Dubai revamps big players

Dubai has embarked on a broad reconfiguration of some of the emirate’s biggest and most important companies as it adjusts to the impact of the global economic crisis.

Yesterday, Dubai Holding, one of the emirate’s largest business conglomerates, said it was consolidating the back-office operations of its property companies and two of its financial arms in the latest move by the Government to adjust as the global economic crisis hits the Gulf.

Meanwhile, Nakheel, the sprawling property arm of Dubai World, has merged an array of its business units to form five entities as it adapts to market conditions and prepares for the challenges that lie ahead.

“Nakheel continues to readjust its current business objectives to match supply and demand in the most effective way,” the company said in a statement released to The National.

The moves are the latest examples of how governments in the Gulf are responding to intensifying pressures as the global financial crisis weighs on economies that were booming as recently as six months ago.

Since then, oil revenues – the chief creator of wealth and driver of economic activity for much of the region – have plunged by 75 per cent and the international credit crunch has undercut regional financial and property markets.

Although Dubai does not benefit directly from oil, its economy has benefited greatly from the tourist traffic and booming investment in property and financial assets that the surge in oil revenues created in the region. As those funds have dried up and international credit markets have frozen, the emirate has moved to adapt.

Dubai Holding said yesterday it would merge the administrative and back-office functions of Dubai Properties, Sama Dubai and Mizin, a subsidiary of Tatweer, to form “closer working relationships by realising efficiencies through the consolidation”.
The statement said the move would not change the companies’ “core activities” or have any impact on the legal relationships the companies have with their current partners, including their suppliers, contractors and investors.

In November, Sama Dubai said it was reviewing its eight projects, which together are worth about Dh202 billion (US$54.99bn). At least two have since been put on hold – one in Bahrain and one in Saudi Arabia.

Dubai Properties, the largest of the three with Dh348bn worth of projects, has postponed work on its Mudon development in Dubailand. Mizin has three projects in Dubai worth Dh36bn.

In a parallel move within the conglomerate’s financial firms, Dubai International Capital (DIC) and Dubai Group will also merge their back-office operations. The chairman of Dubai Group, Soud Ba’alawy, and the chief of DIC, Sameer al Ansari, were appointed co-chairmen of the combined Dubai Holding Investment Group, an existing entity that will now house both companies.

Tom Volpe, who is the chief executive of Dubai Group, will become chief executive of Dubai Holding Investment Group and acting chief executive of DIC.

Nakheel’s moves are part of a longer-running overhaul of the country’s largest property developer. In January, Nakheel merged the teams working on its Waterfront and Palm Jebel Ali projects and appointed Marwan al Qamzi as the managing director of the group.

According to a statement from the company, the most recent moves merge the business units for Palm Deira, Mina Rashid and The World to form Nakheel Northern Coastal Projects. The division is headed by Adnan al Naqi.

The Design Group and Universe Master Planning divisions have also been combined to form Nakheel Asset Management, according to an internal e-mail reviewed by The National. The group is now headed by Abdulrahman Kalantar.

The shake-up has resulted in cost-cutting measures including layoffs in recent weeks, as well as a changeover in senior management for each new business unit, according to a person familiar with the restructuring process.

Nakheel has not confirmed the redundancies. The company reduced staff by 500 in December.

Elsewhere, Hamza Mustafa, the former managing director of The World, has been appointed managing director of Nakheel Leisure, a unit that includes Nakheel Hotels and other new initiatives, while Johan Schumacher is managing director of Palm Jumeirah/Investment projects, which includes Palm Jumeirah, Tall Tower, Investment Projects and the Marine division.

The restructuring follows the postponement of work on some significant projects. These include Trump International Tower and Hotel, Frond N villas and Gateway Towers – all on Palm Jumeirah – and The Universe.

Construction work on Tall Tower, a building that is expected to be the centrepiece of the Nakheel Harbour and Tower Development and is expected to rise more than 1km, has been delayed for one year. The decision has led companies affiliated with the project to make cutbacks on staff.

By Angela Giuffrida and Sarmad Khan - The National

agiuffrida@thenational.ae
skhan@thenational.ae

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