Dubai real estate firm Nakheel risks being unable to repay an Islamic bond (sukuk) due in 2015 unless it can launch new developments and sell land in the next three to five years, according to a report by the US’ JP Morgan.

The bond is expected to be issued later this year and be around $3bn, according to the bank. The sukuk will act as the final repayment for trade creditors of Nakheel. It will be traded on the Nasdaq Dubai and pay 10 per cent a year.

JP Morgan says that because of concerns about the ability of Nakheel to redeem the sukuk when it matures in 2015, its trading value will be around 60 per cent of the face value of the bonds.

Nakheel should be able to repay other debts up to 2014, the bank said. It added, “Barring a recovery in the real estate market we expect Nakheel to run out of cash by the end of 2015.”

The firm’s ability to redeem the sukuk will depend on its ability to complete projects and make sales “Although we believe that Dubai’s real estate market is expected to stabilise by 2013-14, we remain cautious on developers’ ability to launch and sell new projects over the next five years,” the bank said.