The shape of things to come

A look at Dubai's annual showcase for real estate developers and the most impressive attractions.

Looking to the future in Saudi Arabia: an artists? impression of the $26 billion, 168,000,000m2 King Abdullah Economic City, which will be situated on
Looking to the future in Saudi Arabia: an artists? impression of the $26 billion, 168,000,000m2 King Abdullah Economic City, which will be situated on

There has been little tangible difference in the UAE real estate market over the last 12 months since the previous Cityscape. The perpetual question of the construction bubble remains just that; major new projects continue to be announced and there is seemingly little sign of a change in pace.

If anything, the Middle East market is taking on a greater definition as investors aim to consolidate their position in the market, announcing further developments in Dubai and securing major-scale projects throughout the region.

Nakheel - with its Palm Trilogy, World and Dubai Waterfront developments - is doing just that following recent comments that it plans to build up to 200,000 new homes in anticipation of continued demand.

The company says it expects demand in the emirate to continue at a considerable rate, supporting an ongoing high volume of residential sales over the coming decade. According to Robert Lee, executive director for investment projects, the market could provide 200,000 to 400,000 residential units over the next 10 years and Nakheel could provide half of them. This approach will also go some way to tempering house prices, which have soared as demand has outstripped supply - leading to a 38% increase in rental rates in 2005. As Lee says, such activity discredits any suggestion of saturation in the market and points merely to ongoing growth in Dubai.

This opinion was confirmed by a recent report by Egyptian bank EFG-Hermes Holding, which said that it expects real estate prices in Dubai to continue at high prices throughout 2008.

Delays in construction will keep the supply of housing restricted next year, maintaining high prices in the emirate, the bank said in its report entitled: ‘Hot Market Begins To Cool'. Dubai will not see any decline in property prices before 2009, EFG concluded.

The banks says it expects average property prices to go up between 10 and 15% this year, slowing down to five and 10% growth in 2008. Residential and real estate prices in the emirate had already gone up by an average of 13.9% in the first eight months of 2007, EFG added. "Supply in the residential property market is and will continue to be constrained in 2007," said Sana Kapadia, research analyst, EFG-Hermes. "We predict that the peak year for supply will now be 2009 - meaning the market is unlikely to see a price decline before this occurs."

Thomas J. Barrack, who is described by Fortune magazine as ‘the best real estate investor in the world', believes that future growth in the global property industry lies in the east.

Barrack, who is CEO of Colony Capital, an international real estate investment and management firm, and will be one of a panel of more than 60 executive speakers at Cityscape Dubai, believes the property market in the US is hindered by the lack of quality in potential deals. "To find true growth areas you have to look east, from Dubai to Shanghai - the future is here." His latest development is a $2 billion development of seven hotels, two golf courses and residential communities along 3.5 miles of beachfront on the Moroccan coast.

It is not just about Dubai at this year's Cityscape, however, with investment opportunities and projects from the Kingdom of Saudi Arabia figuring prominently. With more than 45,000 people expected to participate in this year's event, projects in Saudi Arabia are expected to act as major attractions for investors looking to improve the regional balance of their portfolios.

Some Saudi developments to be featured at the show include Dar Al Arkan's 5 million m2 Shams Al Riyadh ‘neighbourhood' project (which is situated in the northern suburbs of the Saudi capital), Al Makam Tower (developed by Jiwar Real Estate Management, Marketing and Development and was recently sold in a deal worth $588 million) and two leading projects by Al Masarat near the commercial hub of Jeddah, in the western province.

Prince Al Waleed bin Talal plans to invest heavily in the real-estate sector in both Jeddah and Riyadh. The Riyadh project will have residential units and commercial areas, as well as a Fairmont-operated leisure resort with some 69,000 residents. The cost on completion will be $7 billion. In Jeddah, his Kingdom Holdings will develop a 5.3 million m2 mixed-use complex with an estimated completion cost of $13.3 billion.

Saudi Arabia, already the biggest econ-omic market in the Middle East, has launched a series of mega-economic cities, expected to attract upwards of $80 billion in domestic and foreign investment as well as create thousands of jobs for Saudi nationals. The economic cities are spearheaded by the Saudi Arabian General Investment Authority (Sagia), which seeks to harness large-scale private sector investment to create the multi-use integrated zones.

According to Sagia governor, Amr al Dabbagh, Saudi Arabia plans to become one of the top 10 most competitive nations in the world by 2010. At present the Kingdom is 38th. "Investment is the oxygen of the economy. Without investment there is no growth, there is no job creation," he says.

The King Abdullah Economic City on the Red Sea coast embodies this drive for economic diversification. Others are planned in Madinah, Hail and Jizan, with two more expected in Tabouk and Dammam. The $26 billion city is a 168 million m2 project with six key components: a seaport, industrial zone, CBD, resort district, educational zone and residential communities.

Riyadh is also bidding to develop the largest financial centre in the region with the King Abdullah Financial District. Billed as not only the largest but one of the most technologically advanced centres in the Middle East, it will cover an area of 1.6 million m2. It will include residential properties, hotels, sports facilities, retail and commercial outlets. The first building is set to open towards the end of 2008.

UAE-based companies, however, continue to explore opportunities in the Middle East. Tameer International, the representative of the UAE-based Tameer Holdings will also be participating at Cityscape where it will unveil Madinat Al Majd, its first project in Jordan. It will be offering units in the $500 million project for public sale during the exhibition.

Madinat Al Majd will be the first, modern gated community to be designed and developed according to Tameer's international standards in Jordan as the country continues to develop as a property developers' haven. The development will provide state-of-the-art amenities, including 18,500 residential units in an area of two million m2.

Tameer also has a number of other high-profile projects, including Princess Tower, one of the tallest residential towers in the world, Al Salam City, a gated community that will house more than 350,000 people and Madinat Al Hana, the largest property development in North Africa.

There will also be further evidence of growing environmental awareness at this year's Cityscape. At the end of September, the UAE launched a new rating system for construction companies, in a bid to raise environmental awareness among Gulf contractors.

The new system is based on the American Leadership in Energy and Environmental Design (LEED) green building rating system, which is used as a means of qualitatively measuring standards within the building industry. The Emirates' version of the LEED system will be put into operation his month on a nine-month pilot scheme, set to monitor 25 developments currently under construction across the UAE.

And Dubai-based real-estate firm, Damac Properties recently announced its plans to develop a number of properties overseas, with its main focus on Egypt and Saudi Arabia where the company holds a substantial land bank.

The company's direction has been restricted somewhat by different governments policies. For example, the company is in discussion with a number of governments in overseas countries about building master developments. However, in Qatar, the government wants its own companies to act as master developers, which limits opportunities for companies like Damac. Therefore it will continue to pursue single projects there. Until now, the company's only major project has been the Gamsha Bay project in Egypt, with total investment expected to reach $16 billion over the next ten years.

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Construction Week - Issue 767
Sep 01, 2020