Nakheel cuts staff, delays projects

Angela Giuffrida and Bradley Hope

• Last Updated: December 01. 2008 12:09AM UAE / November 30. 2008 8:09PM GMT

Constructed of villas, like those pictured above at Palm Jumeirah, have been affected by the global economic slowdown. Ahmed Jadallah / Reuters

Nakheel has made 500 of its staff redundant as it delays work on major projects including the Trump International Tower and Hotel on Palm Jumeirah, Waterfront, Palm Jebel Ali and The Universe, the company said yesterday.

The decision is another sign of the global economic slowdown affecting the property sector. Banks have tightened lending, prices have dropped and sales have slowed, forcing developers to review their expansion plans.

The job losses make up 15 per cent of Nakheel’s workforce, which now stands at 3,000, and follow at least four years of breakneck hiring.

Nakheel said in a statement that the layoffs were “a responsible action in light of the current global market conditions”.

“The redundancies are indeed regrettable, but a necessity dictated by operational requirements which are in turn dependent on demand.”

In another statement, Nakheel said it was delaying long-term infrastructure work on some of its projects.

The projects include Frond N villas, Gateway Towers and Trump International Hotel and Tower on Palm Jumeirah.

At Waterfront, work on Madinat Al Arab, Venetto, Badra and Canal District is continuing as planned, but other phases will be delayed.

The company has already slowed reclamation work on parts of Palm Deira, the largest of the Palm island trilogy, while the pace of construction on components of Palm Jebel Ali is expected to slow.

Work on The Universe, a collection of reclaimed islands planned to be built between Palm Jumeirah and Palm Deira and launched in January this year, will also be restricted to preliminary engineering studies.

The statement said: “Nakheel is delaying long-dated infrastructure work on some of our projects in order to ensure that our business model is aligned to meet market demand. We have the responsibility to adjust our short-term business plans to accommodate the current global environment. Work on all other Nakheel projects is ongoing as planned.”

Reclamation on The Universe was intended to begin by the end of this year and negotiations were under way with at least three contractors. The contractors now expect the project to be awarded much later.

“We are in talks, but I think the contract will be awarded much later than December,” said one contractor. In the past month, almost 1,000 job losses have been confirmed by developers in Dubai.

Damac Properties, the emirate’s largest private developer, laid off 200 of its 8,000-strong workforce, while 180 out of 350 staff at Tameer Holding, another Dubai developer, were told they would lose their jobs by the end of this month.

Omniyat Properties also confirmed 69 redundancies from its workforce of 350.

“It’s not unusual for companies to downsize during a recession,” said Peter Walichnowski, the chief executive of Omniyat Properties. “Also, if the skill-sets are not required it’s best for people to find other jobs that want and need them at that point in time.”

Still, Omniyat plans to boost staff numbers in its customer care and facilities management divisions in time for the completion of projects, three of which will be handed over early next year.

“We need to allocate resources into areas of the company that are more appropriate,” said Alex Andarakis, the company’s director of sales and marketing.

Recruitment experts said that while there has been a slowdown in Abu Dhabi, redundancies have so far only hit Dubai, but are now trickling down to construction consultancy firms and contractors. According to Duncan Murray, a consultant at Duneden Recruitment, the situation has led to “too many people looking for too few jobs”.

“Companies in Dubai are culling people left, right and centre,” he said. “It’s now a case of people not knowing each day whether they’re going to have a job or not.”

And as developers and construction firms freeze hiring, recruitment companies are aggressively looking to place applicants in jobs elsewhere in the GCC.

“People will just have to go to places like Qatar and Saudi Arabia if they want to work,” said Mr Murray.

“It will be a lot harder for families, but people can’t afford to be fussy and they will also need to be more flexible and accept pay cuts.”

Mr Murray predicted that it could be early 2010 before companies think about recruiting again.

“It will be a difficult 12 months ahead,” he said.


agiuffrida@thenational.ae

bhope@thenational.ae