It must have been the dream job offer. Chris O'Donnell, an accomplished Australian property tycoon who had already left his mark on the industry in his native land, was being offered the opportunity to head up Nakheel, one of the most dynamic and imaginative developers on the planet, with the substantial resources of the Government of Dubai at his disposal. That was in early 2006. The Gulf property market was half way up the curve of an unprecedented boom, fuelled by cheap and readily available finance and inspired by some of the most creative designs on the planet: man-made islands; iconic waterside lifestyle developments; and extravagant shopping malls.
On top of that, he was being offered a remuneration package that would make him the best paid expatriate property man in the Emirates, according to headhunter speculation. Mr O'Donnell, whose track record had already showed him to be an opportunity taker, found it irresistible. He moved his family to Dubai and became the chief executive of Nakheel. Fast forward three years and the picture is very different. Dubai has been ravaged by the global financial hurricane and its property boom has been thrown into reverse. All property companies are facing tough times, with prices falling dramatically and cash hard to squeeze from shareholders and banks, but Nakheel, part of the government-owned Dubai World conglomerate, is feeling the pinch especially keenly.
Many of its glittering projects have been delayed, seemingly indefinitely. Nakheel is facing a deadline of December to come up with a hefty US$3.5 billion (Dh12.85bn) repayment of a sukuk bond. Expatriate executives are under scrutiny. Some have been caught up in the Dubai Government's purge of corruption in the property market. At Nakheel, two of Mr O'Donnell's compatriots are in prison on fraud charges. Has his dream turned to nightmare?
"The challenges facing Nakheel are beyond Chris's ability to deal with on his own. He needs the team around him, and he needs the backing of the group. Even Warren Buffett couldn't handle Nakheel on his own right now," says a former colleague. Of course, Mr O'Donnell is not alone. He enjoys the backing of the board of Dubai World and its chairman, Sultan Ahmed bin Sulayem, as well as the loyalty and respect of his staff, and the financial resources Dubai can still call on, even in these troubled times. "You'll find it difficult to find anyone to say a bad word about him," says a property expert.
What impressed colleagues when he joined Nakheel was the practical knowledge and expertise gained in the tough training ground of the Australian property business and a direct, even populist style of management. "He was a breath of fresh air at Nakheel. He was popular, approachable and on first name terms with everybody," says an ex-Nakheel executive. He learnt this common touch in the early days of his career in the tough Sydney property business. After a diploma in business education and a builder's certificate from New Zealand, he rose through some of the best known names in the Australian property and financial sectors - Lend Lease, Leighton and Westpac Banking Corporation - before his appointment as managing director of Investa Property in 2000.
As one of the leading Sydney developers, Investa carried some clout in the business and in local politics, and Mr O'Donnell took full advantage of his position. "He learnt a lot about politics down there," says a colleague. "He's been able to use that knowledge in Dubai." In his time there, Investa grew funds under management nearly eight-fold, making it one of the country's largest quoted property companies. Soon after Mr O'Donnell moved to Dubai, it was taken over by Morgan Stanley Real Estate, the property investment arm of the US investment bank.
In Dubai in 2006, anything seemed possible for Nakheel. The Jumeirah Palm was well advanced, the countries of The World were beginning to emerge in recognisable form. Nakheel had completed or was developing several other major projects in the emirate: two other "palm" developments in Deira and Jebel Ali; residential developments in "new" Dubai; and retail extravaganzas at Ibn Battuta Mall and Dragon Mart. The Universe, another spectacular offshore development, was on the horizon.
Other parts of the Dubai World conglomerate were also doing well. The ports business of P&O had just been taken over in the deal that created DP World; Istithmar, the mainly overseas investments arm of Dubai World, had begun a series of high-profile forays into Europe and the US; and divisions such as Limitless and Leisurecorp were pushing Dubai World further into the promotion of the "Dubai dream" - stunning architecture, luxurious leisure facilities and marina lifestyles.
