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Further consolidation among Middle East property companies to cope with economic downturn

In the 'new' property world that will take the Gulf region forward as the real estate industry starts to recover big will be beautiful and smaller companies are likely to be less able to survive, it is believed.

Analysts also point out that at the height of the property boom in places like Dubai perhaps too many property companies were created in response to demand but now that demand has fallen away there is no room for the smaller ones.

The merger of Dubai Properties, Sama Dubai, Bawadi, Remraam and the Tiger Woods golf course will create one of the largest property entities in the Middle East, said parent company Dubai Holdings.

The strategic move comes just two months ahead of a mega merger planned between subsidiaries of Dubai Holdings and Emaar Properties that was announced in June and due to be completed in October.

'This realignment among Dubai Holding entities was widely expected ahead of the big merger between its real estate companies and Emaar properties,' said Tariq Ramadan, a property analyst and chairman of Tharaa Holding.

'I see this as a positive move. When the property sector was booming, the government has launched a number of companies, although that was not necessary. However, time has changed,' he explained.

'Right now, consolidation and merger are the way to move forward. This merger will help Dubai Holding to move ahead with the merger of its real estate assets with Emaar Properties,' he added.

According to Marios Matatheftis of Standard Chartered Bank consolidation is something that will continue. 'Growth rates are not reaching the levels of previous years so consolidation is justified,' he said.

Sama Dubai and Dubai Properties together have one of the largest land banks within the Middle East and North Africa region covering a geographical stretch from the United Arab Emirates to Morocco.

In a statement Dubai Holding said it has realigned its real estate and business park entities under two verticals as part of a restructuring programme due to the economic downturn that it announced recently.

Although it is not known what name the new merged company will have it is predicted to be branded as the Dubai Properties Group. The company also said that existing project plans will continue.