Dubai Holding, owned by the ruler of the Gulf emirate, and leading developer Emaar Properties said they are in advanced talks to merge four local real-estate companies.

A joint statement said the move would consolidate Emaar, which is building the world's tallest tower in Dubai, with three developers owned by Dubai's ruler - Dubai Properties, Sama Dubai, and leisure developer Tatweer - that are all prominent players in a sector badly hit by the global financial crisis.

Emaar's shares closed at Dh3.21 ($0.87) on Thursday, well off their Dh28.75 high, reached in September 2005, said a report in our sister publication, the Gulf Daily News.

Reuters data showed Emaar's enterprise value was Dh23.9 billion, and that it had net debt of Dh3.8 billion.

Property prices in the emirate have slumped since last year when the global economic crisis and a drop in oil prices ended an economic boom in the Gulf region.

'Emaar and Dubai Holding ... with the assistance of their financial advisers, the Royal Bank of Scotland and Merrill Lynch International respectively, are in the process of finalising a thorough assessment of the merits of this proposed consolidation,' the statement said.

The assessment covers areas including 'the valuation of the various entities as well as ... the potential transaction structures,' it said.

'Consolidating these three companies with Emaar is a natural progression in the evolution of the Dubai real estate landscape, providing benefits to all stakeholders,' Mohammed Al Gergawi, chairman of Dubai Holding, said in the statement.

'Given the sharp drop in project pipeline it is a good idea to right size Dubai Holding businesses exposed to various projects,' said Saud Masud, real estate and construction analyst for the Middle East and North Africa at UBS.

'The merger is the right thing to do. It is a much needed catalyst and could lead to bigger M&A activity.'

Earlier, Peter Riddoch, chief executive of Damac Properties, the emirate's largest private developer, told the Reuters Global Real Estate Summit in London he believed prospects for consolidation in Dubai remained high as the government looked to support its property firms.

Tatweer said earlier this month the bankruptcy of its partner Six Flags, one of the largest theme park operators, would not delay a multi-billion dirham park project in Dubai. – TradeArabia News Service