Tuesday, June 02, 2009

Nakheel, DMCC announces merger

The property arm of Dubai Multi-Commodities Centre (DMCC) has entered into merger with Nakheel, one of the largest property developers in the emirate. This is one of the latest mergers from Dubai's property companies, as they restructure their operations to reduce costs.

A Nakheel spokesman revealed that all property-related operations by DMCC have been consolidated with Nakheel to accommodate present market conditions and make maximum use of the resources and expertise. As both the companies are owned by Dubai World, which is owned by Dubai Government, Nakheel will be involved in all projects developed by DMCC.

One of the main real estate projects by DMCC is the Jumeirah Lake Towers, a community office, residential and hotel towers. The Jumeirah Lake Towers will comprise 87 towers on the whole, and is due for completion by 2011.

The DMCC-Nakheel merger is the second to take place this year, among government-backed property developer. Earlier this year, Dubai Holding had merged the admin and back-office functions of Dubai Properties, Sama Dubai and Mizin. More mergers are likely in the real estate sector, as the companies continue to involve in cost-cutting measures, said Robert McKinnon, Head of Research at Al Mal Capital.

With most property developers being cash-strapped, with the banks restricting lending and homebuyers defaulting on payments, the main aim of consolidation is to pool resources to enable firms survive the downtown.

Nakheel had merged a series of its business units to form five entities, during February this year. Developers are of the opinion that such mergers can help them cope with the shrinking number of projects.

No comments: