Dubai's biggest property developer Nakheel has laid off a further 400 employees as its struggles to adjust to the economic downturn in the United Arab Emirates, a newspaper said on Thursday.

The report comes after Nakheel cut 500 jobs, or 15 percent of its workforce, in November as the global financial decline hit Dubai's property sector -- the engine of economic growth during the boom time in the Gulf emirate.

The National newspaper quoted a Nakheel staff member who was laid off with six months' pay as saying that redundancy notices were given out over the past two weeks.

Nakheel declined to confirm the report, but said it was going through a readjustment process and merging a number of its units.

"Nakheel continues to readjust its current business objectives to match supply and demand in the most effective way," a spokesman said in an email to AFP.

"Nakheel recently merged a number of its business units, which are now undergoing resource restructuring to ensure efficiency and optimisation of skill and talent," he said.

Nakheel is behind a number of Dubai's larger-than-life projects, including three palm-shaped islands, only one of which is completed, and a cluster of islands taking the shape of a world map.

Several other property developers have cut their workforces while tens of thousands of blue-collar cosntruction workers, mostly South Asians, have reportedly been sent home as many projects have been put on hold.