Tuesday, 13 April 2010
Dubai bust hits tower chief
I guess it was only a matter of time for Mr O'Donnell......
The picture on the left (burjdubaiskyscraper.com) shows Burj Khalifa and the even taller Nakheel Tower.
Source: Sydney Morning Herald 13th April 2010
WHEN Chris O'Donnell was plucked from Sydney to head one of the world's biggest property operations in Dubai, he saw a golden horizon.
''There are more than 50 per cent of the world's cranes currently located in Dubai, which makes the new position I have taken up an extremely exciting one,'' said the Australian, freshly installed as the chief executive of the emirate's state-backed developer Nakheel.
That was mid-2006. By October 2008, when debt had engulfed much of the world, Mr O'Donnell was still bullish about Dubai.
''There won't be a crash,'' he declared when revealing plans for the world's tallest building, Nakheel Tower, a rocket-shaped concrete wonder that would soar more than a kilometre into the sky. Asked to confirm reports that it would be 1400 metres high, Mr O'Donnell had replied: ''Watch this space.''
Look into this space today and that is all you will see: space.
The crash came to Dubai, after all. Its property values halved in a year, the cranes fell silent and Nakheel Tower was scratched, along with many of the company's grander visions as it struggled to pay its bills.
Now Mr O'Donnell has become another casualty of Dubai's ruptured bubble. Nakheel has dumped him from its board. While he remains chief executive, reports suggest that several fresh faces appointed to the board, including a new chairman, will want to replace Mr O'Donnell.
The Dubai government has announced it will spend $US9.5 billion ($10.2 billion) restructuring the Dubai World conglomerate, of which Nakheel is a subsidiary. Dubai World carries a $US23.5 billion debt burden and $10.5 billion of that is Nakheel's. About $US8 billion of the government funds will go to Nakheel to settle its liabilities, repaying creditors over five to eight years, ensuring ''near-term'' projects proceed.
Nakheel will become wholly government-owned.
The Financial Times said: ''The ruler's lieutenants behind Dubai's real estate boom-to-bust years are being gradually replaced by established names from the city's mercantile elite.''
Nakheel's assets, valued at more than $US110 billion by late 2008, include the Palm Trilogy, The World and Dubai Waterfront.
Two of Mr O'Donnell's former Australian colleagues at Dubai Waterfront, Matt Joyce and Marcus Lee, are fighting fraud charges in the emirate over the sale of a plot of land to an Australian developer, Sunland.
Before heading to Dubai, Mr O'Donnell served as the managing director of Investa Property Group in Australia for five years. Under his leadership, the company lifted its funds under management from $800 million to $6.2 billion.
In December 2007, back when the future was bright for Nakheel, the O'Donnell-led company took a $400 million stake in the Australian developer, Mirvac. Mr O'Donnell had said it made sense to consider joint developments ''with a like-minded company''.
But last year it pulled out of a joint bid with Mirvac to develop Barangaroo, the NSW government's multi-billion dollar project east of Darling Harbour. And in August, Nakheel sold its final 12 per cent stake in Mirvac.
That was only 10 months after Mr O'Donnell had said that Dubai's ''fundamentals'' were too strong for a crash. Now that the Nakheel restructure has been announced, Mr O'Donnell has thanked ''our customers, suppliers and contractors for their patience during these difficult times''.
He did not reply to the Herald's request for an interview.