Dubai/Delhi: Dubai’s Emaar Properties plans to split with its Indian joint venture partner through a demerger process, the emirate’s biggest property developer said on Wednesday.
The move ends a decade-long relationship between Emaar and MGF Developments through Emaar MGF Land Limited, one which has seen plenty of struggles along the way including a failed stock market flotation and delays to many of its projects.
The demerger will “enable Emaar to implement focused strategy for its real estate business in India and will allow the business to undertake future expansion strategies”, as well as drive its ongoing projects, Emaar said in a bourse statement.
It did not provide further details or a time frame for when the demerger would happen, except to say that it had “agreed to take steps for the reorganisation of Emaar MGF Land Limited”.
Emaar denied speculation in Indian media last July that it was planning a split, insisting that India was a key market for Emaar through Emaar MGF.
The Dubai-based developer, known for building the world’s tallest building in the emirate, the Burj Khalifa, entered the Indian market in 2005 through its partnership with MGF.
It aimed to build homes, offices and shopping centres for India’s rapidly-growing middle class as their incomes were rising.
However, it has so far completed only a handful of projects, with many still under construction and suffering from long delays.
Emaar MGF Land Limited posted a net loss of Rs 353 crore ($53 million) in 2015, narrower than the Rs 384 crore it lost in the previous year, according to rating agency Icra, which said in a January note that the firm was constructing 49 projects with total saleable value of Rs 18,745 crore.
According to Emaar MGF’s website, it has ongoing projects including in the northern city of Gurgaon, Chennai in the south and Jaipur in the west.
Emaar MGF also came under fire from the government in New Delhi for shoddy construction and months of delays after being contracted to deliver the $230 million athletes village for the 2010 Commonwealth Games held in the Indian capital.
During the peak of India’s property boom in 2007, Emaar MGF planned to raise $1.5 billion through an IPO but was forced to abandon the plan in February 2008 due to a stock market slump as the global financial crisis hit home.
($1 = Rs 66.5838)