The first deal under Solidere’s new strategy of regional activities in managing urban development projects is with the emirate of Ajman in the United Arab Emirates. Estimated at $13.6 billion, the project is a lot larger than one might have expected for Solidere’s maiden international venture, especially in terms of the 50% share of investment volume that the Lebanese company will reportedly assume. It is also—at least for the time being—a lot more enigmatic than one would expect from a project that wants to ring in a new and larger corporate identity.
The outline of the Ajman development program sounds like it is tailor made for Solidere. The rulers of the 259 km2 emirate—with a population of 250,000, it is the smallest among the UAE’s seven—are in search of a spanking new identity, which they want to achieve by building a new downtown. Sound familiar?
Called Al Zorah (but different spellings are in circulation), the new “unique” urban core on Ajman’s seafront will feature hospitals, hotels, homes, offices, retail, schools, a golf course and marina. The project is unprecedented in size for the emirate and should allow Ajman to attract investment, give it a higher economic profile and allow it to compete with heavyweights Abu Dhabi and Dubai.
Ajman’s development ambitions also include industry and infrastructure, including building a metropolitan rail link to Dubai. Abdel Fatah Farah, head of research and statistics at the Ajman Chamber of Commerce and Industry, told Executive that the emirate’s government focus on infrastructure will involve spending between $13.6 to $27 billion over the next five years.
“This will provide ample opportunities for investments, both foreign and local. We believe the growth in investment in 2007 will be close to 20%, and the lion’s share will go to the real estate sector,” Farah said.
According to the government of Ajman, the emirate has initiated $7 billion worth of real estate development projects since 2004. The Al Zorah project would swallow almost double of that amount in its projected development span of seven to 10 years. Another new project will be the Ajman Marina, with a price tag of $2 billion.
The role of Solidere in the creation of Ajman’s new identity would certainly involve planning and management of the urban development project. This is what the Lebanese company has built its reputation in and what shareholders approved in November as new activity outside of the narrow geographic confines of the Beirut Central District.
Receiving a four-fifth “yes” vote at the general assembly, the Solidere management got the green light to establish a new subsidiary for international activities. Solidere management announced that it would get involved in the Ajman project and assume a fee-based management role in a $1 billion real estate investment fund with Abu Dhabi Investment House.
Solidere would not channel domestic revenues or funds from existing operations into international ventures, the company’s chairman, Nasser Chammaa, said at the time.
Tight-lipped on funding sources
However, after the crown prince of Ajman, Sheikh Rashid Bin Humaid Al Nuaimi, announced that the Al Zorah project would be developed in 50-50 partnership with Solidere, the Lebanese company was tight lipped about the business model under which it will source billions in funding for the project.
Mounir Doueidy, Solidere’s general manager and chief financial officer, declined to give any information on the partnership agreement beyond what had been said by Ajman authorities. Citing confidentiality agreements as reason for his reticence, Doueidy confirmed only that “the investment in Ajman is part of Solidere’s plan to leverage its brand name and to export its expertise to the outside. The move has been agreed upon by the general assembly of course and this is one of our projects for expansion.”
The Ajman government has allocated $600 million to the Al Zorah infrastructure development in the next two years. A statement by Nuaimi said that the project would be financed through a mixture of private placement, pre-sales of properties, and government investments. The holding company for the venture will have a capital upward of $1.1 billion, according to the statement.
The emirati partners of Solidere in developing Al Zorah will be the Ajman Development and Investment Authority (ADIA) and Aqaar Real Estate, whose 100% sole shareholder is reported as the crown prince.
While Solidere has not announced new steps in its partnership with Abu Dhabi Investment House since the initial statement in November and while the specifics of the Ajman financial investments are still opaque, the company is still bullish about future regional projects.