The pressures of expansion have inevitably forced change. By 2004, Nakheel employed 400 staff on half a dozen developments. It now employs more than 2,000 people and has a project portfolio worth more than $30bn.
“There have been several transformations over the course of the three years I’ve been at the company,” says Robert Lee, executive director of investment projects. “The organisational structure has changed three or four times over the past year.”
Initially, Dubai World chairman Sultan Ahmed bin Sulayem, who established the company, played an active role in its management, with Wahid Atallah, then executive director of commercial and operations.
The first significant change to the company structure came in early 2005 when Atallah left and Bin Sulayem began to focus his attentions on other Dubai World companies, such as DP World. James Wilson was brought in from Kuwait’s IFA Hotels & Resorts to run the company. But in June 2006, he moved to Nakheel Hotels & Resorts, making way for new chief executive officer Chris O’Donnell, who arrived from Australia’s Investa Property Group.
O’Donnell’s appointment resulted in the creation of eight business divisions: retail; design; finance and IT; sales, marketing and customer service; human resources and administration; asset management; projects; and company secretary and general council.
The purpose of the restructure was to delegate decision-making to the business divisions and the general managers of each project company. The move has been shadowed by the decentralisation of procurement process. Each general manager is directly responsible for the delivery of Nakheel’s megaschemes, reporting to O’Donnell.
One of the new divisions, the design group, acts as a filter for all design, health, safety and environmental issues across projects and a repository of project information. Its function is to ensure standardisation and act as a library of project information.
Nakheel did not have an easy start. It was launched just after construction began on the second Palm island scheme at Jebel Ali in 2003. It also had to replace the dredging contractor on the first palm project, Palm Jumeirah, for failing to perform, and when villas were finally delivered in 2007, they were more than a year overdue.
The company’s Ibn Battuta outlet mall was also severely delayed after a radical redesign and relaunch as a retail mall, while the Jumeirah islands project was criticised by the local media for the standard of finishing, and buyers were moved out of its Garden View Villas development in Jebel Ali after cracks developed in structural walls. Several projects that are yet to be built have also undergone a redesign, including the biggest of the palm islands, Palm Deira, and Lost City.
The recent handover of properties including villas and apartments on Palm Jumeirah, commercial buildings in the Jumeirah Lake Towers development and Jumeirah islands residential properties has forced the company to consolidate its facilities management division. The unit has grown from 30 staff in June 2006 to more than 250 people currently.
Under O’Donnell, and in the face of mounting criticism relating to the environmental impact of its man-made island schemes, Nakheel has been keen to prove its green credentials.
“There were big changes with the arrival of Chris O’Donnell,” says Shaun Lenehan, head of environment at the design group. “There has been a top-down push for sustainability. The managers and directors have to say what in terms of sustainability [they are doing]. It is a real change.”
Nakheel has also forced its own changes on the market. The size and number of projects undertaken by the company means Nakheel can affect the way things are done along the supply chain. “We are such a big developer that we can make a market change,” says Lenehan. “We can ask for certain products and our buying power is such that business will develop in Dubai to service our needs.”
When recruiting, the company has a policy of first looking to its existing staff to cherry-pick talent before launching an international search. The policy helps with staff retention. “There is competition for talent from Dubai and Abu Dhabi, and elsewhere,” says Lee. “We still have a need and an obligation to provide learning and promote from within. It helps to retain employees. You can pay top dollar but that perpetuates a cycle of people jumping jobs.”
The company is looking overseas for oppor-tunities and is in talks with companies with which it has existing relationships about pursuing projects outside the UAE. “We are taking our brand equity to an international level,” says Lee.
O’Donnell agrees: “We are dominated by what we do here in Dubai and are looking to diversify into the international market, which over time will grow into a very significant part of what we do,” he says.
Nakheel International is a new endeavour that broadens the company’s remit outside Dubai into the realm of its sister company Limitless, which is also part of the Dubai World group and predominantly pursues projects outside the UAE.
Plans to build the world’s highest tower are on the developer’s drawing board. The tower will be higher than Emaar Properties’ Burj Dubai, which has an estimated final height of more than 800 metres.
Nakheel is learning fast. It has quickly realised that to become an effective project manager it must be an intelligent client. It also realises that to offer real value in design it must have the same intellectual capacity as international consultants who have been building their own design libraries over a much longer period.
It is also changing its approach to financing schemes. In early November, the firm confirmed it was looking to set up a real estate investment trust (Reit) of its residential assets, likely to include International City and Discovery Gardens. The Reit will be worth $600-800m and will provide Nakheel with the means to raise capital by listing it on a stock exchange. This is a significant step away from the bonds and syndicated loans used previously.
Nakheel’s $1.8bn sharia-compliant syndicated loan in August 2007 followed the largest Islamic bond ever issued, a $3.5bn sukuk (Islamic bond) issued in November 2006 and listed on the Dubai International Financial Exchange (DIFX).
MEED expects the entire firm to list after 12 months.
NAKHEEL IN NUMBERS
$3.5bn: Value of sukuk issue, November 2006
16 live projects
$60bn: combined project and land value
$600-800m: estimated Reit value
1,000km: coastline under development