Nakheel, the state-owned developer of Dubai's palm-tree shaped islands, is reportedly halting work on the one kilometre Nakheel Tower as it looks to cut back in the wake of a weakening Middle Eastern real estate market.
The planned skyscraper, part of the 140 billion dirham ($38 billion; €29 billion) Nakheel Harbour and Tower project was announced in October, and would be the world's tallest tower once completed.
However, according to a Reuters report, work on the foundations of the project has been postponed for 12 months.
A Nakheel spokesman said in an e-mailed statement the foundations would take approximately three years to complete, adding: “This is part of our readjustment of our immediate business plans, to better reflect the current market trends and match supply with demand.”
Emerging markets, such as the Middle East, were, until last summer, seen as being relatively insulated from the credit crunch.
However, the global liquidity squeeze has severely impacted the Middle East’s real estate markets, the major driver of the area’s boom. Investment bank EFG-Hermes recently predicted a 20 percent correction in Dubai real estate prices by 2011, a trend that is leading companies to review their operations.
Nakheel has already shed 500 jobs, or 15 percent of its work force, while development company Emaar Properties is also reportedly considering cuts. In December, Shuaa Capital, the Dubai-based investment bank, said it would cut 9 percent of its workforce in the emirate as it looks to reduce “overcapacity” in the wake of the credit crunch.
The bank, which has launched a variety of private equity and real estate funds through subsidiaries, said at the time the job cuts in Dubai would be across the board but predominantly affect back- and mid-office operations. The number of jobs to be lost is expected to be 21.
Nakheel also stopped work in December on Trump Tower, a $789.5 million project on one of the emirate's palm-shaped islands.