Dubai World unit says work on eight-building project to start in early 2012 amid 'good demand'
Limitless, a property developer owned by Dubai World, plans to restart work on four office and residential buildings in the Galleries development next year after its parent company restructured $25bn in debt.
The work will complete the eight-building development, adding more than 600 apartments and 1m sq ft feet, of office space, said Bahaa Abouhatab, head of projects for Limitless. The buildings are 75 percent to 80 percent finished, he said.
“Hopefully, we can start on the residential side in early 2012 because there is good demand for it,” Abouhatab said in an interview at a conference in Dubai. “They need about nine months of work. We’re hoping to start offering them in late 2012 or 2013.”
Developers in Dubai, the Middle East’s worst-performing property market in the last three years, are restarting stalled projects that are nearest to completion in the most attractive locations.
State-controlled holding company Dubai World, which also owns developer Nakheel, is entering “a new phase of growth,” chairman Sheikh Ahmed Bin Saeed said after the company reached a final agreement with creditors in March.
The Galleries, on the main road between Dubai and Abu Dhabi, has attracted overseas tenants including Siemens, Ericsson, China National Petroleum Corp and Kraft Foods which use the area to move products across the Middle East, Abouhatab said.
The development’s proximity to the Jebel Ali Free Zone and port makes it convenient for customers with warehouses in the port, he said.
Other advantages include a metro station and the fact that the development has one owner, he said.
The 800,000 sq ft of commercial space in the Galleries’ four completed buildings is about 50 percent occupied and Limitless expects to increase that to 70 percent this year, Abouhatab said. Work stalled on the development’s four other buildings in 2009 after the financial crisis caused the sheikhdom’s property market to collapse.
“We have around 200,000 sq ft for lease in the pipeline that we’re hoping to close before the end of the year,” Abouhatab said. “Lately, we’ve been getting serous inquiries and that’s an indication that the market is moving in the right direction.”
Excellent. It is nice to see some positive news.
Everything about this article is just so wrong . There is absoloutly no demand whatsoever for residential towers in Dubai . ' Serious enquiries ' are what ? Nobody has purchased anything of value as it would have made front page news .
Articles like this just talk the market up and are very very bad for Dubai , people hang on as they think it's going to turn and then inevitably it doesn't . C'mon people get real this has been going on for over 2 years , there's no recovery yet and 4 towers is hardly goind to kick start Dubai's rise again . Let the market take it's course , Dubai will be a much better , more affordable and more competetive city which will attract the buisiness on it's own merits , that will happen as Dubai has everything in place for the future , but that's the future . Today is now and there's no recovery people , walk around the city , see the price decreases , see the hotel room prices , see the open roads . Dubai is starting to get better as it's more affordable.
Oh that's alright then... we have nothing to worry about.
Apparantly the GFC will have sorted itself out by June 2012.
What a relief!
If anyone needs me this afternoon, I will be down at the Limitless office buying a few properties off plan.
These articles maange the reflect the efforts of struggling companies to remain in the news and their key officials agenda to stay active in dribbling the ball around... such efforts are professionally complimented by established publishers such as AB. As always, the layman and the unsuspecting readers will have to do their own home work and exercise common sense rather than relying on such 'market intelligence'.
Looks like i should restart my property firm. Wait ... ah maybe i will wait this one off :)
How pray, if the big global real estate advisories are forecasting that office space vacancy level will reach 50 per cent by the year end and residential now stands at around 45 per cent vacancy, can starting a 4 building office/residential development in 2012 be a good idea as the market is "picking up"!
The logic defies belief, the oversupply is simply massive, what about Business Bay, Dubai Properties is also state-owned, presumably they'll wish to continue with that project as well reinstate the residential/theme park projects of Dubailand.
Also the global market influences UAE, e.g. 750,000 mortgages in default in Florida alone and over 1 million homes have just entered foreclosure in the USA .
If Limitless plan to restart another phase of Downtown Jebel Ali is a "decent" location beside JAFZ, but the Galleries Phase 1 offices has only just let two floors to China National Petroleum and hold "generous" leases with 7 other blue chips in there. Real profit margin questionable!
There is a sad logic to the fact that despite 50% vacancy in office space there could still be demand for new product, and that is that Dubai made a mistake by letting developers sell off parts of buildings and even parts of floors, the result being buildings having multiple landlords. And if you are a multi-national used to dealing with institutional owners, you want no part of dealing with several unsophisticated landlords.
This is a huge disincentive to companies looking to lease large floorplates or multiple floors. So for developers who come along and offer space with one landlord, one negotiation they will see high demand.
As for the residential demand, yes that is quite baffling, unless they are convinced everyone wants to live right next to the office towers.
There is another potential reason, quality in many office buildings is lacking (media city towers experience serious "traffic jams" at the elevators for example) so a better thought and beter executed building may be of interest to many small and medium players.
That of course means bad news for the owners of the older, less efficient, buildings but that was always going to be the case in this market where a flight to quality is unavoidable.
As you keenly point given such a fragmented ownership, it will be very difficult to reach an agreement to retrofit the buildings, if possible at all.
This is a textbook example of an opportunity for an investor willing to buy and aggregate properties for someone with the cash and risk appetite.
If a project is more than 50% complete I believe the developer should complete the project. I don't buy the argument that because there is an oversupply of office & residential that developers should stop building. If they build a better product then there will be renters and possibly some buyers. This goes for every "dead" project out there.