Nakheel cut down to right size - Dubai World

Dubai: Dubai World has cut down its real estate arm Nakheel's operation to what it calls the "right size for the current market" and says it is now "structured to best meet the needs of its real estate customers," as part of a wider restructuring aimed at greater efficiency and cost savings.

The restructuring "has resulted in significant cost savings and increased efficiency. Its businesses are now well prepared to thrive in both the current climate and the still uncertain future environment," Dubai World said in a statement.

"The reorganisation builds on the changes announced in June, when the management of Jumeirah Golf Estates, Jumeirah Lakes Towers and the real estate activities of Dubai Maritime City moved to Dubai World real estate company Nakheel."

Under the restructuring, the management of several hotels and commercial property has been transferred from Nakheel to Istithmar World. Istithmar World will continue to own these assets.

In addition, the management of Nakheel's shopping malls, including Ibn Batutta Mall and DragonMart in Dubai, are moving to a separate entity branded Retailcorp World.

"Nakheel is now right sized for the current market and is structured to best meet the needs of its real estate customers," Dubai World said in a statement.

Challenges

Istithmar World is the investment arm of Dubai World. Its divisions Istithmar World Ventures and Istithmar World Capital have been merged and Istithmar World's activities are now focused principally on the ongoing management of assets already acquired.

In addition, Istithmar World will manage the assets of Dubai World Africa in addition to the Victoria & Alfred Waterfront in Cape Town, South Africa.

Analysts see the restructuring positively.

"The interest in investment in real estate has declined worldwide. Nakheel's huge development pipeline is expected to create a massive mismatch in demand and supply curve," property analyst Sudhir Kumar, managing director of Realtor's International, told Gulf News.

"The restructuring will help Nakheel manage its projects better and in line with the market demand, which in turn will help its parent company Dubai World."

During the reorganisation process, each division reviewed its business plans and developed a clear strategy in line with its specific area of expertise, and reviewed their operations and costs to better reflect the current environment, Dubai World said.

"Whilst the challenges we faced are not unique, with no global entity immune from the pressures of the worldwide recession, we are confident that Dubai World and its subsidiaries are appropriately focused and properly structured to embrace the new global reality," Dubai World Chairman Sultan Ahmad Bin Sulayem said.

"Our diverse portfolio of assets around the world, together with our significant interests here in Dubai, provides us with an exciting and compelling future. With the reorganisation, the Group enters this next vital phase of our evolution better able to withstand all economic eventualities. Dubai World remains a testament to the vision of our government and the UAE as a whole, today and tomorrow."