World's tallest tower plan 'will not be delayed'

Thursday, 27 November 2008 3:56 PM

Nakheel’s plans to build the tallest tower in the world will not be stalled by a slowdown in the property market in Dubai, but the master developer has put on hold taking on new projects for the time being, chief executive Chris O’Donnell said.

With foundation work on the 1.4km-high skyscraper underway, the property market would be “moving positively” again by the time the foundations were complete within two to three years, O’Donnell told Arabian Business.

He said funding for the $38.12 billion project, unveiled last month, would be secured by the sale of land around the tower to other developers.

“We indicated when we launched that we would do the foundation work and that is underway and will take two or three years. My view is that within two or three years you will find the Dubai market well and truly moving positively.

"So we think that’s the right thing to do,” he said on Wednesday evening ahead of Nakheel taking delivery of the QE2, which it plans to transform into a hotel and tourist attraction off the eastern trunk side of Palm Jumeirah.

In response to a question of whether Nakheel was considering cutting jobs, O’Donnell said the Dubai-based firm was assessing the impact of the global financial crisis on its operations to “match resources to meet its workload.”

“We are reviewing the situation,” he said. “The world economic crisis is having an affect on Dubai and we are assessing what the impact is and what we are looking to do in the future is to match supply with demand. We will match our resources to meet the workload.”

Emaar Properties, another Dubai master developer, said on Monday it may consider making staff redundant due to the downturn in the local real estate market, while Omniyat Properties could cut up to 100 jobs and Dubai developer Damac has said that it planned to lay off 200 employees.

O’Donnell said following launches in the last year and a half of the Universe, Mina Rashid and Nakheel Tower, it was not taking on any new projects for the time being.

“We are delivering over 50 percent of everything that will be delivered in Dubai over the next ten years. We are managing sub-projects within our projects, so smaller projects within Palm Deira and Palm Jumeirah and the Waterfront,” he said.

He said $80 billion was the last figure Nakheel had given for the value of its projects including international assets and as this was a conservative estimate the amount was still correct despite the global financial crisis.

O’Donnell firmly denied there were any plans for a merger between Nakheel and Emaar.

“The government has come out and confirmed that is not the case, so there’s definitely no Nakheel and Emaar merger that’s being considered,” he said.

It follows a comment on Monday by Emaar chairman Mohamed Ali Alabbar saying he would welcome a merger with Nakheel if the opportunity arose.

Nakheel, part of state-owned conglomerate Dubai World, is building three palm-shaped islands off the Dubai coast, as well as an archipelago in the shape of the world.

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

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Posted by: Brandaid Sunday, 30 November 2008 2:18 PM[UAE]

Haytham, what are you "in" exactly? As someone who is also "In", former VP Damac, Omniyat, former Marketing Director of Better Homes, I can tell you that this tower will NOT be built. 85% of investors come from outside the region, the oil industry only sustains a fraction of the growth of the emirates, construction will stop as investors and speculators default as they are starting to do now, which means all the supporting industries will suffer and cut back. By January next year many developers will go broke, as will assorted businesses supporting them, tourism will slow, Dubai will need to be bailed out by Abu Dhabi, many Dubai state owned assets will be transferred to Abu Dhabi and if any giant towers will be built they will be built in Abu Dhabi, but with the price of oil as it is now, Abu Dhabi will not be in any rush to build anything other than what they have on the books now. As for the thousands and thousands of people working in the oil and gov't supply sector, the vast majority cannot afford to buy any of these houses, most are labourers. Think of the UAE back in 2002, that level is sustainable, and we have more than enough housing to support things at that level, so why build more luxury when there is no one left to occupy these places? There will be dozens and dozens of incomplete towers littering the landscape and many more that will stay off plan forever.

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Posted by: Mary Sunday, 30 November 2008 12:12 PM[UAE]

Dear Valerie, They are building the history of Dubai ): Years from now our children and grand-children may want to visit this city and yet find nothing else but another tall museum to stare at.

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Posted by: Mohammed Khalil Saturday, 29 November 2008 4:55 PM[UAE] - UAE

I really don't see the demand being there for a 1.4 km tower, but forget that, let's pretend for a second that there was. Nakheel, being a government owned company, is spending almost $100 billion on the entire project, Nakheel Gardens. Instead of investing such an enormous amount of money in another real estate mega project, why not put this money into our health care and education system? We have great towers in this city, but I can't say the same about higher education institutions and health care facilities. Otherwise, people wouldn't be traveling abroad for health care and education. We should be looking to invest in the long term foundation of Dubai, and real estate fluctuates, but not education and health care. Right now Dubai is being treated as a company, wondering how much debt there is and if it can be serviced and if it will need assistance from its mother "company", Abu Dhabi. Let's hope we can make this into a sustainable place based on strong foundations while we still can.

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Posted by: Paul Friday, 28 November 2008 10:31 PM[UAE] - UAE

On Sept. 28 (just two months ago) O'Donnell confidently predicted Dubai property "would not crash". If he cannot spot a crash a month or two in the future, how are we supposed to take any prediction he makes seriously? Especially one several years in the future. I wish AB and other publications would not just print the property industry's relentless and desperate spin, but instead would challenge O'Donnell and his ilk on the absurd predictions they have made in the past. These guys are nothing more than glorified salesman, not economists. Their predictions, quite evidently, are not based on any expert knowledge or methodology. They are simply plucked out of thin air to try to put a positive spin on what is a dire situation. As for this tower, it will never be built. They are just talking it up to try to pretend it is still 'business as usual'. They cannot even properly fund their existing projects.

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Posted by: Upandhi Friday, 28 November 2008 8:49 PM[UAE] - UAE

Valerie, you ask what is the need to do this project now. I would argue that this project is already well under way, as it has been in the works for many years - studies made, models floated, ideas tested, etc. The question should be, why continue with it? Part of the answer then would be that a significant investment has already been made. It is also considered to be still financially feasible - as the article above attempts to explain. Besides, Dubai has already established itself as being on the cutting edge of architectural innovation and pizazz. If a 1.4 km tower is going to be built anywhere in the world, it almost seems logical that it should be in Dubai. It isn't just about providing residential or office space. It is about designing a one-of-a-kind urban landscape. This is one of the things that makes Dubai unique and so fascinating.

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