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Dubai plans ‘Mall of the World’ and other big things

Dubai Real Estate landscape

"The current facilities available in Dubai need to be scaled up in line with the future ambitions for the city," Sheikh Mohammed said.

November 25, 2012 8:45 by



Dubai announced plans for a huge tourism and retail development including the largest shopping mall in the world, a fresh sign that the glitzy emirate has recovered its commercial ambitions after a crippling corporate debt crisis three years ago.

The development, on the outskirts of Dubai’s current downtown area, will include a park 30 percent bigger than Hyde Park in London, said Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum, also prime minister of the United Arab Emirates.

A retail complex named the “Mall of the World” will be able to host 80 million visitors a year and include over 100 hotel facilities, Sheikh Mohammed said in a statement on Saturday.

A family entertainment centre linked to the mall, developed with Hollywood’s Universal Studios, a unit of ComcastCorp , would be designed for 6 million visitors each year.

The development, named “Mohammed Bin Rashid City”, would also include a district of art galleries and an area where entrepreneurs could develop businesses.

Sheikh Mohammed did not say how much the development would cost or when it would be finished, but his description indicated investment would total many billions of dollars. It would be built by Dubai Holding, a conglomerate owned by him, and Dubai’s leading real estate firm Emaar Properties.

“The current facilities available in Dubai need to be scaled up in line with the future ambitions for the city,” Sheikh Mohammed said, adding that Dubai aimed to become a business and cultural capital for 2 billion people in surrounding regions.

Such ambitions would have seemed ludicrous three years ago, when a crash of Dubai’s inflated real estate market triggered a corporate debt crisis that forced state-owned conglomerate Dubai World into a $25 billion debt restructuring. Some of Dubai Holding’s own units restructured their debt.

Property prices plunged over 50 percent from their peaks and neighbouring Abu Dhabi, which has most of theUAE’s oil wealth, came to Dubai’s rescue with a bailout worth over $10 billion.

But Dubai, home to the world’s tallest building, an archipelago of man-made islands and an indoor ski slope in one of its shopping malls, has staged a dramatic recovery this year, partly because of a tourism boom.

Tourist arrivals grew 10 percent and hotel revenue 19 percent in the first half of 2012. Some state-linked companies have made progress working through their debt loads, while property prices have started to rebound in some areas.

Arab Spring uprisings in the Middle East, including Syria’s civil war, appear to have helped Dubai, which has attracted funds seeking a politically and economically stable haven.

Several extravagant real estate projects, shelved during the debt crisis, have been revived in the last few months, including a $1 billion replica of India’s Taj Mahal that would include a 300-room hotel, and a canal to the city’s business district.

Passenger traffic at Dubai International Airport will exceed 50 million people this year and the airport is being expanded. Sheikh Mohammed said traffic would top 90 million in six years and Dubai’s development should revolve around this prospect.

“Our development initiatives concerning infrastructure in all sectors should be aligned with this growth rate and we have the determination to reach our objectives and be the first in the region to achieve them,” he said.

Sheikh Mohammed did not say how the latest development plan would be financed. Although yields on bonds issued by Dubai firms have plunged this year, showing a return of investor confidence, some bankers are concerned that Dubai is merely pushing many debt maturities into the future without selling assets and taking other difficult steps to cut the debt load.

Standard Chartered said in a research note this month that while the recovery of key areas of its economy would help Dubai, its entities would face nearly $50 billion of liabilities maturing between 2014 and 2016, and there had been “little progress on the deleveraging front”.



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8 Comments

  1. Robert on November 25, 2012 9:05 am

    Dear Kipp – this is a bit lazy – a potentially huge project but you only publish the Reuters report without any commentary – just for a start how about:

    Sometimes I simply wish that Dubai would complete what has been started before announcing yet another mega project. We have been down this road before – too much hype and unfulfilled promises. It is a dangerous path that feels far too similar to 2006/2007.

    A number of obvious problems – the involvement of Dubai Properties who have a poor track record of timely delivery of quality projects; the lack of metro access; yet another world’s largest mall – what impact will that have on the existing retail sector?; how much will the whole development cost; how will it be funded (forget off plan purchasing – no one will be that daft again) and when will it be finished. Without answering the last few questions this may remain a paper project for a while.

     
  2. M. Aldalou on November 25, 2012 9:17 am

    Thanks for the encouraging words Robert. Yes this is a reuters piece that we have used for news, not necessarily meaning that we will not publish a piece later on with commentary.

    Your insight is valuable though so thanks.

     
  3. Noman Ali on November 25, 2012 9:45 am

    As much as I can appreciate a country’s (or city’s) ambitions, sometimes it seems that is all Dubai seems to be doing — outshining other countries. Is this an attempt to improve quality of life? I doubt it.

    Don’t we already have the biggest mall in the world? With an aquarium? And a water zoo? And an ice-rink? Not to mention a labyrinthine parking lot? That should be a world record too! And then there’s the other mall with a (oh dear god) ski slope?

    How does any of this improve the lives of current residents? I mean REALLY improve their living experience.

    Oh, we have great community living options, which, by the way, come at a premium. Strange, because in any other part of the world, community living is a basic need — a secure environment with enough schooling, groceries options to ease the lives of residents.

    Thank you for all the wonderful facilities, but we thought we were living in a city, not an amusement park.

     
  4. MK on November 25, 2012 1:03 pm

    I couldn’t agree more with Bob on this one!

     
  5. sushmita ghosh on November 25, 2012 1:14 pm

    I highly doubt this is going to materialize. I don’t think they already have the money. This is just one way of again selling Dubai to investors/creditors. And if they do manage to ge tthe funds, we’re going to see yet another real estate bubble waiting to burst. We still have to see the previous projects they launched a long time ago. Whatever happened to Universal Studios, the “international renowned dinosaur theme-park, Mall of Arabia, etc?

     
  6. peter peter on November 25, 2012 1:33 pm

    hey Dubai , How about clearing all your debts before launching on more fancy schemes ?

    Unfortunately, as the American saying goes , “there’s a sucker born every minute” and I am sure there will be many who will get lured in to investing in what seems like an unrealistic plan – considering past experience. I am already meeting many new comers to Dubai who have no clue as to what happened in the past !

     
  7. Leonard on November 25, 2012 2:30 pm

    I agree with all of the above sentiments. Having been involved in the UAE construction sector for longer than I care to remember precisely, it still amazes me how keen so called investors are at the end of the supply chain to dispose of their hard earned money. It’s all cloud cuckoo land stuff. This is one of many schemes that I for one will not get excited about.

     
  8. M. Aldalou on November 25, 2012 2:48 pm

    Loving your comments Kippers, keep them coming! They want positive sentiments but we want realistic and practical ones.

     

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