Site Visit: The Wave, Oman
Stian Overdahl visits Muscat's first integrated tourism complex
The Wave weathered the global financial crisis by focusing on delivering orders already received and managing its cashflow.
Backed by solid shareholders, the Integrated Tourism Complex (ITC) is on track to deliver a shopping mall, hotels, and expand its housing stock. By Stian Overdahl
The first Integrated Tourism Complex (ITC) in Oman allowing both Omanis and non-Omanis the option to buy freehold properties, currently The Wave is a mix of buildings that have been completed and delivered, buildings that are under construction, and building which exist only on paper.
Nevertheless the development has delivered over 900 residential units, completed 600,000m² of land reclamation, and at the far end of the site stands an 18-hole, Greg Norman-designed golf course, opened late last year.
With a total cost of $2.5 billion (OR963m), The Wave's shareholders are the Omani government and a national pension fund investment company, and Majid Al-Futtaim Properties, in a 50/50 venture.
Master planned and designed by Atkins, the site is located near the new Muscat airport, it occupies an enviable beachfront site to the west of the main city area, stretching along 6kms of natural beach coastline.
The project began in 2006, and while the initial vision was to see all aspects of construction completed by 2013, the realities of the global financial crisis soon dictated a new timetable to the development.
Stuart Ingram, chief development officer, The Wave, says that the project has made steady progress, and counts itself as a success, both in terms of attracting investors, but also ensuring that residents on site have a world-class experience.
Much of this progress can be put down to the early attraction of the development to investors. When the financial crisis hit, orders 700 for residential units had already been placed, meaning that the project had sufficient cashflow to continue construction. The first units were delivered in October 2008.
“While a lot of projects stood still, we’ve continued moving,” says Ingram. When Construction Week visited the site in February, the project had handed over more than 900 residential units, and a further 300 were under construction.
Ingram believes that it was the phased approach of the development which helped keep the project on track. “One of the challenges that a lot of developments [in the region] had was that they overstretched, they started going too far, trying to do 3,000 buildings at once.
“We have a very clear attitude – for residential, we sell sectors, and once we’ve achieved a certain sale on a sector then we start construction. We’re very careful that we don’t overreach, and that’s basically what saw us through the trying times of the end of 2008 and 2009.”
Another cautionary measure, which contributed to its continuation was that the project did not overspend on infrastructure up front, says Ingram, and then was able to pace the speed of the earthworks according to its cash flow.
Major works completed include 600,000m² of land reclamation, as well as a two kilometre long artificial reef. The reclamation was phased, according to what was needed for sectors of housing.
Ingram says that calculating individual costs for earthworks from the total is difficult. However, a dredging contract in the initial phase of construction saw 3 million cubic metres of material excavated.
On top of that, another 2 million m³ of material has been excavated, while approximately 2 million m³ of rock has gone towards the construction of the artificial reef, in addition to the 20,498 Core-Locs used.
Other works include the water ways, filled with salt water, with five pumps that ensure the water is changed every three days. Fish and other aquatic life flourish in the waterways, while from a construction standpoint, the waterways are fully lined with concrete in order to keep the salt water separate from the groundwater.
Another impact of the financial crisis was a reformulation of the development plan in order to bring lower cost residential units – such as one bedroom apartments – on to the market to suit buyers.
The intent, says Ingram, was to have a spread of options available, which he likens to having 1 and 3 Series BMWs available, not just 7 Series.
“When there is a slow-down in the market, as there was in 2008-9, developers such as us, with big master plans, have to be flexible to the market requirements, and work and move with the market.”
“We’re able to look at the master plan, and look at where the market is going. We don’t want to sell our soul and change everything just to sell investment product, but the skill is to get the right mix of the owner-occupiers, who maintain their properties, and renters who come in.”
In the past 18-24 months, the project has delivered a steady stream of residential units, and a recent release of 121 marina-front apartments sold out within three months, the first of the marina front apartments.
Rental yields are averaging 6-8 per cent, says Ingram, and sale prices are not driving down yields. The majority of buyers are Omani nationals, many of whom are buying properties for investment purposes and renting them out.
“We’ve since seen the market recover very strongly, and over the last two years we’ve been delivering a very steady stream of properties, on a sector by sector basis, not partially. There’s not a ‘missing tooth’.
“The residential is probably the least of my worries in terms of quality, which is generally the biggest challenge for volume house building."
