Palazzo Versace Dubai: Sunland swapped its AED2.3bn hotel away; it opened in 2016

Palazzo Versace Dubai was meant to be one of the landmarks of Dubai's Culture Village: an AED2.3bn, 170,000-square-metre palace on Dubai Creek with 217 hotel suites and 169 branded residences, all furnished from the Versace Home collection. It was built by Emirates Sunland Group, a 50:50 partnership between Australia's Sunland Group and UAE's Emirates International Holdings, with Arabtec — the builder of the Burj Al Arab — as contractor.

By March 2011 the story had turned. Business Insider, quoting Arabian Business, reported the project was 'heavily behind schedule' with 'project funding blocked' and completion dates postponed; the developer did not respond. Two months later Emirates Sunland was still promoting the project as 81% complete, with managing director Soheil Abedian praising its pace — even as roughly 20% of the residences remained unsold in a market where prices had collapsed.

The true position surfaced in October 2011. In a filing to the Australian Securities Exchange, Sunland said it would transfer all its interests in the Dubai ventures — 51% of the Palazzo Versace hotel and 50% of the 80-storey D1 tower — to Sharjah-based developer Enshaa, in exchange for Enshaa's 49% of the Palazzo Versace Gold Coast in Australia. Because the deal was a straight swap of legal and financial interests, 'there is no corresponding cash amount required to settle the transaction.' The Australian partner had walked away from its Middle East flagship without a dollar changing hands.

The hotel then took another five years to open. Donatella Versace finally cut the ribbon on the brand's second hotel in the world in November 2016 — more than five years after the project had supposedly been four-fifths built.

AED2.3bn hotel and the 80-storey D1 tower handed over in a no-cash swap in 2011; the hotel only opened in November 2016

The venture was priced and marketed in the 2007-08 boom, then had to be funded through the crash; by early 2011 trade sources said its funding was blocked.

Marketing continued on autopilot: '81% complete' claims ran in the same months as reports of blocked funding and postponed completion dates.

Sales stalled with about a fifth of the branded residences unsold, leaving no revenue stream to finish construction.

The 50:50 joint-venture structure meant neither partner could be forced to fund the other's problem, so exit was the only move — and the only buyer was the builder's own group.

Accepting a no-cash swap of Dubai assets for a stake in an Australian hotel showed how far the project's book value had fallen below its headline AED2.3bn.

A completion percentage published while funding is visibly blocked is a sales tool, not a progress report — and in a crashed market, nobody will fund the gap.

Enshaa completed the project, and Palazzo Versace Dubai finally opened on 16 November 2016 with Donatella Versace officially cutting the ribbon on the brand's second hotel worldwide. The D1 tower was finished separately as a residential landmark on Culture Village. Sunland, which had exited for a mirror stake in the Gold Coast hotel, returned its attention to Australia; the Dubai project it once controlled for AED2.3bn left its hands without any cash consideration at all.