In the past couple of days, some interesting information has been released regarding Hydra Properties. For anyone wanting a summary on what happened at Al Fahim's Hydra we would recommend you start with our story of 20 July.
In the two articles (See links below) Hydra, via briefings to the media, has for the first time acknowledged that additional funds are likely to be required to complete the Hydra Villages development. They have also let it be known that there is a distinct likelihood that it will be asking Royalgroup to dip into its coffers to finance the scheme completion (confirming our report of last week Cash injection needed at Hydra).
Hydra has announced that to raise funds that it will be attempting to sell the partly-commenced developments around the world. Al Fahim's strategy for Hydra was to use customer's deposits from the flagship Hydra Village development to expand into other projects. The global property slump has left Hydra holding a number of partly excavated holes in the ground with comparatively little re-sale value.
Almost all of Al Fahim's much heralded ventures will finally be scrapped to focus predominantly on the 2,500 property Hydra Village. However even with the sale of these construction sites, Hydra needs additional funding to finish this project. The company has little option but to tap owners Royalgroup for additional funds. Although the indications are that they will, it still remains to be seen if Royalgroup will stump up the additional financing. Royalgroup is owned by the UAE Royal Family - in turn, Royalgroup owns 100% of the Hydra shares.
Royalgroup's financial responsibility with Hydra is limited to the shares that it owns - it has no legal or financial requirement to assist Hydra. The Hydra brand itself is considered to be virtually worthless and there is little immediate financial incentive for the Royalgroup to pour more money into Hydra.
However it could be potentially very damaging for the image of the Royal family if they are not seen to assist in a situation where many feel they have some direct responsibility. There are also long-term implications for UAE's construction and business reputation to consider; for these reasons we do expect (and hope) that the Royalgroup will indeed come to Hydra's assistance.
The bail-out by the Royal family and the sale of Al Fahim's high-profile projects are highly embarrassing. Al Fahim, winner of the 2008 Middle East 'Visionary of the Year' simply did not see this happening.
Arabianbusiness.com
The National
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must be a low news day
ReplyDelete"The boss of the Abu Dhabi based developer said that its parent company, The Royal Group, had not injected any funds into the company but capital was available if needed. "
ReplyDeleteSorry Faircomment, must pull you up on the above article. The report actually states that Royal Group have NOT injected funds but that funds ARE available if required. That is not stating that they HAVE had to inject funds.
In the current climate it is right that projects get scrapped or mothballed. As I have said before this is happening in almost every country at present.
Did you check www.berkleyhomescollective.com yet on the situation with some UK property problems. Not exactly the same as Hydra but just shows that UAE problems are not isolated.
Martin, The delays at Hydra are due to funding issues, not any lack of will from the new CEO. It is great news that funding will probably be coming from Royalgroup to finish this project.
ReplyDeleteThe position is somewhat different to berkleyhomes. At Hydra, the properties are not even nearly built and Hydra have financial issues (this is not the case at berkleyhomes). Also Hyda properties were always offered at a very attractive price - combined with the massive brand advertising led to the huge demand.
The fall in property prices is not the main issue for Hydra purchasers (unlike berkleyhomes)
Faircomment, As I said the issues are different but feed into the same property bubble. Berkley have a site in Reading (UK) where the plots were sold off plan but has now been delayed and investors cannot get out.
ReplyDeleteAll I know about the Hydra project is that it is a combination of investors getting in too deep (smaller player than they let on to be) and the crunch leading to the build not starting. It would have been very interesting to see what would have happened had the build started but not completed when the new tranche of investment was required. I believe they still would have had the 20% can pay issue as these investors are clearly not cash rich.
As the old saying goes 'some you win some you lose'.
On a final note as 100% owners of Hydra shares the least one would expect is that the Royals cough up.
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