Plastic sheets with slick photos and generic names like “The Candy Shop” covering storefronts make Amman’s The Boulevard look less empty than it is.
Some five years after initially planned, the $423 million project officially opened to the public on June 14, but of the 22,000 square meters dedicated to shops, cafes and restaurants, only 30 percent are leased, says Joseph Helou, chairman of Abdali Investment and Development PSC, a part owner.
Covering a total 40,000 square meters of land, The Boulevard consists of 12 buildings flanking a 370-meter long, 21-meter wide pedestrian walkway and represents just over 10 percent of the now decade-old Abdali Urban Regeneration project. The development — a work in progress valued at around $5 billion — is the brainchild of the late former Lebanese Prime Minister Rafik Hariri and Jordan’s King Abdullah II.
Planning for profit
Abdali Investment and Development began in 2004 as a public-private partnership between Hariri — via Saudi Oger — and the Jordanian government — through Mawared, a state-owned real estate developer. Following Hariri’s death a year later, Saudi Oger’s stake was transferred to Beirut-based Horizon Development, owned by Bahaa Hariri, Rafik’s eldest son, explains Helou, who is also Horizon’s CEO.
In 2005, Kuwait Projects Company (KIPCO) joined Abdali Investment and Development as a partner with an initial 12 percent stake, which later shrunk to 2 percent because they “didn’t participate in any capital increase,” as Horizon and Mawared did, Helou explains.
All told, Helou says Horizon sunk “195 million [Jordanian dinars], or around $300 million,” into the development, the first phase of which is now slated to be completed in 2018. Asked what return on that investment he is expecting, he says, “Like any investor, we are hoping to get anything above 10 percent, for sure.”
The total Abdali project will be built on 384,000 square meters of land, most of which once belonged to the Jordanian military, and is divided into two phases. Currently in development, the first phase — covering 251,000 square meters of land — is cut into 33 parcels. Abdali’s development strategy is similar to that of Solidere, developing small chunks themselves and selling the rest to others to build on in line with their master plan. Helou explains that Abdali Investment and Development took a stake in building up only two parcels of land, The Boulevard and Abdali Mall, the latter expected to be completed in 2017.
“The 31 other parcels have been developed by completely independent developers,” Helou says, adding that Abdali Investment and Development has the same plan for phase two — which represents nearly 35 percent of the project’s total land area.
George Amireh, Abdali Investment and Development’s CEO, tells Executive that 18 of phase one’s 33 projects are complete, 10 are under development, and the rest are still in the planning and designing stage.
“Mostly financial” problems were the cause for delays in some of the developments within phase one, Amireh says. In late 2011, the Jordan Times reported that local contractors were complaining that developers working on Abdali projects — and other megaprojects in the Kingdom — were not paying.
“We worked around their problems,” says Amireh, adding that the government offered various incentives. “None [of our investors] pulled out,” he explains. “Maybe one or two couldn’t finish the project; we managed to help them and assist them in [finding] them partners to finish.”
Delays have prompted Abdali Investment and Development to take a closer look at new developers’ feasibility numbers and “keep these projects running,” he says. “We’ve put more restrictions on the developing durations so they will not drag for a very long time.” Specifically, he says, Abdali Investment and Development will look at “timing, feasibility, availability of funds, [and] equity versus debt ratios,” which “should be 60 percent at least.” Asked how this is a change from the past, Amireh says: “[All] 33 plots were sold in two days” when the project was first launched.
When completed, according to a company brochure and Helou, phase one will break down, approximately, as follows: 26 percent will be retail locations, 28 percent office spaces, 14 percent will be hotels and serviced apartments, 26 percent will be other residential and 6 percent will be a hospital, owned by Lebanese Maher Abu-Ghazaleh, who is behind the Clemenceau Medical Center.
Attracting investment…and business
Several Lebanese companies are either investing in or making money from the Abdali project. Bank Audi, Société Générale de Banque au Liban and MedGulf all own buildings in phase one. Beirut-based Laceco Architects and Engineers, meanwhile, are building five of the 33 first phase projects.
Abdali Investment and Development is looking for a “serious partner” to codevelop around 40 percent of the 792,000 square meters of phase two’s built-up area. Asked if they have anyone in mind, Helou laughs. “We do, but I cannot give the name at the moment,” he says.
Infrastructure works for phase two are expected to begin by the end of this year. The war in Syria and increasing instability in Iraq are not scaring away investors, according to Helou. “Frankly, if you had asked me this question last year, I would tell you, ‘Yes, we have some difficulties to get new investors or interested parties for phase two,’ but now it is becoming more easy,” he says, citing progress on phase one as spurring interest.
As a potential business hub, the project does not intend to compete with Dubai, says Abdali Investment and Development CEO Amireh, but rather wants to position itself as a gateway to the Levant. He is hoping to attract large companies from countries such as Iraq and Syria to set up shop in Abdali or for those already based in Jordan to move.
“Being in Abdali, it’s the address,” he says, adding that infrastructure in Abdali is higher quality than that in the rest of the country.
As for retail, Amireh argues the project is aimed at the general Jordanian public, but says retail spots will be targeted at medium to high-end customers. Jordan’s per capita GDP is $4,945 according to 2012 World Bank estimates.
Abdali’s advertising brochures repeatedly use the word ‘luxury’ and seem geared toward the wealthiest Jordanians rather than the masses.
But Amireh insists “Abdali is not meant for only a special category in the market.”
“It’s not only branded for the high-end retailers. Abdali has the medium — and the high. It has the medium-end and the high-end retail offers,” he says, adding “It’s open to everybody.”