of the top three retail owners and developers in the world, a significant hotel investor, and a funds management operation.

The strategy would transform Nakheel from a local, albeit enormous developer, to a global investment power house.

In December, its sister company, hotel owner Istithmar, was rolled into Nakheel, adding $US20 billion in assets.

In the six months, Nakheel has invested $US1 billion in offshore real estate excluding the Istithmar merger, Mr O'Donnell said.

So far Nakheel has only taken stakes in two listed property groups -- a 12.5 per cent stake in Australia's Mirvac and 9.4 per cent holding in Singapore's CDL (City Developments Limited, whose parent company is Hong Leong Holdings).

There has been speculation that Nakheel would move to make a full takeover of Mirvac as it pursues Australia's biggest urban regeneration project, Barangaroo at Sydney Harbour.

Nakheel has confirmed it will tender for the project, on the edge of the CBD, with Leighton Holdings and Mirvac.

Mr O'Donnell said Nakheel was looking to partner with Mirvac and tap into its design expertise rather than privatise the group, despite the dive in Mirvac's share price.

"A full takeover is not on the cards for us," he said.

Mr O'Donnell said the group would look at larger projects in Australia, but generally looked for developments with an "ease of bureaucratic process".