Developer says financial crisis has forced it to delay construction on building in Dubai

A tower planned by developer Nakheel and intended to rival the Burj Dubai has been put on hold.

The company said its building, which it has said could be 1km high, had stalled because of the financial crisis hitting the UAE and Dubai in particular.

Nakheel said work on the building's foundations, which had already begun, “would recommence in 12 months”. Commenting on the delay, it added: “This is part of the readjustment of our immediate business plans to better reflect the current market trends and match supply with demand.”

Nakheel had not confirmed a final height for the tower, but it had hoped it would compete with Emaar Properties' Burj Dubai, which currently stands at about 780m. Emaar has also not revealed the final height of the building, but it is believed it could 818m.

Nakheel intended its skyscraper to be filled with offices and homes and be part of its $56bn (£39bn) Nakheel Harbour & Tower project launched last October.

Last month, government-owned Nakheel said 500 jobs would be cut at the firm because of the slowdown and has mothballed a series of high-profile projects, including the Trump Towers hotel and residential scheme.