A view of the Burj Khalifa tower is seen in downtown Dubai. Property prices in the emirate jumped as much as 43% last year amid a surge in trade and tourism.

Bloomberg/Dubai

The UAE property boom may be passing Limitless by as the developer that split off from Dubai World in the fallout following the 2008 credit crunch seeks to delay a loan payment.

The company has asked lenders if it can defer a $400mn repayment due in December, the first instalment of a restructured $1.2bn Islamic loan, according to two people who asked not to be identified because the information is private. Limitless offered banks 200mn dirhams ($54mn) in cash toward the payment, they said. The company wants to delay the repayment by a year, one of the people said.

Property prices in Dubai, one of seven emirates that make up the UAE, rose as much as 43% last year, according to Cluttons data on Bloomberg, amid a surge in trade and tourism. The momentum cut the cost of borrowing for real estate companies including Emaar Properties and Nakheel, and prompted Damac Real Estate Development to sell $650mn in a debut sukuk sale this month.

“Having a deferral so early after the restructure is not a very positive sign,” Apostolos Bantis, a credit analyst at Commerzbank AG, said by phone from London last week. “Growth in the emirate is not yet phenomenal enough to bring recovery to everyone.”

Limitless in October 2012 announced it had signed a deal to extend a loan due 2010 after two years of negotiations with creditors. The company is revisiting its business plan, chairman Ali Rashid Lootah said in London last week, and will speak to banks about the maturity.

Limitless developments include mixed-use projects in Moscow, Vietnam and Dubai’s Jebel Ali area, according to its website. A sale of land in Jebel Ali is among options being considered by the company, Lootah said on April 7. A spokeswoman for Limitless said in an e-mailed statement last week that talks between the company and its lenders are private.

Dubai’s improving economy is making life easier for developers and the banks they borrow from, which should make lenders more open to Limitless’s proposal, according to Amol Shitole, a Bangalore-based analyst at SJS Markets.

“Things have changed in the last couple of years, and real estate companies are doing better,” Shitole said by phone last week. “Thanks to the strong liquidity in local banks, lenders are more open to meet the requirements of these companies.”

Dubai’s economy expanded 4.9% in 2013, the fastest pace since 2007. The cost of insuring the emirate’s debt against default fell to 165 basis points on April 7, near the lowest in more than five years.

Dubai’s real estate rally helped prices of sukuk from Emaar and Nakheel soar. The yield on Emaar’s $500mn Islamic bond due July 2019 has tumbled 68 basis points this year to 3.86% in Dubai, near the lowest since the debt was sold in 2012. The yield on Nakheel’s notes due August 2016 fell 107 basis points to 5.55%. That compares with a 32 basis-point drop for the Middle East sukuk on average, according to JPMorgan Chase & Co indexes.

Nakheel issued its sukuk to trade creditors as part of measures to restructure more than 27bn dirhams of liabilities.

Dubai World, which was parent to both developers, extended $14.7bn of debt after a near default in 2009 that roiled global markets.

“Limitless is a smaller company than the others,” Bantis said. “Maybe the terms they secured were not as generous, so they feel more pressure right now.”