By Minjune Kim
Dubai World, the government-owned ports and property conglomerate, announced it was shifting assets and staff from its troubled property developer Nakheel to its portfolio management arm Istithmar World.Dubai World officials said it was shifting “selected hotel and real estate assets and the management teams related to these assets, primarily in international markets” to Istithmar World.
Dubai World has at least $59 billion of liabilities, a large proportion of the emirate’s total debt. Its announcement was the group’s first public mention of specific assets it has chosen to restructure as it tries to slash costs and refocus its business to cope with the economic downturn.
The tiny emirate of Dubai spent more than US$60-billion building the so-called "Eighth Wonder of the World," a group of man-made, palm-shaped islands in the Persian Gulf, which attracted A-list buyers from the Jolie-Pitts to the Beckhams. Now debt from the faltering venture and other soured investments have put Dubai in the hole for US$80-billion.
Real estate values at the Palm Islands are down over 50%, and construction has stopped on further extensions. Even more embarrassing, Dubai had to approach fellow emirate Abu Dhabi with hat in hand to ask for a temporary bailout; in February, Abu Dhabi bought US$10-billion in five-year bonds.
Real estate values at the Palm Islands are down over 50%, and construction has stopped on further extensions. Even more embarrassing, Dubai had to approach fellow emirate Abu Dhabi with hat in hand to ask for a temporary bailout; in February, Abu Dhabi bought US$10-billion in five-year bonds.
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