The property arm of Dubai Multi Commodities Centre (DMCC) has been merged with Nakheel, one of the emirate's largest property developers. The move is the latest sign of consolidation among Dubai's property companies as they restructure their operations to cut costs. "DMCC's property-related operations have been integrated with Nakheel to better accommodate current market conditions and optimise resources and expertise," said a company spokesman. Both companies are owned by Dubai World, which is owned by the Dubai Government. A source close to the deal said Nakheel would now be involved in all projects being developed by DMCC. DMCC was set up to establish the emirate's commodity market and provide infrastructure and facilities for commodities including gold and precious metals, diamonds and energy. Its main property project is Jumeirah Lake Towers, a community of office, residential and hotel towers. Nakheel was also involved during the early stages of development. Jumeirah Lake Towers, which will consist of 87 towers, is due for completion in 2011. The partnership is the second to take place this year among property developers backed by the Dubai Government. In February, Dubai Holding merged the administrative and back-office functions of Dubai Properties, Sama Dubai and Mizin. There will be more mergers as property companies "try to capture the little bit of synergies they have", said Robert McKinnon, the head of research at Al Mal Capital, an investment bank in Dubai. With most property developers strapped for cash as banks restrict lending and homebuyers default on payments, the main benefit of consolidation would be to pool resources to enable firms which would otherwise be competitors to survive the downturn. Nakheel says it has drawn money from the first half of the US$10 billion (Dh36.7bn) government bond, in part to pay contractors. In February, Nakheel merged an array of its business units to form five entities as it prepared for the challenges ahead. "I don't see much financial benefit in a lot of cases for the mergers that have been discussed," said Mr McKinnon. "But with so many Dubai entities in the development game, it probably makes sense, from a control, quality and management standpoint, to shrink it down so that they're not all competing with each other and there's more co-operation and planning involved." Consolidation would also help developers cope with the shrinking number of projects. New project announcements in the UAE declined to Dh3.5 trillion last month compared with Dh4.8tn in April, according to a recent research note from Kuwait's Global Investment House. More than 50 per cent of the projects planned in the country have been postponed or cancelled since the start of the downturn, according to the property consultant Jones Lang LaSalle. Property prices in the first quarter of this year fell by more than 40 per cent compared with the previous quarter, according to Colliers International, a consultancy. However, HSBC said in a report yesterday that agreed sales prices rose 4 per cent in April and 5 per cent last month compared with the same months last year, which helped boost property stocks. agiuffrida@thenational.ae skhan@thenational.ae
