Dubai Inc.: planning for the long term

The announcement of several big money real estate projects in recent weeks reflects Dubai Inc.’s determination to focus on the long term.

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By  David Ingham Published  March 30, 2003

Introduction|~||~||~|It was probably no coincidence that the final weeks of February and the early weeks of March saw a flurry of announcements related to real estate and infrastructure development in Dubai. As the region headed towards conflict and uncertainty began to creep into business, Dubai’s senior businessmen, no doubt encouraged by those in positions of authority, were keen to reiterate their belief in the city’s long term potential.

The tone of all these announcements was that whilst the economy may be affected and tourists may stop coming in the short term, local business is building for the long term. Mohammed Alabbar, chairman of Emaar, described plans to build the tallest building in the world as “a rational commercial response to the pipeline of large scale infrastructure developments in the country, which will bring a new professional community to the area.”

Ahmed Bin Byat, director general of the Dubai Technology and Media Free Zone, also emphasised the need to look long term. “Dubai Pearl is the next step in the development of the Emirate and reflects the vision of His Highness General Sheikh Mohammed Bin Rashid Al Maktoum, Crown Prince of Dubai and UAE Minister of Defence, to develop Dubai into one of the best places in the world to live and work,” he said, at the announcement of the Dhs3 billion Dubai Pearl development.

This belief in Dubai’s ability to keep on growing, despite the uncertainty around it, is backed up by plenty of data. For example, there’s the 16 million people that moved through Dubai International Airport in 2002, up from 13.5 million the year before, plus the 4.75 million people that stayed in Dubai’ hotels in 2002, up 31% year on year.

Some of the announcements that we saw in the last couple of months weren’t totally new, but were an opportunity to put the meat on the bones of projects that are already in the pipeline. Other developments, such as the Burj Dubai and Dubai Pearl, were being unveiled to the public for the first time. What all these announcements show is that Dubai is trying to focus on the long term and that the city we know now will be a very different place in five years time.
||**||A city within a city|~||~||~|
A city within a city
‘A city within a city’ is how Niall McLoughlin, communications manager of Dubai Festival City, describes the $4 billion project taking shape on the banks of Dubai Creek close to the Garhoud Bridge. Over a total period of twelve years and in a series of distinct phases, Dubai Festival City will grow to cover 1600 acres (including 3.8 kilometres on the waterfront) and house up to 21,000 residential units.

When finished, the project will incorporate 15 ‘districts’ that will contain a mixture of residential, office and retail space. As the Dubai Festival City promotional video illustrates, the aim is to create a self sustaining community with its own schools, shopping and community facilities.

“The scope and mix of this project cannot be found elsewhere in the world,” says Omar Al Futtaim, chief executive of Al Futtaim Group, the owner and developer of Dubai Festival City. “It is an all inclusive destination, which, when complete, will see upwards of 75,000 people living and working within it.”

Work on the project has begun with the construction of the Robert Trent Jones II golf course, which is scheduled for completion in early 2004. The 18 hole, par 72 course, with its water features and lush fauna, is intended to be an attraction in itself.

However, the course forms only one part of ‘Phase One’ of the Festival City development, which is scheduled for completion by the end of 2006. Phase One has a project budget of $1.5 billion and consists of three main components: the golf course and surrounding residential units; the mixed use ‘City Core’ located on the banks of the creek; and a dedicated car showroom area. This ‘Phase One’ development will be entirely funded by the Al Futtaim Group from its cash reserves.

Further waves of development will see the addition of a plethora of new features and buildings over the course of almost a decade. A waterfront residential district will offer medium rise apartments whose design will be influenced by the nautical heritage of Dubai; the Promontory Tower will be a 50 storey tower housing a hotel and offices; and the ‘Central Park’ district will house 3000 apartments and a 600 room hotel within a green downtown area.

There are also plans to build comprehensive community facilities, a theme park and a resort hotel on a man made island. The method of funding and the exact layout of these post-Phase One development districts is still to be decided, but Niall McLoughlin was very specific that all the planned development is “definitely going ahead.”

As to where the 75,000 residents who will fill the city are going to come from, McLoughlin was adamant that there is nothing “speculative” about Dubai Festival City. “Obviously, the growth of Dubai is very important to us, but we will be competing regionally,” he said. “Rental rates are going to be commercially attractive.”

The traffic situation has also been looked at. Computer modelling software has been used to predict traffic flows into and within Festival City. The 12 kilometres of road due to be constructed inside the city have been planned based on these results. Any project to widen the Garhoud Bridge does not fall within the responsibilities of Festival City, but is believed to have been given the go ahead.
||**||Luxury shopping|~||~||~|
Luxury shopping
BurJuman already boasts more than its fair share of high end retail outlets, but its Dhs1.4 billion expansion project could catapult this luxury mall into the big time. When the extended BurJuman opens on December 15, a medium sized shopping centre in downtown Dubai will be transformed into a 300 unit ‘mega mall’, with a 22 storey office tower and substantial residential space.

