Saraya Aqaba is the first of four major developments launched by Saraya Holdings. The high-end tourist and residential resort will cement Aqaba to the world tourism map and establish Saraya Holdings among the region’s leading property developers.
If Lawrence of Arabia were to return to Aqaba today, he would not believe his eyes. What was then a backwater within the enormous Ottoman Empire, is now a major port city with a growing population of 100,000 and, if government goals are met, Jordan’s second economic center after Amman is set to double in size by 2020.
The main catalysts for the city’s rapid growth in recent years have been the modernization of the port and the establishment of the Aqaba Special Economic Zone. Easy access to the sea, tax cuts and other business incentives, combined with Jordan’s entering the World Trade Organization and the signing of a Free Trade Agreement with the United States, has lured dozens of factories to the Hashemite Kingdom’s southernmost tip.
However, the city is yet to fully capitalize on its potential as a tourism destination. Although blessed with beaches, coral reefs, year-round sun, and situated in close proximity to such treasures as Petra and Wadi Rum, Aqaba remains largely a transit city. The main problem is a lack of infrastructure in terms of hotels, cafés and restaurants, as well as leisure activities. Apart from a dive in the sea or a less exciting glass-boat ride, there just is not much to do. But that is about to change.
Big plans in the works
In recent years, a number of tourism and residential projects worth billions of dollars have been given the green light, among them Tala Bay, Ayla Oasis and Saraya Aqaba. All three are mixed-use developments consisting mainly of mainly high-end residencies, retail and hotels. Arguably the most prestigious among them is Saraya Aqaba, the first of four major projects under development by Saraya Holdings (SH). The company’s main shareholder is Saad Hariri, son of the late Rafik Hariri, Lebanon’s former prime minister and by many regarded as the mastermind behind Solidere’s regeneration of Beirut.
According to Ali Kolaghassi, SH’s vice-chairman and CEO, “the company aims to create high-end real estate, hospitality and leisure opportunities throughout the Middle East and North Africa, focusing on destinations that have high growth potential. Through our projects we hope to help turn carefully selected locations into world-class tourism destinations.”
Regarding Saraya Aqaba, SH is the main, but not the only shareholder. Its partners include Jordan’s Social Security Corporation (SSC), Arab Bank and the Aqaba Development Corporation, while Saudi Oger, one of the Hariri business empire’s main pillars, is the project’s main contractor. Much like Solidere in Beirut, SH in Aqaba will function both as a leading developer and asset manager.
First announced during the 2005 World Economic Forum, Saraya Aqaba is a mixed-use development built on 617,000 square meters of land around a man-made lagoon, which is to add 1.5 kilometers of seafront to Aqaba’s 27 kilometers of shoreline. The project is worth an estimated $1 billion and will consist of more than 600 high-end villas, townhouses and apartments, as well as 6 luxury hotels, a retail area complete with restaurants, cafés and nightclubs, as well as leisure facilities, such as a water theme park, an amphitheater and a sports complex. The hotels will be managed and operated by the renowned Emirati Jumeirah and American Starwood chains.
A recent walk over the construction site, situated in between the InterContinental Hotel and the palm tree gardens of King Abdullah’s palace, revealed nothing yet of the future glory being erected. The infrastructure and foundations have been laid, and some of the villas are starting to take shape. Prices have not been determined yet, but according to a construction manager one should reckon with a price tag of $2 million to $4 million depending on type of villa and location.
The project is set to be completed by 2009. Next-door neighbor, the $1 billion Ayla Oasis, will follow a few years later, as it seems have encountered some problems in creating a 17-kilometer long manmade lagoon. There are in fact strong rumors that the Saudi-Jordanian project has been (partly) sold to an Emirati investor. Tala Bay, located some 15 kilometers to the south of Aqaba is nearly completed. The question is: who is going to buy?
Are there enough tourists?
“We mainly target Jordanians, as well as Gulf Arabs, looking for an escape from the city or second home in a destination resort that offers the highest standards of service,” said Kolaghassi. “But we will also target the European market with an eye on second-home buyers.”
Kolaghassi said not to fear the competition by similar projects targeting a similar clientele. “Jordan has great potential and is currently witnessing an era of prosperity,” he said. “It has a healthy investment environment, and enjoys stability and security. Its central location places it within easy access to a number of countries. The number of foreign visitors who chose to come to Jordan in 2006 was an estimated 6.5 million, which represented a 13% increase compared to 2005. If anything, we are currently facing a shortage of hotel rooms throughout Jordan, and especially in Aqaba, which right now has only 2,000 rooms.”
