Special Report: Real Estate - Downturn hits office space supply in Dubai

In fact, some of the companies themselves may soon disappear, swallowed up in a series of mergers.

Emaar, developer of the Burj Dubai, among other notable buildings, is to be merged with three other property companies owned by Dubai Holding: Dubai Properties, Sama Dubai and Tatweer.

Meanwhile, Dubai World has merged several of its real estate operations, bringing together Nakheel, the company responsible for the three Palm islands and The World, with the property arms of Dubai Maritime City, Leisurecorp and Dubai Multi-Commodities Centre. This real estate consolidation has been forced on the government by the emirate’s financial problems.

With the supply of property expected to outstrip demand in Dubai for several years to come, smaller real estate companies are likely to struggle with cash flow problems. Many are likely to view being part of a larger group as their best hope of survival.

Emaar and Nakheel are potent symbols of the emirate’s economy and the decision to pool their resources with smaller firms should at least ensure that the emirate’s flagship developers survive the downturn.