The ‘new’ BurJuman will occupy 4.4 million square feet, four times larger than the existing BurJuman, and 3200 cars will be able to fit into its four underground parking levels. All 120 retail units in the extension have already been leased and some of the biggest names in fashion and luxury items have taken up space.

Saks Fifth Avenue will occupy an 80,000 square feet unit and names as illustrious as Hugo Boss, Christian Dior, Burberry, Tommy Hilfiger and many others will also be there. “Once the landmark project is completed, BurJuman will become the most significant development in retail, leisure and entertainment industries in the Middle East,” says Majid Saif Al Ghurair, president of BurJuman Centre.

As Al Ghurair implies, retail is intended to be only one part of BurJuman ‘2’. The office tower will be the tallest building in the area and will boast a ‘high-tech business centre’, a 20,000 square ft conference hall and leisure facilities.

On the residential side, BurJuman will include 163 furnished and semi-furnished ‘condominiums’ and an unspecified number of furnished luxury apartments. “We will offer the most luxurious apartments in town, that’s for sure,” pledges Eisa Adam Ibrahim, general manager of BurJuman. As the whole project nears completion, the wall of the existing BurJuman will be knocked through and the two parts joined to become a single unit.

For those horrified at the prospect of another huge development in overcrowded Bur Dubai, there may be some cause for comfort - a plan to ease traffic flow in and out of BurJuman has been put together. Arabian Business has learned that a brand new traffic junction will be added to the Trade Centre Road in between the existing Karama and BurJuman junctions.

Two dedicated lanes will feed traffic coming from the direction of Dubai World Trade Centre into the new BurJuman. U-turns at the BurJuman traffic lights, a major existing chokepoint, will be banned or restricted.

There is also talk of facilitating access from the back of the complex, although how that is going to be done in the crowded residential area behind BurJuman isn’t clear. Whatever happens, “there are going to be roadworks for sure,” confirms Ibrahim.
Once visitors are inside the car park, “Movement of traffic within the mall, horizontally and vertically, is going to be very fast,” according to Ibrahim.

Observers may not be convinced that the junction plan will deal with Bur Dubai’s traffic problem. However, an engineer close to the project told Arabian Business that traffic simulation software was used to predict various scenarios and that this was the best solution based on those tests. Another potential solution, a flyover on the opposite side of Trade Centre Road, was looked at, but was discounted for reasons of cost and practicality.

The design of the extension will include modern and traditional ingredients. Four court areas will each be based around the concept of an element: one each for Earth, Water, Fire and Air. Around fifty water features aim to add a feeling of nature and natural light will be plentiful thanks to a glass atrium.

Design and construction is being managed by an international team of experts, comprising over 50 nationalities. Kohn Pederson Fox Associates is the architect and lead consultant.

A large chunk of the Dhs1.4 billion bill is being provided by the BurJuman Centre itself. National Bank of Dubai, Emirates Bank International and Mashreqbank have provided a loan package of Dhs600 million, one of the largest corporate loans ever in the UAE.
||**||The world’s tallest building?|~||~||~|
The world’s tallest building?
Emaar Properties’ ‘Burj Dubai’ may have to reach 550 metres in height if it is to achieve its goal of being the world’s tallest building. The real estate developer vowed last month to construct the world’s tallest building in Dubai, at a location close to the Sheikh Zayed Road.

Details are not yet forthcoming on exactly how tall the building will be, what the budget is or how the company will finance its construction. However, a quick look around the world reveals that Burj Dubai will have to outdo Petronas Towers in Malaysia (452 metres) and the forthcoming Shanghai World Financial Centre, which should scrape 492 metres when it is completed in 2007.

Then there is the Taipei 101 Tower in Taiwan, which, its developer says, will be 508 metres when it is completed. That 508 metres includes a 60 metre tall antenna, however, which American designers do not consider as part of the height of the building.

Potentially outdoing all those is the reconstructed World Trade Centre Towers, whose proposed design features a number of high rises culminating in a tower that reaches 541 metres. There is a possibility, however, that this could be revised downwards.

However tall the Burj Dubai has to be in order to be the world’s tallest building, the cost of construction will be staggering. Although no official figure has been given, Al Hayat newspaper reported that Burj Dubai has a budget of US $1 billion. In comparison, Petronas Towers is reported to have cost anywhere between US $1.2 billion and US $2.94 billion.

Emaar said in a statement that construction on Burj Dubai will begin this year and that land has already been donated by the Dubai government. “Combining residential, commercial, hotel, entertainment and leisure outlets with open green spaces, water features, pedestrian boulevards, an old town and one of the world’s largest shopping malls, this project will create a new architectural landmark,” said Mohammed Alabbar, chairman of Emaar.

Observers might be temped to ask how Emaar, even at Dubai’s current rate of growth, is going to fill a building of such a size. Alabbar, however, seems to have no doubts about the viability of the project.

