At the peak of the Dubai property boom in 2008, Nakheel hosted a party on Park Avenue in New York to promote the new Donald Trump project in the emirate. It was an elaborate, if not slightly surreal, event in a specially built tent with a large model of the Trump International Hotel and Tower. Men on stilts tottered around as canapes were served and celebrities mingled briefly with the well-to-do guests. The bill for the event was a cool US$5 million (Dh18.3m).
At the entrance of the event was a photographers' scrum, where top executives posed with the likes of Demi Moore, Donald Trump and Naomi Watts. It was the height of the brash marketing style of Nakheel - conveying luxury and deep pockets. A similar event was held in Los Angeles a few months later, and perhaps the grandest party of all took place at the beginning of the downturn in late 2008 to celebrate the opening of the Atlantis hotel.
Fast-forward nearly two years and that culture is being completely re-engineered. And a sign of the changing times is the appointment of Aqil Kazim, formerly the director of the company's Jumeirah Golf Estates project, as its new chief commercial officer. Mr Kazim has a reputation for a more hands-on, down to earth approach to management. At the recent Race to Dubai golf tournament, for example, he was seen directing traffic on the side of the road.
Mr Kazim "was literally holding up signs and guiding traffic", a former Nakheel employee said. This could be seen as part of a comprehensive change in the staff at the company. In the past year and a half, Nakheel has seen its number of employees reduced to fewer than 1,000 from 3,800 at its peak, but at least one major executive remains. Chris O'Donnell, the Australian chief executive of Nakheel, is still working under his five-year contract.
By early 2008, Nakheel was one of the headiest property companies in one of the most speculative property markets in recent history. There were sales launches where buyers camped out on Nakheel's doorstep for more than 12 hours overnight and high-profile tours featuring luminaries such as the actor Shah Rukh Khan and Grand Duke Henri of Luxembourg. The sales strategy was aggressive and professional, but its goal of pulling in the maximum number of buyers as quickly as possible with small downpayments is no longer viable.
The Nakheel of today is instead dealing with the effects of its excesses. The company has large debts and is contending with a property market characterised by limited sales, especially for the off-plan projects for which the company was renowned, such as The World archipelago, The Waterfront and the Palm Jebel Ali. Efforts are under way to reform the way the sector works. The property regulators - the Real Estate Regulatory Agency and the Dubai Land Department - are setting up a legal framework to reduce speculative buying and selling, and to make developers more responsible about getting financing for their projects in advance and setting up payment plans according to construction milestones.
The challenge of figuring out just what to do with Nakheel has fallen in large part to Aidan Birkett, the chief restructuring officer of Dubai World. Mr Birkett has been visiting each department of Nakheel over the past few months to understand how the company works and where it is possible to reduce staff and expenses. Dubai World is negotiating with creditors over some $26 billion of debt, and Nakheel is the most crucial component of these discussions. It has one of the largest stores of undeveloped land in Dubai and expansive obligations including payments owed to contractors, homes that still have to be built and handed over to buyers, and billions of dirhams owed to lenders.
Some observers wonder whether Nakheel might disappear after it spins off its developments as individual companies, while others predict it will continue to exist as a smaller, quieter company that strives to find new ways to finance its immense man-made island projects. A new marketing campaign could revive the brand, at least partially, in the years to come. The future of the company is not clear, but the fact that the culture of large companies such as Nakheel is shifting is a sign that Dubai is outlining a new set of business values.
Dubai World has announced a number of management changes in recent months, including the resignation of David Jackson, the effusive head of Istithmar World. Dubai World referred to him in a press release announcing his departure as a "private equity specialist", rather than an accomplished chief executive. This could be a sign that the Dubai Government felt Mr Jackson's way of doing business was not aligned with the future of the emirate.
With the global markets no longer soaring, Dubai needs a new skill set. Gone are those who could manage the gala events, make trophy purchases and arrange celebrity site visits. They are being replaced with people such as Mr Kazim, who are keen to engage with even the tiniest of details - even traffic flow at a golf tournament. @Email:bhope@thenational.ae