Originally Posted by Bonion
· Published: 09 April 2009 11:30 GMT
· Author: Colin Foreman
· Last Updated: 09 April 2009 18:41
State-backed developer set to merge with sister company after taking over its management.
Dubai Properties has taken over the management of Sama Dubai, and plans to reactivate high-profile projects that the latter put on hold late last year.
The move is the clearest sign yet that Dubai plans to navigate the downturn by consolidating its real estate companies and projects.
"I manage all of Sama now - locally and internationally," Hashim al-Dabal, executive chairman of Dubai Properties, told MEED on 6 April.
The move is a precursor to a likely merger. "In one or two months time we will prove Sama is still alive," says Al-Dabal. "Then you might see Sama become part of Dubai Properties."
Contractors and bankers have expected a merger since February, when MEED reported that state-backed giant Dubai Holding planned to cut costs and restart stalled projects by consolidating its real estate subsidiaries.
Dubai Holding later confirmed that it would merge the back-office operations of its real estate subsidiaries, Dubai Properties Group, Sama Dubai and Mizin, which is part of Tatweer.
Since February, all three developers have cut costs and laid off employees to improve efficiency, which makes them more attractive targets for mergers.
"When you see a real investment opportunity [that has] been made efficient, that is when you can merge," says Al-Dabal.
Sama Dubai will receive financial assistance from Dubai Properties and Dubai Holding, which has received part of Dubai's $10bn sovereign bond.
"Dubai Holding is looking with the bond [Dubai's $10bn sovereign bond] to assist its subsidiaries where necessary," says Al-Dabal. "I would call it a bridging loan. If the company cannot return the money, it is not a good idea. I will only assist sustainable companies - those that can pay back in three or four years."
An injection of liquidity will allow Sama to restart work on its real estate projects.
Sama Dubai will continue with work on its Dubai Towers project in Doha, and will reactivate the Salam resort project in Bahrain and the Yiti development in Oman, says Al-Dabal.
"I have reviewed all of Sama's projects," says Al-Dabal. "It made some good investments outside Dubai and we are committed to them. I have reviewed Oman and Bahrain, given a plan to move forward, and a team is ready to reactivate them."
In Dubai, work will restart on the Lagoons project after Dubai Properties held talks with the contractors that were working on the development's infrastructure.
"The Lagoons will definitely be active this year," says Al-Dabal. "I have done an execution plan in the past five weeks and we can continue. I have spoken to Dutco, Wade Adams and Al-Naboodah. Those three contractors are our partners [on the] projects and we will reactivate them."
"I have liquidity and a team of contractors - that is what I need to move forward."
The Lagoons is one of six UAE projects that Dubai Properties will continue to develop throughout the year. The other developments are the Executive Towers and Vision Tower at Business Bay, Al-Waha and The Villa in Dubailand, and Mirdif Villas.
According to MEED's Real Estate 100 survey of the Gulf's leading developers in September 2008, Dubai Properties' project portfolio totalled $95bn, and Sama Dubai was working on projects worth $25bn.
Dubai Properties will suspend or put on hold other projects depending on their commercial viability.So far, it has shelved plans for the Mudon development in Dubailand and Signature Towers at Business Bay. But both projects were in the early stages and had not been sold to investors.
Similarly, the developer has put Sama's opera house project at the Lagoons on hold until market conditions improve.
Developers in Dubai, such as Dubai Properties, are now focusing their efforts on projects that are nearing completion and are located within the city, rather than in outlying areas where potential buyers are less keen to invest and infrastructure and construction costs are higher.
REAL ESTATE PROJECTS
DUBAI PROPERTIES
Live projects (all Dubai)
Executive Towers
Al-Waha Villas
Mirdif Villas
The Villa
Vision Tower
Status unknown(all Dubai)
Mudon
Sheikh Mohammed bin Rashid Gardens
Signature Towers/DFM
Culture Village
Tijara Town
Bay Square
SAMA DUBAI
Live projects
Dubai Towers (Doha)
To be reactivated
Lagoons (Dubai)
Salam Resort (Bahrain)
Yiti (Oman)
To be kept on hold
Century City (Tunisia)
Amwaj (Morocco)
Opera House (Dubai)
Sources: MEED; Dubai Properties; Sama Dubai
In recent months, work has slowed or stopped on three of Dubai's largest out-of-town real estate developments: the Arabian Canal, Dubai Waterfront and Dubai World Central, which are located between Jebel Ali and the Abu Dhabi border.
"For projects, it is important to deliver, so we look at the construction costs and the avail-ability of infrastructure, which is normally closer to the city," says Al-Dabal.
"Both Dubai Properties and Emaar [Properties] have projects in the centre of Dubai. They are what I call the 'go' projects."
As Dubai's population contracts, there are concerns that there will be an over-supply of housing units by the end of 2009.
"The view of long-term oversupply is no longer a concern because a lot of projects have been put on hold," says Al-Dabal.
·Author: Colin Foreman. Gulf Bureau Chief
|
Prev
dubai towers with the rest of the skyline
Linear Mode
