Dubai property giant Nakheel -- behind such grandiose projects as a one-kilometre tower and artifical palm-shaped islands -- said Sunday it has fired 500 staff as the global economic crisis begins to bite in the oil-rich Gulf.

The government-controlled developer, one of the biggest employers in the booming desert city-state, also said it would be scaling back work on some of its projects.

"Approximately 15 percent of the total workforce, which amounts to 500 employees, was made redundant," it said in a statement, describing 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 foreign residents.

"We have the responsibility to adjust our short term business plans to accommodate the current global environment," said an unnamed spokesperson quoted in the statement.

"The redundancies are indeed regrettable, but a necessity dictated by operational requirements which are in turn dependent on demand," the spokesperson added.

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.

Nakheel is in charge of developing several iconic projects in Dubai, including three palm-shaped man-made islands, only one of which is completed, and a cluster of islands in the shape of a map of the world.

It also announced last month a jaw-dropping plan to build a one-kilometre-high (3,280 feet) tower which would overshadow the still unfinished Burj Dubai, already the tallest on earth.

Nakheel also develops residential and commercial property, whose sales thrived after the sector was opened to foreign investors a few years ago.

Last week, Nakheel jointly hosted a star-studded 20-million-dollar bash to celebrate the opening of Atlantis Hotel on its Jumeirah Palm island, with a huge firework display.

Top officials in Dubai insist that the emirate's real estate sector -- a major 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.

Mohammad Alabbar, head of Dubai's Advisory Council, which was formed to deal with the impact of the financial meltdown, hinted earlier this week that Dubai's major developers will use their control over supply to curb an increasingly clear drop in property prices.

"Our priority is to manage supply in the real estate market to ensure equilibrium," he said.

Fears however loom over the future of Dubai's economy after a double-digit growth registered in the past few years, with concern rising over the emirate's accummulated foreign debt, amid a global credit crunch.

The emirate's bourse has been taking severe beating since the beginning of the global financial meltdown, mainly due to a nosedive by realty shares.

Despite occasional surges, the Dubai Financial Market is now about 67 percent lower than the start of the year, while the market leader, Emaar property giant, dropped to record lows.

insidethegulf.com