But with the project developers focused on creating a sense of community, and looking to bring in tourists to populate the golf course and patronise the retail offerings, it is apparent that the other aspects of The Wave have lagged behind.
“I would say that the ‘missing tooth’ is the other elements,” says Ingram. “We’ve done very well on the residential, but the hotels haven’t moved as quickly as we would have liked. At the end of the day, we are an ITC,” says Ingram.
The master plan called for at least three hotels, which will include both Kempinski and Fairmont hotels, as well as a four-star hotel beside the marina. Enabling works on the Kempinski hotel will start this month, at the marina-end of Almouj Beach.
Financing for the hotel has come from a conglomerate of Omani pension funds, who set up an investment company, and the Kempinski is due to be finished at the end of 2015 or early '16, the same time as the four-star. A 290-room Fairmont hotel, located next to the golf course, is scheduled to be completed 2016-17.
The Wave is not looking for investment outside of Oman, says Ingram. “And that’s better for the country – the whole idea of these ITCs was to stimulate investment in the local market.
So that it means long-term employment for Omanis, and the tourism sector is seen as a major element of the diversification of the Omani economy within the Oman 2020 plan.”
With 900 residential units already delivered, the requirements of the contractors have to be balanced with those of residents, and there is a strong need for measures to keep the construction sites separate from the areas in use.
“We have very clear delineation between what is occupied and what is construction. Both from a HSE perspective, but also to make it the best possible place to live,” explains David Cummings, vice president residential development.
While the bulk of the heavy earth moving works have been completed, construction of the shopping mall is currently underway in the middle of the site, as well as a number of sectors of villas and apartments.
Measures include dedicated entrances for construction vehicles, and roads into the site that keep them separate from ordinary traffic. Residential sectors under construction are isolated from populated areas.
Sales have also benefited from the populated residences, with investors able to visit the project, and see the finished housing stock and get s sense of the community.
“We don’t have to show pretty pictures of things, we can take people out on the site and show them, we can touch and feel,” explains Ingram. The profile of the project’s owners is also a reassurance to possible investors.
“One of our clear messages from day one has been ‘strong shareholders’. I think that having those significant shareholders has given everyone a confidence that what we’re seeing is happening.”
He says that they have seen a steady intensification of local investor interest over the past 18 months, which bodes well for the overall project completion. “We believe that the next 5-6 years we will significantly or substantially complete the project.”
The two-kilometre long artificial reef built alongside The Wave is one of the longest man-made reefs in the world. It has been built with a mix of rock and Core-Locs, an interlocking concrete construction, shaped like a child's toy.
Weighting 12 tonnes, or 17 tonnes for anchor units used at the end of the reef, they are described by their patent holder, the US Army Corps of Engineers, as “a concrete armour unit for breakwaters and shore protection works”. They have been used for the construction of more than 19 breakwaters worldwide.
In Muscat, the reef has been constructed to protect the development, including the 400-berth marina, from high seas and heavy waves during extreme weather conditions.
The reef was designed by engineering firm WS Atkins. Each Core-Loc must be accurately positioned to provide the correct density to dissipate the energy of the sea.
The base of The Wave’s reef is made from approximately 1,000,000m³ of rock, is 70 metres wide at its base and 17 metres high.
The Core-Locs were made under license in Oman by Carillion Alawi, transported to site by road and loaded onto the crane base and barge. Contractors Société National D’Entreprises (SNE) using a floating crane capable of lifting 150 tonnes to place the Core-Locs. In total, 20,498 Core-Locs were used.
Despite it being early days, The Wave has achieved a number of ‘firsts’ for Oman, not least the first PGA-approved golf course in the country, which will host a European Challenge Tour event in October, for the next three years, the first professional golf tournament in Oman.
The marina, with berths in the smaller part of it already delivered, is home to a yacht club, which hosts the extreme sailing series every year.
“From a community perspective, one of the challenges we have is make all of these components work together. We don’t want the hotels to dominate the residential, or vice versa. We want it to be as harmonious as possible,” says Ingram.
“I would say that mixed use is the pinnacle of master planning. It’s getting all the components working together to get more than the sum of the parts.”
When it is fully finished, The Wave will consist of a community of 12,000 in the residential units, of whom 70-80 per cent will be full-time occupiers.
The transient population will be as many as 5,000, including the hotels, as well as local Muscat residents visiting to make use of the retail, restaurants, and leisure facilities.