John Laing Homes, the US homebuilder bought by Emaar for $1.05 billion in 2006, has found that its operations in Southern California, Arizona and Colorado have been badly hit by the financial crisis.
As well as redundancies it is considering halting sales on projects and may close some of its offices in the US. Work has already stopped on a 180 apartment project in Hollywood. The company has around 10 projects in the Sacramento area
'John Laing is reviewing its operations due to market conditions. We have made a reduction in force this week and we'll have more information shortly about the review of the operations,' said Linda Mamet, a company spokeswoman. She refused to say how many jobs had been lost.
Like many property companies in Dubai, Emaar has been suffering from the effects of the credit crunch which are beginning to affect the emirate badly.
Emaar missed analysts' forecasts with a 3.3% fall in profit in the third quarter of last year as it took a $204.2 million writedown on its US arm.
It bought John Laing just as the US property market was reaching its peak. Since then John Laing has suffered in the US mortgage crisis triggered last year by defaults on subprime mortgages.
At the time of the purchase, officials called John Laing Homes the second-largest home builder in the US. The company, which is originally British, dates back to 1848. It expanded into the US market in 1984 and has focused most of its business on the western part of the country.
Such a large developer experiencing financial problems is a worrying sign according to the industry. 'I think it's a very sobering sign of the times, when we see a large, national builder like John Laing Homes that is essentially on the ropes at this point in time and looks like fighting for their life,' said Sacramento property consultant Jake Allen.
In Dubai Emaar chairman Mohamed Ali Alabbar said it could not rule out job cuts in the Middle East.