“It is a rational commercial response to the pipeline of large scale infrastructure developments in the country, which will bring a new professional community to the area,” he says. “This community will create a significant new demand in terms of both work, residential and leisure facilities and space. We are pre-empting that demand.”
||**||Shopping in the Gardens|~||~||~|
Shopping in the Gardens
Dubai’s consumers will have yet another retail development to enjoy when The Gardens Shopping Mall, developed by Nakheel, opens in the first half of 2004. The Dhs800 million shopping and entertainment complex will be located off the Sheikh Zayed Road between junctions 5 and 6.

“The Gardens Shopping Mall will provide a unique shopping experience featuring a wide variety of outlets in a themed, family oriented environment,” says Sultan Ahmed Bin Sulayem, executive chairman of Nakheel. “Its strategic position within the latest fast growing residential developments in Dubai, including The Gardens, The Palm and Jumeirah Islands, positions it favourably to draw a significant number of shoppers.”

According to Bin Sulayem, The Gardens’ location was chosen after careful research into the developments planned in the area. “The results of the research stated that by the end of 2004 the population level within a 5 minute drive of the mall is expected to be over 130,000 and by 2008 over 265,000,” he explained.

“In addition to this, by 2008, over 880,000 people are expected to be living within a 15 minute drive. Apart from the residents, there are also up to 600,000 tourists per annum staying in hotels within a 15 minute radius. To facilitate this large volume of traffic to the mall a complete road network leading to the project is being developed in collaboration with the Dubai Municipality.”

A unique selling point of this mall is that is being built around a distinctive theme, the travels of legendary Arab explorer, Ibn Battuta. The Gardens will therefore include five country-themed shopping zones to reflect Ibn Battuta’s travels through Morocco, Egypt, Persia, India and China.

Another major draw could be the world’s largest indoor maze. Over 300 units will be available for lease throughout the single level mall, which will cover 3.1 million square feet. 5000 car parking spaces will be available.

Nakheel, developer of The Gardens, is the company behind the two Palm Island projects, which are reported to have a budget of US $4 billion. The mall’s design has been put together by Callison Architects and Hill International has been appointed as project manager. Byvan International Pty Limited, part of the FPDSavills group, has been appointed manager of The Gardens.
||**||Dubai’s Dhs3 billion Pearl|~||~||~|
Dubai’s Dhs3 billion Pearl
Omnix Group intends to turn 10 million square feet of land between Dubai Technology and Media Free Zone and the Palm Island into a high tech residential area. The Dhs3 billion ‘Dubai Pearl’ will be the largest privately owned project in the UAE and one of the largest construction projects in the world, according to Omnix. Completion is scheduled for May 2006.

“Dubai Pearl is a new downtown concept which has everything needed for a self-contained community,” said Jamal Abu Issa, chairman of Omnix Group. “With cultural and heritage centres to hotels, conference halls and trade centres, Dubai Pearl accommodates a complete micro-urban environment.”

The precise details of the project make for mouth watering reading.
There will over 2000 residential units, plugged into a broadband network that offers high speed internet services, according to Omnix. Each residence will have “magnificent views of ‘New Dubai’,” according to Waleed Ghafari, chief operating officer of Omnix.

Visitors are promised a choice of more than 1,500 rooms in one five star and two four star hotels. The 240 metre high, five star hotel will be managed by Movenpick Group and offer 720 rooms, more than the massive 674 room Grand Hyatt, Dubai’s largest existing hotel by room number.

Commercial properties will cover 1.2 million square feet and the Pearl’s community facilities will include a theatre and an 1,800 seat opera house. The entire development will have a ‘lush, exquisitely designed landscape and beautiful pedestrian walkways.’

Another key project within the Pearl will be Pearl Techno World, described as a year-round showcase of the latest and best technology from the biggest names in the world.

25,000 people are expected to move in and around Dubai Pearl on a daily basis, helped by many kilometres of new road. Parking space is also being created to accommodate more than 13,000 vehicles.
Ghafari told Gulf News that some major investors from outside the UAE are involved in the project.

Prince Alwaleed bin Talal, who owns several Movenpick properties in the Middle East, will be involved with the five star hotel, but Ghafari would not confirm whether he was an investor in the wider project. Around 60% of the capital required to build Dubai Pearl will be provided by banks and other financial institutions.

The developments described above are massive in themselves, but are just the latest in a long list. Elsewhere, the US $2.5 billion ‘Phase Two’ airport expansion project will ensure that all the people required to fill these developments can actually come into the country. The 674 room Grand Hyatt Dubai will give visitors to Dubai’s many conferences and trade events somewhere to stay.

The US $210 million Dubai International Convention Centre gives the city a world class conference and convention centre. Over on the other side of town, units in the retail area of the multi-billion dirham Madinat Jumeirah development have been made available for leasing.

The list of developments goes on, but only time will tell if Dubai can continue to attract the people needed to make these developments a success. For the time being, the city tries to stay focused on achieving its long term vision.||**||

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