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The Death of Development, Part II
Dubai master-developer Nakheel, which aimed for the stars with iconic projects, prepares for a dramatic restructuring, reports Trends. Part II.
January 13, 2010 4:01 by Edmund Sheen
Reputation in tatters
The company’s reputation has taken a battering in recent months. While some investors still vocally stand by Nakheel and profess faith in their business partnerships, several others have seen their projects floundering in stasis.
There are also questions surrounding Nakheel’s claim that 70 percent of The World islands are sold (The World development, which sits a few kilometers off the Dubai coast, is a planned series of high-end resort islands in the shape of the earth’s continents). Some investors who paid up to 20 percent of the cost of an island have reportedly developed cold feet.
There may not be much to separate Nakheel from other Dubai developers which were guilty of launching overly ambitious projects when things in the emirate were on the up. But what’s more questionable in the case of Nakheel is the more recent decisions it took and then backtracked on.
Take the Oct. 6, 2008 announcement of a kilometer-high tower to be built in Dubai, for example. Barmak Besharaty, the managing director of Almas Capital, questions the timing as well as the wisdom behind it.
“Even in a global economic crisis of enormous proportions that we haven’t seen in our lifetimes, Nakheel came out and announced another, bigger tower. Now, how sustainable was that when jobs were disappearing and people were leaving the country? Then, weeks later, the project was put on hold,” he says.
The larger question is the judicious use of resources. The company has been woefully lacking in that regard.
“Nakheel would have been better off not spending on fireworks and instead paying contractors and employees,” Besharaty says.