(Bloomberg) -- State-owned Dubai developer Meydan is reviewing its operations and parts of its business may be outsourced to Nakheel PJSC, famous for building man-made islands in the shape of palm trees.
“We have embarked on a review of Meydan's business strategy,” Meydan City Corp. Chairman Mohammed Al Shaibani said in an emailed reply to questions. “Our aim is to improve efficiencies in operations.”
Facing a property glut, Dubai has moved to combine several of its state developers that have churned out an increasingly unsustainable supply of homes, offices and shopping centers. Already a drag on property values, some projects have run into financial trouble after the coronavirus pandemic wrought havoc across Dubai's economy.
Al Shaibani, who's also director general of the Dubai's ruler's court, in January replaced Ali Lootah as chairman of Nakheel.
Meydan's two main lines of business -- real estate and horse-racing -- will remain separate, he said. “Most day-to-day management functions” have been delegated to Nakheel, he said.
“We are slimming down the company's debts while remaining fully committed to all liabilities,” Al Shaibani said. The goal is to bring down Meydan's debt by 40% by the end of this quarter, he said.
A partnership with Indian developer Sobha Developers Ltd., negotiated in 2013, has also been dissolved, he said. Sobha didn't respond to emails and calls seeking comment.
Meydan Group and Sobha formed a joint venture to build 1,500 homes on 4 million square meters (43 million square feet) of land, a project known as District One. Hundreds of villas have been completed and sold. Sobha remains “an important business partner to Meydan,” Al Shaibani said.
Nakheel was at the center of Dubai's debt crisis in 2009 that pushed the emirate to the brink of a default. After receiving support from the government, it now has billions of dirhams of projects and infrastructure development underway.
With a wide-ranging review of Meydan's real estate operations underway, construction of Meydan One Mall, designed to include more than 550 shops, has been suspended indefinitely, according to the people familiar with the matter
The mall's prospects were already tenuous given its location near one of the world's largest shopping centers. The assessment of Meydan's business includes “redesigning the master plan for the mall,” Al Shaibani said.
“We have paused certain projects to rethink their viability, and cost efficiency, and also their compatibility within a Dubai context, before we reignite and relaunch them more solidly,” he said.
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