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The Death of Development, Part I

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

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.

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  1. Anupama V. Chand on January 12, 2010 7:23 am

    Rather surprising when you consider the overreaching optimism on the one hand and the greed on the other to be the best…..did everyone lose their grip of reality? Can you ever spend more than you have? Simple market economics, and one which could have gone a long way in keeping corporations like Nakheel in check. And prevented Dubai from becoming a laughing stock in the international scene, where till 2008, it was always considered an exemplary business model. Anyway, hopefully, these are lessons learnt, and those involved would have learnt to check their wallets before making overly ambitious investment decisions! If they get the chance to do so, of course!!

  2. Mounir on January 21, 2010 7:50 am

    “Nakheel’s parent company recently defaulted on its billions in debt (deftly billed by the government as a ’standstill’)”

    On what planet did Nakheel’s parent company actually default on its billions in debt? Or are you just going to be a Dubai Basher regardless of any facts?

    Get your facts straight, no one defaulted on anything.

    There goes the credibility of the rest of this ‘report’.


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