Credit notes had originated following some of the Developer’s developments being delayed or cancelled due to certain circumstances.

A Client from a cancelled project has a right to sell the credit note to a third party for a rate acceptable to both parties. Seller of credit note gets his money by selling his credit note and Buyer of the credit notes gets a discount from the seller for the credit transfer towards his upcoming instalment of an ongoing project.

The Nakheel credit notes had originated following some of its developments being placed on hold during the global downturn. Now that Nakheel has announced its intentions to continue or discontinue certain projects, there is the renewed interest in the credit note swaps.

Nakheel has rules and regulations related to each type of credit and how it can be used in each project, So the buyer needs to make sure the broker he is dealing with understands which credits can be applicable with what projects. With more than 500 million worth of consolidation till date with various developers who offer such facility to their clients, this is where our expertise comes to play.

Let's assume the holder of the note owns Dh100,000 worth of credit on the Nakheel Credit note.

He could tie up with an investor in a property at Downtown Jebel Ali Credit note who needs to make a payment and who would like to use the credit notes to get the discount.

If the discount available is ‘X’ per cent, this means the cost of the credit for that buyer will be Dh 100,000 – X% discount plus a 2 per cent transfer fee.

It is unclear as to how the discounts and notes are calculated; it could be on the original sum that the credit note holder paid to the developer through a deposit and payment plan, or it's based on a percentage of current values.

Credit notes can typically be used for Offplan properties or land purchases only.