By Sean Cronin
It is arguably the biggest developer in the world, with billions of dollars invested in its now world-famous Palm and World mega-projects. But with little potential for further artificial island development in Dubai, Nakheel plans to diversify into the hotel investment and development business. Sean Cronin talks to the man who will make it happen.
James Wilson was hired by Nakheel a year ago as a Mr Fixit. With billions of dollars of construction underway on four offshore mega-projects, and the eyes of the world on them, he arrived at a time when the Dubai government-backed developer was in need of a steady hand at the helm.
Now the former IFA Hotels & Resorts director is returning to the hotel business to head up Nakheel’s new investment and development company, which is targeting the booming hospitality sector of the Gulf.
When Wilson joined Nakheel from IFA last year, the Palm Jumeirah was running a year late, the construction management team of the project had been replaced, the original designs had been changed substantially and questions were being raised in the market over whether there was enough local or international demand to support the development of the much larger Palm Jebel Ali and Palm Deira developments.
Meanwhile the company was also attracting negative press over the build quality of developments such as Garden View Villas — a development of more than 200 properties which was never occupied, after gaping cracks appeared in the villas soon after being built.
Aside from such stories and the schadenfreude of rival developers, the company has perhaps been under more scrutiny than any other property company in the region in recent months. That is the price of building audacious projects of unprecedented scale.
In the 12 months since he joined the company, Wilson has overseen the restructuring of the group and introduced a new ‘chain of command’ on its key projects, through the appointment of several new general managers.
Measuring the success or failure of the group’s year-long restructuring is an impossible task. Although Nakheel lays claim to being the biggest developer in the world (by asset base), it is also one of the most secretive — albeit less so than a year ago. The truth is we don’t know how much its assets are worth, or any other details of its balance sheet.
Accounts are unpublished, so assessing whether Wilson’s efforts over the last year have yielded dividends, is little more than guesswork. But executive chairman, Sultan Ahmed Bin Sulayem, must have thought enough of them to choose Wilson to lead the drive into the hotel business.
So does this mean the end of Nakheel as a developer? “Not at all,” says Wilson, “Nakheel will still be a major developer, the new company will be separate to the mainstream of Nakheel.
“It will be a significant part of Nakheel’s business going forward, but obviously Nakheel is a very large business — probably the world’s biggest developer.”
Nakheel Hotels & Resorts will focus on building a portfolio of hotel and resort properties and strengthening Nakheel’s regional and international alliances in the hotel, resort, hospitality and tourism sectors through acquisition.
The company’s initial portfolio of projects will include the Trump Hotel and Tower Palm Jumeirah; a 150-room boutique hotel and spa with 100 private villas and beach condos on The World; a 400-room hotel and resort in Djibouti; and a 200-room hotel on the Palm Jumeirah. Other projects include properties in Morocco, Oman, Africa, India, Asia and CIS.
“We are going to acquire, develop, construct, and then appoint hotel companies to manage and come back to asset manage once the asset is open, which is very similar to the Kingdom Hotel Investments model.
“We are taking the expertise that exists in the company and the brand power and leveraging all of that,” he says. As far as the real leveraging is concerned, Wilson says that the group’s acquisitions will be funded by a mixture of private equity, joint venture partners and bank debt.
While Wilson takes charge of the new hotels business, he will not relinquish responsibility for the final delivery of the Palm Jumeirah. Only when that happens will he be able to devote all of his time to Nakheel Hotel & Resorts and put the far more troublesome world of construction behind him.
Last week’s announcement about the launch of the new company coincided with the heavy rains which exposed the construction flaws of many recently completed developments in Dubai — including Nakheel’s Jumeirah Islands project.
Despite the story raining on Nakheel’s media parade for the day, Wilson doesn’t duck the issue when questioned about who the residents of the development have to blame for their leaking roofs and walls. He accepts that the development is the company’s responsibility without quibble.
It turns out that he has already visited the site, and on hearing that a CW journalist lives in one of the houses that has been flooded, he calls back to enquire about the address, so that the problem can be solved. It is only what you would expect from Mr Fixit.