Confusion surrounds the ownership structure of the landmark Trump Hotel & Tower on Dubai's Palm Jumeirah island after the chief executive officer of Dubai-based developer Nakheel said his company would be the sole owner of the scheme. This follows claims from The Trump Organisation that it will retain an ownership stake in the project.
Chris O'Donnell tells MEED his firm will hold a 100 per cent equity interest in the 62-storey project, with Trump lending its branding and management expertise to the scheme.
"It will be wholly owned by Nakheel," says O'Donnell. "It will be Trump branding. The apartments will be sold to individual purchasers and the hotel will be owned by Nakheel hotels. Trump will operate it."
His statement follows claims by US property tycoon Donald Trump in late June that his firm would hold a stake in the planned tower, although he declined to reveal any details of the ownership structure. "It is a private partnership so we will not comment on that, but we have a very big stake in this development and its success," he said.
Trump's son Eric tells MEED: "While we do not go into details of our partnership deals, we will have a piece of it. We will have an ownership."
Trump is working closely with Nakheel on the AED3bn ($810m) tower's redesign as well as its lay-out, finishing and floor plan, according to Eric Trump.
Traditionally, The Trump Organisation takes an ownership stake.
The Trump Tower on Palm Jumeirah is not the only landmark scheme Nakheel is working on. MEED reported in late June that it had increased the height of its planned Tall Tower in the Ibn Battuta area of Dubai to 1.4 kilometres, which would make it the world's tallest (MEED 20:6:08).
"We are building an iconic tower, but it does not have to be the tallest," says O'Donnell. "If you look at the Sydney Opera House, it is not the tallest, but it is one of the most iconic. You can speculate [on the height], but it has got to make commercial sense.
"The issues associated with building a tall building are huge and [grow] exponentially as you go higher. There is a plot we are looking at around Ibn Battuta, but I stress the issue of tall towers is something we will let others speculate on. We hope to release firm details by the end of the year."
The Tall Tower is likely to be the centrepiece of a high-density development, much like Emaar Properties' Burj Dubai, which forms part of the downtown development.
"You have got the whole Arabian Canal that is coming up on Emirates road, which will cut across to the Gulf," says O'Donnell. "A lot of that work is being finalised, so we can not confirm what will be going around it.
"Definitely there is a metro rail station and I think what you are finding is that wherever you have metro stations, you have a higher density of development around them."
With so much development in Dubai, there have been some major question marks over the city's ability to cope, with many observers suggesting that construction work should slow to allow its infrastructure to catch up.
"There is no doubt that infrastructure has had to play catch-up," says O'Donnell. "But now it has caught up and is in a position that it is almost ahead of the game. If you look at the roads being built and the power station being built at the Waterfront, this government is spending a lot of money preparing the city for a population of more than 4 million.
"If the influx of people to Dubai [population growth of 6-7 per cent a year] continues to 2020, we need to build everything that is on the books already, so I don't think the option of stopping is really valid."
A lack of housing has resulted in rental rates soaring by up to 80 per cent a year in some areas. O'Donnell says he expects this to change as the housing market matures and more supply comes on stream.
"Given the current population growth, I do not actually see demand being satisfied just yet," he says. "The large amount of property that has come to market is helping to ease the rental increases. What you will see is differentiation coming into play. Properties near water or around transport hubs will be in high demand, but some real estate that is not may struggle."
With so many projects on its books, Nakheel is looking at a range of options to ensure adequate cash flow. "We could sell all our property up-front and we would not have any need for cash borrowings," says O'Donnell.
"But we have a strategy of selling a third up-front, selling a third with construction and a third on completion, and with that being the case, we do have a need for debt funding. With the sub-prime issues, the banks have certainly slowed up on the amount of debt they are willing to provide so we are looking at a range of options for the provision of capital to run the business in the way we want.
"[Future debt raising] will be a mixture of bond issues, more project finance and direct financing, and we have a fund management business so we would expect to launch some private equity funds.
"We have [an initial public offering option] on the table from our original sukuk [Islamic bond] two years ago and that will continue until it matures at the end of 2009."