In 1770, James Cook first caught sight of the eastern coast of Australia. Two hundred and thirty five years on and Oceania has been rediscovered. However, rather than setting British and Irish convicts loose on the islands, a group of Kuwaiti investors is gearing up to invest $3,500 million to attract the rich, famous and anyone else fancying the idyllic dream.

Of course, it’s not the real Australia. This time it is a set of 14 islets forming a section of the 300 man-made islands that Dubai-based property developer Nakheel is developing four kilometres off the coast of Dubai. The World, as the project is known, is just one development in an offshore and onshore portfolio that could be worth as much as $50,000 million.

"Nakheel is a very large development company," says its newly appointed chief executive officer (CEO) James Wilson. "It is probably the largest development company in the world in terms of the size of the projects." Yet until recently, it has remained largely conceptual. Buyers are paying up on the back of fantastic masterplans. The interest is being drummed up through an equally impressive $110 million marketing machine. Delivery, however, remains the key issue. In mid-April, the shopping mall themed on the travels of Arabian geographer Ibn Battuta became Nakheel’s first completed development. The final result has been impressive, with tenants grappling for space, but the project was behind schedule.

Nakheel acknowledges its primary focus is ensuring timeframes are met, and quality maintained. Its biggest competitor, Emaar Properties, which has a number of completed developments and is building the world’s tallest tower, has had to fend off allegations of poor finishing and late delivery. David Spencer, director of Nakheel’s Golf Communities, allays fears over the quality of his company’s future projects.

"We want to be recognised as a developer that delivers on its promises and one that has sustainable developments, both in Dubai and other regional areas," says Spencer. "It’s very important to us that we develop projects that are sustainable and offer people a lifestyle within our developments that we can live up to and deliver on an ongoing basis."

Current market conditions in Dubai may prove a stumbling block. Contractors have already seen their resources squeezed over recent months. Costs are escalating, and the volume of work is swelling. Dubai does not have enough contractors, or subcontractors, to handle the work. Wilson is adamant that this has not affected Nakheel in its bidding procedures: contractors are still lining up for company projects. However, on the prestigious Palm developments, several contractors indicated that the timeframes were unrealistic, making them think twice about the bidding process. The inaccessibility of some of the Palm plots is also holding up some of the work.

"It is true that the pool of bidders is getting smaller and that we are getting about half as many as before," says Mounir Haidar, head of Nakheel’s technical department. While he admits it is an issue at the moment, in the long term he believes more international players will enter the market and alleviate some of the pressure on locally based contractors.

If the contractors are hesitant, should customers also begin to raise questions? A great deal is riding on the first islands to be completed.

"It [Nakheel] hasn’t finished a major project to move into," says the Dubai-based real estate agent. "Everyone is looking at what it will produce at Jumeirah Islands - its first residential project - and insiders say Sheikh Mohammed went round the project and made them redesign interiors to make it extra special. We expect it to be amazing."

While Wilson acknowledges that some of the delivery schedules have been ambitious and dates have slipped back, he points out that over the coming weeks a definitive schedule for all projects will be in place so that clients know where they stand. "Since I’ve joined I’ve been trying to understand the delivery dates that we’re committed to and to start creating a channel of communication whereby developers and customers can get abreast of the issues related to their property," says Wilson. "Customer delivery is the key factor we’re looking at."

More important for the customers is the question of how much control buyers will have over their properties. "Until now Nakheel contracts have had more freedom than Emaar," says the real estate agent. "Nakheel isn’t trying to control absolutely everything its tenants do to their houses or what services they use. We just hope it accepts that if you offer tenants freehold that means they can do what they want to their home within reason."

The number one objective is delivering on promises to clients. Nakheel, which is 100 per cent owned by the government, in many ways will define Dubai’s success. September 2006, when the palm is expected to officially open, will be a pivotal moment.

Getting the investors on board has not been an issue. Palm Jumeirah is sold out, sales on Palm Jebel Ali are going well and even on The World about 50 islands have been sold - although the buyers’ identities remain a mystery. On top of this, speculators continue to buy into the onshore residential projects. The 78 high-rise buildings at Jumeirah Lake Towers are all sold and, despite the absence of freehold legislation throughout the federation, more expatriates are signing up to buy their dream homes in the sun. As a result, investors’ 10-15 per cent downpayments have enabled Nakheel to fund its current portfolio and forge ahead with new projects, effectively without having to raise the capital itself. Investment continues primarily to be fuelled by the surplus liquidity of Gulf investors due to high oil prices and, increasingly, by wealthy foreigners buying a piece of the action.

Heavyweight

However, while funding is not a problem, circumventing any construction problems will not be an option for Nakheel. Its ambitious goals have brought it to the fore, but there is no room for cutting corners; global exposure means it must be professional and responsible in every aspect. Recent managerial changes have reflected Nakheel’s priorities. The arrival of James Wilson, formerly of Kuwait-based IFA Hotels & Resorts, highlights the fact that Nakheel needs a heavyweight to get the job done. Likewise, the man fronting the sales and marketing division, Simon Horgan, who has been in the job for just under six months, has had to expand his division drastically to manage the billion dollars of sales the company is now undertaking. Wilson is also quick to highlight the resources available to him from co-partners.

"One of the successes with Nakheel is that we’ve been able to attract a collection of 60-100 developers around us," says Wilson. "We’re the master developers, but they are helping us build our overall developments. They are working with us, because there is no way any company can build at the level we’re building by itself. Also, investors are coming in and they bring in their consultants, engineers and advisers."

For Nakheel, the biggest focus could be the environmental damage following the dredging and reclamation work for all its offshore developments. It has carried out detailed environmental impact studies on the surrounding area and has promised that preservation of marine life, as well as creation of new habitats, will be its priority. However, a walk along the shoreline next to Palm Jebel Ali - once a marine wildlife zone - illustrates the impact that such largescale dredging can have.

Nakheel is merely one driving force behind Dubai’s frenetic development, but ultimately much will depend on whether it successfully hands over those first properties. Jumeirah Islands will be a start. However, Palm Jumeirah will be the ultimate test. Only then will the world know whether Nakheel can bring Captain Cook’s discovery a lot closer to home.