Dubai Holding, one of the emirate's three major holding companies, said it was reorganising its business in preparation for an end to the economic downturn. The announcement represents the latest move towards consolidation among Dubai conglomerates as they streamline and cut costs in times of slowing activity and declining asset values.
Under the plan, Dubai Holding will reorganise its companies into property, business park, hospitality and investment units. "The realities of the global economic climate have made it necessary for us to look at our portfolio in a different way," said Ahmad bin Byat, the chief executive of Dubai Holding. "In order to remain competitive in the marketplace and be sure that we are poised for success once the markets open up, we've undertaken a number of changes that will reinforce and strengthen our business."
The company is divided between the Dubai Holding Commercial Operations Group (DHCOG) and the Dubai Holding Investment Group, formed this year when Dubai Group and Dubai International Capital (DIC) were combined. Under DHCOG are the property developers Dubai Properties Group, Sama Dubai and Tatweer. Dubai Holding is in discussions to merge the three with Emaar Properties, the Middle East's largest developer.
DHCOG also holds the hotel operator Jumeirah Group and the business park operator TECOM Investments. Dubai Holding Investment Group controls six financial companies, including Dubai Capital Group, Dubai Financial Group and Dubai Banking Group. DIC is a private equity firm that owns stakes in the Travelodge hotel chain, the Middle-Eastern operations of the property consultancy CB Richard Ellis, and the British engineering company Doncasters.
Dubai Holding would not disclose how its subsidiaries would be classed under the new structure. "It's a logical step for Dubai for those entities to amalgamate going forward so we can cut out some of the competition," said Nicholas Maclean, the managing director of CB Richard Ellis's regional office. "Now we are going into a market where we need the power of economies of scale. The market doesn't need this many companies."
The announcement follows a similar streamlining at Dubai World, one of the Dubai Government's other major holding companies. This year, Dubai World shifted the property holdings of the Dubai Multi Commodities Centre and Dubai Maritime City under the control of the property developer Nakheel, which it also owns. Dubai World has cut staff and is trying to sell some of its property assets, according to investors who have been approached by the company.
afitch@thenational.ae