Lebanon is now a fully operational resort, but it had to be sold at a 42 percent discount on the original land price — the island, that is, in the artificial “The World” archipelago off the coast of Dubai in the United Arab Emirates. As Arabian Business reported from land registry files, the sales transaction for the for the 39,000 square-meter creation was concluded for $9.5 million and the new landlord of Lebanon is Ravi Raman, an Abu Dhabi-based owner of a general contracting company. According to the publication, Raman last November bought Lebanon from Wakil Ahmed Azmi, a fellow Indian expatriate in the UAE. Lebanon is the only fully operational commercial development in The World. It opened last year as Royal Island Beach Club. Cape Reed, a construction company, said in a mid-February press statement that it completed the final works on the resort without specifying what those last works were. The World is one of the most troubled real estate developments in the Gulf region. Despite big sales announcements through 2008, the development sank in feasibility when the Dubai property bubble burst. Plans were canceled and prices of islands tanked badly in 2009-2010. Land values of the artificial islands have not recovered to date, and their master developer, Nakheel, was targeted by a number of lawsuits by investors and services operators. Among problems that the Royal Island Beach Club faced last year were exorbitant costs of fuel, water, sewage and transport owing to the fact that no other islands of The World were developed. Original owner Azmi was reported to have sunk more than $54.5 million in his five-year distressed proprietorship of Lebanon.
Saudi’s growing demand for real estate investment funds
Saudi Arabia’s Capital Market Authority (CMA) has encountered increasing demand from investment companies to team up with developers to create real estate investment funds, according to the CMA President Mohammed bin Abdulmalik al-Sheikh. In the program to develop Saudi Arabia’s property sector and mortgage market, CMA has “completed the issuance of most implementing regulations, including the regulation of real estate investment funds,” Sheikh said. Numerous financial analysts in the region consider Saudi Arabia to be a top growth market for real estate investment opportunities, due to the undersupply of residential buildings for average-income families and the institution of a new mortgage market on basis of a law passed last year. The number of public or private real estate investment funds in the kingdom has grown to 58, the CMA head announced at a Riyadh conference that was organized by the authority. His presentation, read by a member of the CMA Board according to a media statement, did not indicate the annual growth rate in the number of these funds or their average size.
Qatar talks money, money, money
Between its chosen obligations to develop the desert emirate into the venue of the 2022 World Cup and its need to deposit revenues from its exports of liquefied natural gas, the state of Qatar is solidifying its position as a top source of money news in the real estate sector. In an announcement on February 19, the Qatari unit of United Arab Emirates-based Drake & Scull International (DSI) trumpeted that it had won a $82.4 million contract for works on a mixed-use real estate project in Doha. The scope of the contract includes mechanical, engineering and plumbing aspects of a project described as entailing “three superblocks” with total 260,000 square meters in built-up area. DSI did not disclose the name of the project. On the same day, attendees at a Doha projects conference were told that the country will undertake $120 billion worth of mega-projects in advance of 2020, according to a press statement. And, within the same hour, Reuters reported that the state of Qatar will launch a new investment company via the Qatar Holding unit of its sovereign wealth fund. The new company will be publicly traded and powered up with $12 billion to invest in stuff, big time. What stuff? “You name it — shares, bonds, real estate, [and] private equity. We will look at every sector in every country around the world,” said Qatar Holding Vice-Chairman, Hussain al-Abdullah. The flurry of big announcements coincided with the Qatar Projects 2013 conference organized by information and events company MEED/Emap.
Flooring the public sector wage bill
Lebanon’s political theater in February extended its play, “The Mikati Floor,” also known as “How to create public revenue in a broken economy”. Mikati’s proposal offers owners of real estate projects the option to add built-up area (BUA) by paying extra fees. The exact terms of allowable extra floors in BUA and corresponding fees are still hazy. Daily media outlets reported on February 19 that a review of the proposal by the General Directorate for Urban Planning did not reach the ministerial committee on time. According to various media reports, the Directorate nevertheless was in favor. As Executive gauged from interviews with developers in the past two months, some are betting on the increasing land exploitation factors as means to increase their margins and profit potentials (see story page 110) while other developers, economic and urban planning stakeholders remain wary of the socioeconomic feasibility, fiscal efficacy and price impacts of legalizing higher exploitation. All this as public school teachers and civil servants blanketed the country with protests on February 19 and 20 to express their outrage that salary increases had not yet been implemented, with the unions threatening escalating labor action.
Jordan real estate stays level
There was little movement in the Jordanian property market in 2012, said regional property management company Asteco in February. Graphs displaying trends for residential and office properties in the company’s fourth quarter 2012 report on Jordan showed an upward trend in apartment sales toward the end of last year but a flat development of office sales and a nine-month downtrend in office rentals. Focusing on the real estate market in Amman, Asteco said unchanged rental rates for one and two-bedroom apartments were juxtaposed by increased demand for three-bedroom units in some areas of the capital. The report called the 4th Circle the most sought-after area in Amman, with annual rental rates of $23,300 for a three-bedroom unit. As Jordan’s government last year reviewed and cut numerous subsidies, Asteco noted that new governmental policies on energy sources including gas, solar, oil and electricity impacted developer costs and reported that asking prices in apartment sales went up 5 to 7 percent on average and as much as 10 to 11 percent in select areas. Residential unit sales prices in different areas of Amman ranged from $1,250 to $1,550 per square meter. Asteco attributed the declining prices for office rentals to a combination of increasing supply and low demand.
Dubeye over blue water
Call it wonderful. The world’s largest. Key tourism hub, etcetera. If this sounds vaguely familiar, one will not be surprised to learn that another Dubai development has been announced. February saw the announcement of Bluewaters, an oceanfront, mixed-use development by local developer Meraas Holding in the humble projected investment range of $1.63 billion. The project will get its own artificial island with all the trimmings off Dubai’s (once leisurely) JBR Walk area, but that is not the big item. What will be the “world’s largest” in this one? The correct Dubai trivia answer is a Ferris wheel, at a planned height of 210 meters. It will be constructed by Korea’s Hyundai Contracting and Dutch firm Starneth Engineering for about $270 million. For comparison, the current world record-holding Ferris wheel is the 165-meter Singapore Flyer. The London Eye, which inspired the race to supersize those rotating observation points, held the title for about six years with its 131-meter height and 120-meter wheel span. Talks of a big Ferris wheel in Dubai were first mooted in 2006 alongside the original Dubailand theme-park plan, according to the UAE-based Kipp Report. The real question today — more than those pesky peripheral concerns such as Bluewaters’ financial feasibility and funding, economic need and environmental value -— is, of course, if and for how long Dubai Eye will rule the record book. Starneth is also working on the New York Wheel, a Staten Island ride scheduled to start construction in early 2014 and whose project company trumpeted that it will be, yup, the world’s tallest.
