Nakheel suspends work on landmark Dubai projects

PROJECT DELAYS: The Trump tower (pictured) is one of several projects Nakheel has put on hold. (Supplied)

Dubai-owned real estate developer Nakheel is delaying several of its flagship projects, including the Trump International Hotel and Tower, in addition to axing 500 jobs amid the global financial crisis, the company said late on Sunday.

"Nakheel is delaying long-dated infrastructure work on some of our projects in order to ensure that our business model is aligned to meet market demand," the company said in a statement.

"We have the responsibility to adjust our short term business plans to accommodate the current global environment."

Nakheel said the Frond N villas, Gateway Towers and the Trump tower on the Palm Jumeirah, one of three palm-shaped islands the developer is building off Dubai's coast, would all be delayed.

The company, part of state-owned conglomerate Dubai World, said much of its Waterfront project, a series of man-made islands set to be twice the size of Hong Kong, would also be pushed back.

Nakheel said work would continue on Madinat Al Arab, Venetto, Badra and the Canal District, but areas of the project, including construction of six man-made islands, would be put on hold.

The Universe, a series of man-made islands in the shape of the sun, the moon and the planets that wraps around Nakheel's The World project, has been delayed, the company said, with work restricted to preliminary engineering studies.

On the Palm Jebel Ali, the second largest of the three Palm islands, Nakheel said work on the fond villas and infrastructure for the crescent would continue, while other phases would be delayed.

It did not give details of how long any of its projects would be delayed for.

Nakheel said work on all other projects - which include The World man-made archipelago and Palm Deira, the largest of the Palm islands - would continue as planned.

Earlier on Sunday Nakheel said it had cut 15 percent of its workforce as it scales back projects due to the economic climate.

Nakheel is the latest in a long line of Dubai-based real estate developers to announce layoffs, which includes Damac Holding, Omniyat and Tameer Holding Investment.

Many other developers have relaxed payment plans in a bit to stimulate demand for real estate, which has slowed significantly due to the global financial crisis.

The crisis has hit demand from foreign investors, which make up a large percentage of buyers, while tightening liquidity has made home financing more difficult.

HSBC said in a report earlier this month property prices in Dubai fell four percent between September and October, with the price of villas tumbling 19 percent, the first time prices have fallen in the emirate.

Nakheel cuts 500 jobs
Dubai developer reduces workforce by 15% as it scales back projects amid global financial crisis.

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READERS' COMMENTS

1.4km tower
Posted by Paul, Dubai, UAE on Monday 1 December 2008 at 17:45 UAE time

So Nakheel is shelving 'long-dated infrastructure work'... but is still going to go ahead and build a 1.4km tall tower? Of course the tower will never be built because even if Nakheel has lost the plot, the banks have not and will simply not lend on it.

But it highlights that these developers have learned NOTHING. Dubai has more than enough gimmicky luxury projects already - super-tall towers, novelty shaped islands, etc. What it has needed all along, but never got, is investment in boring essentials - sewerage, public transport, as well as in low-cost housing.

Why doesn't the government tell these developers to stop wasting time and money with ever more absurd schemes and get down to building things that Dubai actually needs. Then maybe, just maybe, people might regain the confidence to actually view Dubai as somewhere with a secure future, instead of as somewhere with infrastructure of the 3rd world that is at the point of collapse.

A welcome change
Posted by sid, Sharjah on Monday 1 December 2008 at 09:32 UAE time


I am a property owner in the UAE, both finished and under construction. I am very happy with the current situation of all sales being on hold and new projects being delayed/canceled. I think in the long run it will be good for people who are committed to this market and are not here just to flip. This will certainly make for a more sensible Real Estate market environment.

Due to the global financial crisis.
Posted by Paul King, Dubai, UAE on Sunday 30 November 2008 at 21:06 UAE time

The Dubai real estate market hitting a brick wall is all down to the global financial crisis! It's nothing to do with the garbage quality of the product or the massively high prices. It's all due to the global financial crisis! What a joke! This correction is due to Mr. Market sobering up!

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