Al Habtoor Group has signed a $515m deal with Habtoor Leighton Group (HLG), the contractor in which it owns a 45 percent stake, to build a luxury hotel in Dubai.
The deal is part of the Dubai-based conglomerate’s $1.3bn overhaul of the Metropolitan Hotel.
HLG, a joint venture between the Al Habtoor Group and Australia’s Leighton Holdings, will construct a hotel complex, comprising a five-level podium, one 26-storey tower and one 25-storey tower, the firm said in a statement to the Australian Securities Exchange.
Demolition for the existing Metropolitan Hotel is scheduled to commence in March with early works likely to begin in June 2012, said LHG.
The Australian firm added that it remained committed to its diversification strategy in the region.
“While the Habtoor Palace is a Dubai building project, our future growth will come from major infrastructure projects in markets outside the UAE, particularly Qatar and Saudi Arabia,” Laurie Voyer, CEO and managing director of HLG, said.
Shares in LHG increased 2.27 percent on Tuesday’s trading following the announcement.
Dubai’s Al Habtoor Group in January announced plans to demolish its 34-year old Metropolitan Hotel and redevelop the area into a tourism complex in a plan valued at $1.3bn.
The conglomerate, one of the UAE’s largest, said it would build three luxury hotels and a string of tourist attractions including a theatre to stage Broadway-style shows.
“The economical situation is flourishing now in the UAE and there is major improvement in the market, especially demand for visitors to the country,” chairman Khalaf Al Habtoor told Arabian Business.
“[The announcement] shows that, parallel to the government of the UAE, we are working hard to represent the country…to prove that this country is a safe haven.”
The project will be funded using cash flow from the privately-owned group but the company may tap the debt markets in the future, he added.
“For the time being we are funding it from our own cash flow. We haven’t been approached by any banks. If we are, definitely we will talk about it."
Construction of the complex, which will include a shopping arcade, a tennis and sports academy and themed restaurants, is set to begin in the first quarter and be completed in 48 months.