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The Wall Street Journal
25 February 2010

Owner of Great Britain (Dubai Version) in Jail

Alex Delmar-Morgan & William Lyons

DUBAI—The development of the Great Britain island on Dubai`s "The World" project has been thrown into doubt as its owners languish in jail awaiting trial for allegedly bouncing a check worth more than 200 million dirhams ($54.4 million).

London-born businessman Safi Qurashi and his business partner Mustafa Nagri, bought the Great Britain island in May 2008 for $60 million at the height of Dubai`s boom through their property company Premier Real Estate Bureau.

The island was part of an archipelago of 300 man-made islands reclaimed from the azure waters off the Persian Gulf designed to replicate a map of the Earth and make Dubai the envy of the world.

But as work has stalled at the man-made lagoon, simply known as The World, Mr. Qurashi`s dream to create a paradise on the island of Great Britain has also ground to a halt.

For the past six weeks Mr. Qurashi and his business partner Mustafa Nagri have been languishing in Port Rashid prison in the heart of Dubai.

theworld0225AFP/Getty Images

An aerial view shows the cluster of man-made islands known as "The World" off the coast of Dubai. Photograph: AFP/Getty

The alleged bounced check relates to a land sale, he said, while denying any wrongdoing in the matter. Hussain Lootah & Associates, attorneys representing Messrs. Qurashi and Nagri, declined to comment when called. Zawya Dow Jones was unable to contact in Nagri in jail.

Bouncing checks is a criminal offence in Dubai. A spokesman for Dubai Public Prosecution declined to comment when called.

The rise of Mr. Qurashi has been as spectacular as the plans for the island he intends to transform. The son of a store owner from south London he moved to Dubai in 2004 where he founded Premier Real Estate Bureau which specializes in developing luxury waterfront properties.

The company grew as the oil-rich Middle Eastern states seemed immune to the effects of the banking crisis and the global economic slow-down.

Shortly after buying the island of Great Britain he said he wanted to transform it into a series of luxury apartments that were unmistakably British in feel.

But since late 2008 the credit crunch has hit Dubai`s economy sending its property market into steep decline. The market has collapsed, sending prices down by around 50% and causing projects worth hundreds of billions of dollars to be delayed or canceled. Investors fled in droves with the onset of the financial crisis as the Dubai property party ended.

The World, now a disjointed collection of sandy blocks just out of sight of Dubai`s shore was caught in the storm. Launched by Dubai`s ruler Sheik Mohammed Bin Rashid Al Maktoum in 2003 as part of several ambitious property projects, the initial engineering project included land reclamation requiring 320 million cubic meters of sand dredged from the sea and the creation of the breakwater that surrounds the 9 kilometers wide and 7 kilomoters long island destination.

When eventually completed, the project would add 232 kilometers of beach front to the emirate`s coastline, and form a miniaturized replica of the Earth`s major land masses in the Persian Gulf off Dubai`s coast.

The global financial crisis has gripped the project`s master developer, Nakheel Properties, which are at the center of Dubai World`s problems to restructure $22 billion of debt with more than 90 creditors.

"The World" master developer Nakheel, which posted a 2009 first-half loss of 13.43 billion dirhams, has said it would pay off a $3.52 billion Islamic bond that was due on Dec. 14, averting a default after neighboring Abu Dhabi stepped in with a $10 billion bailout late last year.

"Quite frankly this project doesn`t make much sense in the near term," said Saud Masud, head of Middle East research at UBS AG. "In addition to financing, setting up infrastructure is going to be a massive challenge. Plus Nakheel is in a fight for its survival Management may get spread too thin if it starts negotiating with individual investors at a time when they have to appease the bondholders, lenders and contractors."

But in December a German investor Kleindienst Group said it was seeking funding to finish a 3.1 billion U.A.E dirham ($844.4 million) project to build luxury housing on six islands constructed from reclaimed land in the Persian Gulf.

It has started work on The "Heart of Europe" islands that will be part of the World project, a follow-up to Dubai property developer Nakheel`s nearby palm island, another reclamation and real-estate project that was completed in 2007, becoming the world`s largest man-made island.