Mohammed Bin Rashid City will attract investors as long as not based on off-plan real estate sales
The announcement of plans to build a new multi-billion dollar project in Dubai will fuel the emirate’s tourism ambitions, as long as the project is properly phased and not heavily based on off-plan real estate sales, analysts said.
Dubai ruler Sheikh Mohammad Bin Rashid Al Maktoum announced on Saturday a new city project to be built by Dubai Holding and Emaar Properties that will include the world's biggest shopping mall, a Universal Studios franchise and a huge new public park.
“This is a project that was launched back in 2008 and has been revised somewhat,” said Matt Green, UAE head of research and consultancy at CBRE. “For us, it comes down to the timing and the phasing of this development and getting back to sensible real estate… We are not in a time where you can develop a huge amount of real estate based just on off-plan property.”
Dubai was one of the markets hardest hit by the real estate downturn in 2008, with prices declining by up to 60 percent and around half of projects scrapped or stalled, including major projects in Dubailand, Business Bay and ‘The World’.
The first component of the new project will focus on family tourism, and will include a giant park, capable of receiving 35m visitors and a family entertainment centre set up in collaboration with Universal Studios and hotel facilities.
The second component, focusing on retail, will feature the largest shopping mall in the world called Mall of the World. Dubai already boasts the largest mall in the world, Emaar's Dubai Mall.
A third component will include the largest area for arts galleries in Middle East and North Africa while the fourth will see the development of facilities to provide "an integrated environment for entrepreneurship and innovation in the region".
With less of a focus on residential, Mario Volpi, head of residential sales and leasing at the Cluttons real estate agency, said this was likely to make the project more successful.
"This huge and very ambitious project is centred not on residential, as before, but tourism. I believe this is the key to what will be a successful mega development. The Mall of the World will be an excellent addition to the already popular Dubai Mall, mainly due to the tourist and leisure attraction of Universal Studios nearby and the green open spaces of the vast park to be built will ensure that this project does not resemble a concrete jungle.”
The new city will be located between Emirates Road, Al Khail Road and Sheikh Zayed Road, and will include Mohammad bin Rashid Gardens Project, as well as a number of golf courses under well-known international names.
The timescale, value and financing for the project have not been revealed but Green said the underlying tourism statistics mean the project has a strong chance of succeeding.
“The major malls are all 90 percent plus occupied, the hotels are probably averaging 77 percent occupancy, tourism numbers continue to go up… We are probably going to get about 56m passengers through the airport, which is about 10 percent growth, so lots of the fundamental drivers are there, but a plan of this size needs to be developed in a sensitive way,” he said.
The new project will be built by Dubai Holding and Emaar Properties, the developer behind the Burj Khalifa and Dubai Mall, in what is being described as the biggest real estate joint venture in the region.
Green said this was a positive move as “Emaar has a solid reputation”, but he said it was important to know whether the project will be developed solely by Emaar or if they will act as the master developer and sell the various plots and elements to third party sub-contractors.
“As long as that level of control is kept we should see a more sensible phasing plan… There is no reason it can’t add to Dubai on a positive way, unlike gimmick projects we saw previously,” he added.
Sheikh Mohammad said in the statement: “The current facilities available in Dubai need to be scaled up in line with the future ambitions for the city.
"Therefore we have to start work immediately on the third phase of development that is aligned to our Vision till 2030 and boost the UAE economy to enable it to enter a new era in which it will become the capital of entrepreneurship, arts, culture, and family tourism for over 2bn people.”
“With Dubai looking to host the next World Expo, should it succeed then this is exactly the type of project that will keep Dubai one step ahead in making it a world class city… More and more jobs in lots of sectors will be created thus ensuring the positive long term prospects for population growth,” Volpi said.