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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
Unfortunately, that opened a Pandora’s Box for the company – contractors started demanding release of pending payments, investors developed cold feet on announced projects, and others raised doubts as to the viability of some developments. Nakheel had to scrap some projects – Trump Tower being the most high profile – and shelve others.
While DP World continues its strong business, the success of the ports company is not enough to uphold Dubai World’s other ventures. At the height of the boom, both parent company Dubai World and Nakheel expanded quickly into sectors outside their original mandates.
Last October, Dubai World announced the creation of Dubai Natural Resources World, a company that was later divided into, Dubai Energy World, Dubai Mining World and Dubai Agriculture World in an effort to branch into the commodities and resources sectors. After more than a year, an agreement to manage the crude oil and gas reserves in Nigeria was the only publicly announced projects.
Last spring, a highly publicized agreement with MGM Mirage to develop CityCenter in Las Vegas led to disputes over payments, and Dubai World sued the American company to limit its exposure to ballooning project costs.
Nakheel also expanded into other sectors. The company, established specifically to develop real estate, brought the QE2 luxury ocean liner to Dubai, with plans to turn it into a floating hotel permanently located off the coast of the Palm Jumeirah after an extensive restoration.
But 10 months later, a Nakheel spokesperson told local newspapers that the company was considering sending the QE2 to one of several ports in the Middle East or Africa where it could be docked and opened to customers in its current condition.