Dubai: Emaar Properties, which is expected to inaugurate the world's tallest tower Burj Dubai in four weeks, on Wednesday called off a merger plan with the real estate entities of Dubai Holding that could have created a $52.8 billion property giant.
Emaar Properties, which is 32.5 per cent owned by the Dubai Government, said it will not go ahead with its merger with Dubai Holding, which was announced a few months ago.
The merger was announced by the Dubai Government in June and led to realignment among the property entities of Dubai Holding, including Sama Dubai, Dubai Properties and part of Dubailand.
Emaar, Dubai Properties and Nakheel have been reshaping the real estate landscape of Dubai for the last few years, in line with the government's vision to strengthen Dubai's position as a leading regional hub.
The three entities have, over the last five years collectively developed "New Dubai" — home to thousands of national and expatriate families.
However, since the global credit crisis impacted Dubai's real estate market late last year, these developers have been forced to rethink growth strategies, including the option to merge, as collectively they hold a large chunk of landmass.
Feasibility studies
An Emaar board announcement said the decision was based on careful feasibility studies conducted by a group of leading economists and international expert houses under the supervision of officials from both sides.
The board said the study's results indicated that the merger plan that was discussed proved economically unfeasible for the time being.
Emaar and Dubai Holding prepared a detailed evaluation of the feasibility of merging their activities in the proposed way, including an evaluation of various entities and the proposed structure for the deal, while holding consultations and discussions with the concerned regulatory authorities.
The move comes a few months after Dubai Holding said it was restructuring its companies into four verticals, preparing its real estate entities for a possible merger.
According to the Dubai Government's June announcement, the merger was to have been completed in October.
Analysts say Emaar has taken a calculative step to retain shareholder value and move ahead with its own projects.
"The move shows that Emaar wants to face the current economic downturn on its own terms and is looking at retaining its shareholder value," Sudhir Kumar, managing director of Realtor's International, a property consultancy, told Gulf News.
