Nakheel, the government-owned developer of Dubai’s man-made palm islands, has cut 500 jobs, or 15 per cent of its workforce, as it scales back projects amid the global financial crisis. “We have the responsibility to adjust our short-term business plans to accommodate the current global environment,” it said in a statement. “The redundancies are regrettable, but a necessity dictated by operational requirements which are in turn dependent on demand.”

This month, Nakheel said that there had been a slowdown in the rate of property sales. Last month, it scaled back dredging work on its massive Palm Deira project, the largest of three palm-shaped islands, which was planned to house one million people. Dubai is experiencing an increase in defaults in high-end properties as financing conditions worsen. Smaller property developers are likely to merge, a member of the emirate’s financial crisis committee said. Marwan bin Ghalita, chief executive of the RealEstate Regulatory Authority, said that now would be a good time for smaller developers to join forces.

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