No Formula One Theme Park fo Dubai

Another luxury development in Dubai is facing financial issues – this time a formula one theme park. Union properties has said that a planned Formula One theme park in Dubai would not go ahead unless the developer received financial support from the government or was able to go ahead with a planned bond issue. Union Properties said on Thursday it was suspending construction of the theme park, which now won't open until 2010 after it failed to raise the funds needed to complete the project. The developer received a license in November 2006 to develop F1-themed parks with rides, museums, a library and restaurants. Union borrowed dhs2.75 billion ($680 million) to build part of the park and said in June 2007 it would need more loans.

Chief Executive Simon Azzam also said that the developer expects to make a profit in the first quarter of this year, mainly on gains from rental properties, and expects 2009 profit to exceed that of last year.

Azzam said full-year net profit would rise as the developer hands over properties sold in previous years and books remaining revenues from those sales. "This year will be stronger than last year in terms of net profit," Azzam said. "In 2009, we will hand over the majority of our properties. That is when we will start recognizing the profit." This seems overly optimistic with what seems to be every piece of property in Dubai for sale currently.  The developer made a fourth-quarter loss of dhs37.6 million ($10.24 million) after booking a dhs500 million provision related "primarily" to its largest contracting unit Thermo, he said. Meanwhile, shares in Union Properties declined 5.26 per cent yesterday, after dropping as much as 7.9 per cent in earlier trading.

I am wondering if this is the death knell for formula one. Honda pulled out of competition last year, Royal Bank of Scotland has withdrawn their sponsorship for the Williams team after posting the biggest loss in British corporate history and the grid is looking very short for next year.