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The developer of potentially the world's tallest skyscraper is halting work on the project for a year as the Middle East's business and entertainment capital grapples with the financial crisis.
State-owned builder Nakheel's decision to shelve the landmark development - which it unveiled only in October - came as a leading credit rating firm warned that falling real estate prices will likely hurt banks in Dubai and elsewhere in the United Arab Emirates.
Home values in the emirate tumbled 8 percent in the last three months from the previous quarter, a report said, marking what analysts say is the first such decline in years.
This is an artist impression of Nakheel's new skyscraper in Dubai that, when built, could become the world's tallest building - but for now construction has been put on hold
The halted skyscraper was planned to soar the length of more than 10 American football fields. Analysts said its unveiling late last year showed a lot of confidence amid the souring global economy.
State-owned Nakheel said in a brief statement that 'further work' on its building's foundations '[would] commence in 12 months'.
The developer did not say how much work, if any, had already been completed.
'This is part of our readjustment of our immediate business plans to better reflect the current market trends and match supply with demand,' the company said.
Nakheel is also responsible for the development of Jumeira Palm Island in Dubai
The skyscraper - billed as nearly two-thirds of a mile (one kilometer) tall or more, or the height of more than three of New York's Chrysler Buildings stacked end to end - was designed to top a Dubai rival's nearly complete tower that already is the world's highest.
Nakheel's chief competitor, Emaar Properties, has kept the final height of the silvery steel-and-glass Burj Dubai, or Dubai Tower in Arabic, a closely guarded secret.
The company said late last month the building, which is still under construction, had reached a height of 780 meters (2,559 feet) and has more than 160 stories.
The final height of Nakheel's proposed tower is likewise a secret, as is the price tag.
Skyscraper city: The Burj Dubai - the other world's tallest building - is being built by Emaar Properties, Nakheel's chief competitor
As part of government-run conglomerate Dubai World, Nakheel has played a major role in creating modern-day Dubai, a city that has blossomed from a tiny Persian Gulf fishing and pearling village into a major business and tourism hub in a matter of decades.
Nakheel is best known for Dubai's growing archipelago of man-made islands. The new tower would be located in the rapidly growing "New Dubai" section between two of the islands.
Today's disclosure is only the latest setback for the company.
The developer last month cut 15 per cent of its staff and said it was scaling back work on some of its ambitious island-building projects. It also delayed a much-publicised luxury hotel being built with Donald Trump.
A number of other developers are also scrambling to cope with the swift change in fortunes.
Several real estate and construction companies have been laying off staff, and a new government-backed developer that unveiled a $95 billion project around the same time of the Nakheel Harbor launch, said it was reviewing its plans now that investor demands had changed.
Meanwhile, credit rating firm Moody's Investors Service said falling real estate prices means the outlook is negative for banks in Dubai and elsewhere in the United Arab Emirates.
The firm cited concern about loans given to 'opportunistic' property developers in light of falling real estate prices.
Other worrying signs include tighter liquidity, falling equity values, and the steep drop in oil prices, Moody's said.
Posted by Tom Wickline at 7:07 AM
Tuesday, January 13, 2009
DUBAI // Construction work on the Nakheel Tower – a building that would soar more than 1km high to be the world’s tallest when completed – has been stopped for a year.
“Further work on the foundations of Nakheel Harbour and Tower will commence in 12 months,” said a Nakheel spokesman. “The foundation works are likely to take approximately three years to complete.”
A senior project manager said several employees working on the Dubai project had been laid off because “work has stopped until further notice”.
The stalling of the tower is the latest in a string of delays on Nakheel’s most prominent projects as a result of the slowdown in the property market.
Other developments that have been affected include the Trump International Hotel and Tower, Frond N villas, and Gateway Towers, as well as parts of the Waterfront and Palm Deira.
In late November, the company laid off 500 employees, about 15 per cent of its labour force, “in light of the current global market conditions”.
Developers across the UAE have said they were reviewing their projects and retrenching staff because of the sharp drop in sales. Residential property prices dipped 8 per cent in the fourth quarter of last year, according to Colliers International. Ian Albert, the consultancy’s regional director, said “tighter liquidity, selective lending and growing negative sentiment are all bringing about these changes”.
Dubai was not the only affected emirate. Aldar Laing O’Rourke, a joint venture between Abu Dhabi’s largest developer and a British construction company, announced last week it was cutting between 200 and 250 of its 1,900 professional employees because of the changed economic environment.
Under Nakheel’s plan, which was launched with a flashy ceremony at Cityscape Dubai in October, the multibillion-dirham tower would be the centrepiece of a 270-hectare marina development called Nakheel Harbour and Tower near Ibn Battuta Mall and the Arabian Canal.
The tower would have 200 floors and 150 lifts. It would have been surrounded by as many as 40 other buildings, ranging from 20 to 90 floors. The area would be home to 55,000 people and have enough offices for 45,000 people.
Nakheel officials said at the launching ceremony that the entire Nakheel Harbour and Tower project would take 10 years to complete in phases and require 30,000 labourers.
Posted by Tom Wickline at 6:55 AM