Developers say they will scale back activity

The country's largest property developers say they will scale back activity and review the timeline of existing projects.

Projects such as Nakheel's Harbour & Tower may be scaled back as the developer, and its counterparts, review activities.

Dubai's largest property developers say they are cutting back on activity and reviewing the project timetables in response to the worsening economic climate. The admissions, made yesterday, were the clearest sign yet that developers now consider the lack of credit and slowdown of sales as serious impediments to growth in the months to come. "There is a recession hitting the whole world and some projects in Dubai are being delayed and some are being cancelled," said Imad al Jamal, the vice chairman of the UAE Contractors Association. "We are having to curtail expenses and regroup resources." Nakheel, the property developer behind the iconic island developments that are becoming synonymous with Dubai, also said it would be "scaling back" some projects. "We are witnessing a global negative economic movement, and while we believe that the economic fundamentals of Dubai have not changed, we also believe that we have a responsibility to aid this market maintain healthy momentum," a spokesman said. "This involves reassessing our immediate business objectives to accommodate the current economic climate. The next few months will see a scaling back of activity around some of our projects." Nakheel would not identify projects that could be delayed, but in recent weeks it has said activity on Palm Deira and Palm Jebel Ali had shifted to the areas closest to the existing shoreline to allow for progressive sales launches. Analysts said projects likely to be affected included the island developments that have yet to begin, such as The Universe - a planned archipelago abutting the 300 islands of The World. Union Properties, the developer behind the towering Index building and MotorCity in Dubai, said it had eased the payment plans for some developments and would not announce "any new project until we are clear on the status of the credit market and the appetite of banks to go back into lending", according to Zaid Ghoul, the chief financial officer. He said the company had completed 85 per cent of its projects and was focusing on expanding its rental portfolio to Dh5 billion (US$1.36bn) from Dh2.2bn - a move that would secure the company between Dh400 million and Dh500m in annual income. Mr Ghoul also said the company was planning payment schemes such as "rent to own" - where a potential buyer could choose to contribute their rent toward buying the home if they decided within a certain period of time. "We have always been innovative in coming up with ideas to deal with difficult market circumstances," he said. Developers with a large portion of their sales in the off-plan category are beginning to appear especially vulnerable in the market. Damac Properties said it had awarded 60 contracts in the first nine months of this year for construction of projects, but a review of its website shows six buildings finished or nearly finished, 24 in the early and middle phases of construction and 44 projects without significant progress. Earlier this week, Damac announced 200 layoffs, or about 2.5 per cent of its workforce. Peter Riddoch, the chief executive of Damac, said the company had "undertaken a review of its construction timetable with a view to rescheduling some of its later projects". "This does not mean that Damac Properties is postponing any projects," he said. "We, along with every other company across the world, are simply taking an overall view of our business and prioritising accordingly. It makes good business sense for us to prioritise at those construction sites where we have more advanced status and we have communicated our intentions to our customers." Emaar Properties, which announced new payment plans on Wednesday to boost sales, said yesterday it was reviewing its recruitment strategy as part of plans to "reorient our growth strategies and align our business model to tackle new realities". "While Emaar continues to be one of the largest employment providers and has been instrumental in creating several hundred new job opportunities - directly and indirectly - it is now crucial that we use efficiency and maximise productivity, which includes revisiting our recruitment policies, and optimising human resources," a spokesman said. Limitless, which is building a Dh11bn canal that eventually will, be the centre of a city with an estimated 1.5 million people, said it was reviewing the pace of development "on a continuous basis" and would adjust to "reflect market conditions". Major Abu Dhabi developers, including Aldar Properties and Sorouh Real Estate, said they were still reviewing the economic situation and had not decided whether to ease payment plans to help buyers. Adel Lootah, the executive director of the Dubai Property Society, said transparency was the key to restoring confidence during this period. "We need a little bit more communication from the government, the main players and the financial institutions," he said. "This is a difficult time." [e-mail]