However, it should be noted that some 3.2 million of the 6.5 million foreigners that entered Jordan in 2006 were same-day transit visitors, the majority of whom Syrians who work in Saudi Arabia and Saudi nationals heading in the opposite direction for a holiday in Syria or Lebanon. What’s more, last year Jordan only registered some 300,000 package tour tourists. Nevertheless, taking into consideration the ongoing political turmoil elsewhere in the Levant, as well as Aqaba’s strategic location between sea and mountains, most experts predict the country to attract a growing number of tourists who might normally head to Damascus or Beirut.
Illustrative for SH’s sky-high confidence in the future of Jordan is the company’s announcement during the 2007 World Economic Forum that it is to construct a second prime tourism resort on the northern tip of the Dead Sea. Among other elements the project will consist of three worldclass hotels, a spa and health resort and several sport facilities, including an 18-hole golf course.
Like Aqaba, the Dead Sea has witnessed a lot of construction activities in recent years. Over the last five years, the KHCC and a handful of five-star hotels were built, while two more leading hotel branches are under construction. In addition to SH, Bayan Holding and Emaar have announced plans to construct major spa and health resorts, including an 18-hole golf course, on the shores of the Dead Sea.
“The Dead Sea is considered a religious tourist destination thanks to the many sites surrounding it, it is a health destination due to its mud, salts and water, and has recently become a MICE destination (Meetings, Incentives, Conferences and Exhibitions),” said Kolaghassi. “Thus, the World Economic Forum (WEF) has been held at the Dead Sea for the past several years, and at this year’s WEF it was impossible to find a room for many of the guests, who eventually had to stay in Amman and commute to the Dead Sea every day.”
Still, the Dead Sea is not an entirely risk-free destination. The main problem is that, due to overexploitation of water resources such as the Jordan River, the lowest point on earth is currently sinking by about one meter per year. So, while the mid-1960s the Dead Sea level remained stable at 392 meters below sea level, today it has decreased to -418 meters. In Israel, some hotels used to be right on the shore, but now their visitors have to walk up to 100 meters before being able to float on the salty sea.
Yet most investors seem not too worried as they have put their hopes on the Red-Dead Canal, which is to bring water from the Red Sea to the Dead Sea, whereby the fall of the water to the earth’s lowest point is to produce enough electricity to empower a desalination plant. Last April, the $5 billion project made a tiny step closer to reality when the World Bank issued a $15 million tender for a feasibility study.
“The Red-Dead Canal will reach the Dead Sea from the south, while our project is situated in the north, which is in fact the furthest possible away from the future canal,” said Kolaghassi. “Studies and designs regarding the project have not yet been completed, but the Red-Dead Canal aims to raise the water to pre-1962 levels, or some 396 meters below sea level. The buildings in our Master Plan are placed in such a way that the foundations are well above this level, and hence the Red-Dead Canal will have no impact on our project.”
Saraya Holdings also building in Oman, UAE
Remarkable for a company that has not even completed its first project is the fact that SH is developing two more mega-projects outside Jordan. On an island off the coast of the emirate of Ras al-Khaimah, SH is to create Saraya Islands on a total surface area of some 1.1 million square meters, consisting of a village and four “islands” that are separated by an artificial lagoon, yet interconnected by roads and bridges. The islands will contain luxury villas, apartments and hotels, will be pedestrian-friendly and are organized in such a way that most public spaces are located in the central village, while more exclusive and private areas are located on the islands. Each island will be a gated community for the exclusive use of residents and Saraya Islands clients.
On June 3, 2006 SH signed a Memorandum of Understanding (MoU) with the Omani Ministry of Tourism to launch a project with the Oman Tourism Development Company. The MoU requires the two parties to develop a worldclass tourism project that offers distinguished residential and entertainment facilities for visitors and Omani residents alike.
Ras al-Khaimah and Oman, and to a lesser extent Jordan, have long remained off the beaten track compared to such tourist destinations like Dubai, Egypt and Lebanon, but are currently rapidly developing their infrastructure in the hope to catch up. It is remarkable that such a relative newcomer on the block as Saraya Holdings has managed to sign for four such prestigious projects in a spell of less than two years.
No doubt, the Hariris’ political clout and connections must have played a major role, yet arguably even more important is the sound reputation, throughout the region, of Solidere’s regeneration of the Beirut city center. No wonder then, that not only Saad Hariri, but also his brother Baha and Solidere itself are currently venturing into project development outside Lebanon in an attempt to capitalize on precisely that reputation.
Although spread across the region, SH’s four developments are by no means separate entities. At the recent Paris Air Show, Saraya Private Aviation signed an agreement with Piaggio Aero for six P.180 Avanti II planes, introducing this type of aircraft for the first time in the Middle East.
“We recently launched Saraya Private Aviation, an aircraft charter operator designed to offer exclusive option of executive flights,” said Kolaghassi. “The idea is to provide our customers with the possibility to travel from one Saraya destination to another or anywhere between the Middle East and North Africa and the rest of the world.”
