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RELATED ARTICLES: Habtoor Leighton confirms Doha mall contract | Habtoor Group resumes $272m Palm hotel project | Habtoor Leighton Group launches new brand
Dubai-based Al Habtoor Group is set to demolish one of the city's oldest hotels and redevelop the area into a tourism complex in a plan valued at $1.3bn, its chairman said Wednesday.
The conglomerate, one of the UAE’s largest, said it would knock down the 34-year-old Metropolitan Hotel and build three luxury hotels and a string of tourist attractions including a theatre to stage Broadway-style shows.
“The economical situation is flourishing now in the UAE and there is major improvement in the market, especially demand for visitors to the country,” Khalaf Al Habtoor told CW's sister title Arabian Business.
[The announcement] shows that, parallel to the government of the UAE, we are working hard to represent the country…to prove that this country is a safe haven.”
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The project will be funded using cash flow from the privately-owned group but the company may tap the debt markets in the future, he added.
“For the time being we are funding it from our own cash flow. We haven’t been approached by any banks. If we are, definitely we will talk about it."
Construction of the complex, which will include a shopping arcade, a tennis and sports academy and themed restaurants, is set to begin in the first quarter and be completed in 48 months.
Al Habtoor has yet to sign the hotel brands to operate the trio of properties but said the announcement would be made soon.
“There are three hotels, one is luxury – six stars – and the other two are five-star,” the chairman said.
The UAE was hit hard by the 2008-2009 global financial crisis, which saw house prices decline by over 60%. But last year’s Arab Spring unrest has help bolster tourism, a key pillar of the Gulf state's economy, after the UAE sidestepped protests.
Tourist arrivals to Dubai increased 14%in the first half of 2011 while hotel occupancy rates rose over 80% as Gulf tourists avoided troubled traditional destinations such as Egypt and Syria, according to data from EFG-Hermes.
The redevelopment of the Metropolitan Hotel will be able to take advantage of neigbouring projects such as Downtown and Burj Khalifa areas, said Chiheb Ben Mahmoud, head of hotel advisory at real estate consultant Jones Lang LaSalle.
“The site benefits from an advantageous frontage and visibility and could be expected, through proper planning, to offer a unique proposition,” he told Arabian Business.
“It illustrates the life-cycle of hotel assets in the region and the willingness of specialized hotel investors to go for another round.:
Al Habtoor in October announced it would resume work on an AED1bn hotel project on the Palm Jumeirah. The project is also being funded by the group.
The five-star hotel, which is expected to open to guests by 2013, will include a spa, private beach, six restaurants and a nightclub, said the group.
Construction work on the 330-room hotel was stalled in the wake of Dubai’s debt crisis, which saw property prices in the emirate decline by more than 60% from their 2008-peak.
Almost half of all projects in the emirate were cancelled or put on hold, as bank loans were called in and developers struggled to pay contractors.
The Al Habtoor Group is a holding company for businesses ranging from construction, hospitality, automotive and real estate, run by Habtoor. In 2007, Habtoor sold a 45% stake to Australia’s Leighton Holding for $707m
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FEATURED COMMENT
DEMOLITION AND RE-FURBISHMENT OF EXISTING BUILDING IS REQUIRED TO HELP THE COUNTRY GO AHEAD.