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Nakheel delivers jobs blow to Dubai property sector

Just a week ago the government controlled company was denying that it had any plans to cut jobs. It is one of the biggest employers in the real estate industry in Dubai and the extent of the job losses is a bitter blow to a sector that is already reeling from a severe downturn.

'Approximately 15% of the total workforce, which amounts to 500 employees, has been made redundant,' the company said in a statement. A spokesman described the move as 'a responsible action in light of the current global market conditions.'

It is the largest job cut in the wake of the global financial meltdown to be announced in United Arab Emirates and in Dubai, a city of skyscrapers, opulent hotels and malls which hosts hundreds of thousands of Westerners and Asian workers.

'We have the responsibility to adjust our short-term business plans to accommodate the current global environment. The redundancies are indeed regrettable, but a necessity dictated by operational requirements which are in turn dependent on demand,' the statement continued.

Although job losses at Nakheel, the developer behind Palm Jumeirah and the one kilometre high tower unveiled recently at Cityscape, the scale of the announcement has come as a shock.

Earlier this month, Damac Group, owner of the region's largest private developer Damac Properties, said it cut 200 jobs or 2.5% percent of its workforce.

However officials in Dubai insist the emirate's real estate sector, a key engine of economic growth in recent years, will weather the global crisis, but investors appear to have lost confidence in the market which was until recently a great magnet for investments.

There are, however, fears for the future of Dubai's economy especially relating to its foreign debt amid the global credit crunch. The emirate's bourse has taken severe beatings since the beginning of the financial meltdown, mainly due to a nosedive in real estate shares.