Forward thinking? What for?
Meraas Development has announced it will be “reviewing” its business strategy for Jumeirah Gardens because of changing investor needs. Didn’t they notice that investor needs were changing when they launched two months ago?
December 4, 2008 1:12 by Dana El Baltaji
When Meraas Development launched the AED350 billion Jumeirah Gardens at Cityscape 2008 in Dubai, the local media was confused. Not only had economies around the world cracked due to the global credit crunch, but the local property market was slowing down; it seemed like an unlikely time to launch a mega-development.
At the time, the developer claimed it had scaled back its original plans, and settled on the masterplan it unveiled at Cityscape: “Dubai is always redefining itself,” said Sina al Kazim, the chief executive of Meraas Development to The National. “We are going to complement the other developers.”
According to the developer’s website, the project’s amended ‘Phase 1’ will span approximately 820,000 square meters and will be completed in the fourth quarter of 2013.
But all that has changed, again. Meraas Development announced on Tuesday to the media that it will be reassessing its masterplan for Jumeirah Gardens. Although its media center makes no mention of the announcement, the spokesperson has confirmed that “we are simply reviewing our business strategy, as well as the phasing and rollout of the Jumeira Gardens project to make sure the development proceeds in the most opportune way to meet changing investor needs.
In a worldwide economic downturn, any corporate must analyze the market and ensure its business strategy is aligned to make the most of new opportunities, as well as ensure risk management strategies take account of the new financial landscape with a focus on new market and investor demands.”
The news comes only two months after Meraas Development launched the project, which isn’t enough time for investor needs to change all that much. Indeed, even The National commented on October 7 that the launch of the project “comes at a time when the rest of the world is grappling with a deepening credit crisis and falling stock markets.” Perhaps Meraas Development did not believe that the global financial crisis would affect Dubai’s market. But even so, changing its plans two months after launching suggests the developer’s management did little forward planning, and didn’t take the global economic climate into consideration.
What may worry investors further is that Meraas Development is part of Meraas Holdings, which is owned by the Dubai government. The Dubai government is presumed to have known that the global credit crisis will affect the emirate’s property market inevitably. Kipp was unable to reach the developer for further comments.
Regardless of why the developer was forced to reassess its project, Meraas Development needs to be careful how it handles this and future announcements: investors and the media have become skeptical of the corporate messages real estate companies are releasing.
Ultimately, the announcement will do nothing to restore investor confidence, so whichever way the developer deals with the “review” is bound to raise eyebrows. However, it can calm (and surprise) skeptics by ditching euphemisms and being straight-forward about its mistakes and its future plans.–DB