In the prevailing management philosophy of Dubai at the time, these divisions often competed with each other for customers and resources. It may have made rival executives hungry for business and keen to clinch deals, but it also swelled the corporate payroll. Back office and corporate functions were duplicated across the conglomerate. Mr O'Donnell, as a director of Dubai World, saw this as a problem early on, his friends argue, and suggested a process of rationalisation, but in those boom days there was little appetite for such parsimony. "He had to stamp down internally, and can be tough when necessary, but nobody really wanted to know," says a property executive.
Nor was he slow to hire executives from abroad, especially Australia, when he thought it was required. One of those hirings, Matt Joyce, was taken on as general manager of the Dubai Waterfront development. He now languishes in Dubai prison on fraud charges. Some observers of Nakheel think this influx of expatriate executives is a strength for Mr O'Donnell in the current predicament. "He can count on their loyalty to him, which is based on the personal role he had in taking on senior management. The question is, will he be allowed to keep them now that times are harder?" asks a former Nakheel executive.
Nakheel's ambitions probably reached their zenith with the $38bn Nakheel Harbour and Tower development, announced in October last year, just as the rest of the world was beginning to face the reality of the credit crisis. With a centrepiece tower more than 1km high, the focal point of a network of canals and luxury waterside developments, it outdid just about everything else in Dubai for sheer extravagance.
By that point, Mr O'Donnell was a true convert to the Dubai philosophy. "You shouldn't put any boundaries on yourself. One of the things I've learnt in Dubai is to strive for excellence," he told a radio interviewer. In an unforgettable hostage-to-fortune moment, he added: "I can categorically say we won't have a crash." He followed this up with the multimillion-dollar launch party of the Atlantis, now widely regarded as Nakheel's last fling before it got down to the gritty job of confronting economic reality.
Within weeks of the Atlantis bash, Mr O'Donnell was forced to cut staff. According to insiders, he handled the layoffs - hundreds are gone from the huge Nakheel payroll - with "dignity and humanity", confirming his reputation as a skilled communicator. He has also announced "delays" to some major projects. Work on the 10-year Nakheel Tower project has been halted for 18 months; the Waterfront development, the Jebel Ali Palm and The Universe were likewise put on hold while Nakheel's financial position is evaluated. Trump Tower, the other prestigious international project on the Jumeirah Palm, has also been postponed.
Last May, Mr O'Donnell admitted that Nakheel had received cash from the Dubai Financial Support Fund, the $10bn facility set up with backing from the Federal Government. The admission - almost a throwaway line in the course of a newspaper interview - raised hackles at the senior echelons of Dubai Inc. "They were still deciding the guidelines on how to allocate the money, and here was O'Donnell telling everybody that he'd already got some. It did not go down well with other state-owned entities," said one banker.
Exactly how much Nakheel has already received - and how much more it needs - is a topic for much debate in Dubai financial circles. The $3.5bn sukuk looms in December, while the group still has significant unpaid contractors' bills and contractual liabilities that could run into further billions. Meanwhile, with the fall in the Dubai property market, income from property sales is being severely squeezed.
Some are asking whether this likeable, thoroughly professional Australian can handle a challenge of this magnitude. "Whatever he accomplished back home and in the early days at Nakheel, this is a different ball game. He's done as much as he can, and now it's out of his hands," says a property expert. firstname.lastname@example.org
Early years ■ Born 1956 in New South Wales, Australia ■ Education Diploma of Business (real estate management) ■ Family Married with son, Luke Career ■ 1990s Moves through executive positions at Lend Lease, Leighton and Westpac Banking Corporation ■ 2000 Appointed managing director of Investa Property, a Sydney based real estate group ■ June 2006 Becomes chief executive of Nakheel in Dubai ■ October 2008 Launches Nakheel Harbour and Tower project ■ November 2008 Opening of the Atlantis Hotel on Jumeirah Palm ■ May 2009 Admits Nakheel has received funds from the Dubai Government The company ■ Nakheel is one of the best-known property brands in the UAE, with such internationally recognised projects as the Palm Jumeirah and The World archipelago ■ Nakheel is owned by Dubai World, which is in turn fully owned by the Emirate of Dubai. Nakheel, with billions of dollars of debt, has been hard hit by the property downturn