The Death of Development, Part I
Dubai master-developer Nakheel, which aimed for the stars with iconic projects, prepares for a dramatic restructuring, reports Trends. Part I.
January 11, 2010 1:08 by Edmund Sheen
What does a restructuring led by an outsider mean for the company? Until now, it’s enjoyed the most isolated and rarefied existence of all Dubai-owned firms. But that operational silo is likely to come to an end now that a Deloitte-led restructuring of the company is underway.
The senior executives that remain at Nakheel over the next six months will start hearing terms that, given the company’s current mess, they haven’t heard in a while: Risk mitigation. Operations management. Corporate accountability.
In the months leading up to the reorganization, Dubai World seemed to be grasping at straws, making multiple restructuring announcements to reassure investors. In September, the management of several hotels and commercial property were folded into Dubai World’s investment arm Istithmar World.
Then, in mid-October the company announced further restructuring, merging Istithmar World’s ventures and capital divisions, refocusing the investment company on maintenance of previously acquired assets, and creating a new company to oversee all of the retail activities previously handled by Nakheel.
Investors continue to hold their breath. None of them could have foreseen the company’s recent crash when they watched the dazzling fireworks show to celebrate the launch of Atlantis, a 2,000-room resort and water theme park on Palm Jumeirah a year ago.
Nakheel was already beginning to feel the ground beneath its feet begin to slip away. Within weeks of the spectacular Atlantis party, which included the likes of the flamboyant businessman Richard Branson and the actor Michael Douglas, the event’s host was in the news for all the wrong reasons.
Part of its struggle involves an attempt to regain consumer confidence in an already turbulent market. Not everyone who spoke to TRENDS says they believe the company has regained that confidence. Few are willing to concede that things have gotten better.