Bank guarantee allows Union Properties to accelerate work

18 December 2009

Contractors working on projects for local developer Union Properties at the Dubai International Financial Centre (DIFC) have accelerated construction work because the company has started to make more regular payments.

Union Properties has two major construction projects at the DIFC: the Index Tower and the Ritz-Carlton hotel and Limestone House apartments project.

“We have seen consistent payments in recent months and there is now real progress,” says one contractor working on one of the projects. “It is much better than earlier this year, when work was very slow because we were not getting paid. We now expect to finish the job early next year.”

Another contractor says that projects have been revitalised because Union Properties’ financial position has improved. “Union Properties has had a difficult year, but its position with the banks seems to have improved, and that is obviously good news for the contractors,” he says.

In June, Union Properties blamed “restricted assistance from banks” for delays to work on its projects.

In November, the company’s financial position improved when Emirates NBD, its main shareholder and the UAE’s largest bank, guaranteed a AED2.8bn ($749m) loan.

One banker involved in the deal says the Emirates NBD guarantee has given the other 17 finance houses involved in the deal the reassurance they need to continue funding the company.

In November 2005, Union Properties awarded the local/ Australian joint venture Nasa Multiplex the $272m main construction package for the Index Tower.

In January 2006, it awarded a French/local joint venture of Bouygues and Target Engineering Construction Company the $275m contract to build the Ritz-Carlton and Limestone House project.

UK architect Foster & Partners designed the 79-storey, mixed-use Index Tower.

US-based architect Gensler & Associates designed the Ritz-Carlton and Limestone House.

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