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Al-Futtaim embarks on mega project in Syria
Mall at centre of 1 mln sq-metre project.
October 22, 2010 8:40 by Reuters
Gulf conglomerate Al-Futtaim expects to tender $1 billion worth of construction contracts for a real estate project in Syria by February next year, the head of its property division said on Thursday.
Stable inflation at 4-5 percent a year, rising tourism and demand for consumer goods will help attract demand for the project on a 1 million square metre (10,763,910 sq foot) plot, Peter Walichnowski told Reuters.
Syria has lifted several restrictions on property development as part of cautious economic liberalisation started by President Bashar al-Assad since he succeeded his father 10 years ago.
The new policy is aimed at lifting the economic malaise that has gripped Syria since the Baath Party took power in 1963, imposing Soviet style policies and still extant emergency laws.
Assad has left the authoritarian political system intact.
“There is big demand for all kinds of real estate in Damascus,” said Walichnowski, referring to the project in Yaafour, on the Western entrance to the Syrian capital.
He said the centre of the project, a large shopping centre, would take three years to complete. The site will also include two hotels, office buildings and serviced apartments under a preliminary plan agreed with the state.
“We are going to provide the biggest mall in Syria in terms of its size and attraction. It is going to be the anchor for the whole corridor,” said Walichnowski, chief executive officer of Majid Al-Futtaim Properties.
“There will be a limited number of contractors for such a big project. Typically you would be breaking down the project into the different buildings, the shopping mall, hotels and office buildings,” Walichnowski said in an interview.
Clearing and other preliminary work on the site began last month, he added.
Pointing to Syria’s economic indicators — the World Bank forecasts 4 percent growth this year, up from 3 percent in 2009 — Walichnowski said project risk “is the same as in any real estate project”, despite the lack of mega property projects in the country.
“If you are building a shopping mall, you have to lease the shops. We have to attract tenants to come to Syria. The risks are typical,” Walichnowski said.
He said the government could allow al-Futtaim to sell freehold apartments after the main sections of the project and its infrastructure were complete.
Syrian cities have huge shortages of good quality apartments, with more than half of the properties built illegally as a result of corruption and the difficulty of obtaining permits.
But re-zoning and Gulf buying have contributed to a spike of prices in the last five years.
Emaar Properties of the United Arab Emirates is near completion on the first part of a $500 million project next door to al-Futtaim.
Qatar’s state owned Diar is building a resort on a 240,000 sq metre beach-front property, though it is in dispute with the state over the scope of the project, market sources said.
Independent economists have criticised the government for offering land at cheap prices to investors — Futtaim paid an estimated $70 per sq meter — instead of auctioning the prime properties, but Walichnowski said al-Futtaim was also committing $1 billion in investment.
A survey by the Syria Report economic newsletter indicates that real estate prices have started to cool, with high-end residential property in the capital falling 10 percent in the second quarter of this year to $5,000 per sq meter compared with the first quarter.
Office space, which is rare in Damascus because of severe restrictions, has fallen less, the Syria Report said, pointing to difficulty in obtaining data because of the scarcity of purpose-built office buildings.
(Editing by Will Waterman)