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The real estate and property development sector of the entire Middle East and North Africa (MENA) region today progresses at a level that seeks its equal in any other part of the world. Known as sector of exceptional importance in this region, the Arab property markets have been evolving at unprecedented speed since the turn of the century.
First it was the events of September 11, 2001 which repatriated much of the region's wealth back to the many banks and, at that time, few investment opportunities in the MENA. Then, in 2002, it was the region's real estate market revolution and first boom of unprecedented proportions when Dubai introduced a law that allowed foreigners to take out 99-year leases on selected landmark properties. A year later, oil prices surged to exceptional levels creating huge excess riches in the Gulf region - resources that became the lifeline of the real estate boom experienced in Dubai. And two years later, in 2005, the continuing excess cash generated by the high level of oil prices spiraled around the six GCC countries and found its way out of the thriving Gulf real estate market and into new and promising regional markets such as Syria, Jordan, Egypt, Sudan, Morocco, Lebanon, Tunisia and even Libya. The surge in real estate investments across the region is backed by a fact that magnifies the importance and sustainability of these investments: real estate has a long tradition of being the prime choice for Arab investors. This applied not only in the past when stock markets, securities, and other investment options were not available in large proportions within the region's markets. But even as MENA equity and security markets have been performing very well and attracting more and more liquidity over the past four years, real estate was a favored choice for regional investors. Businessmen of the region perceive real estate investment as the safest vehicle since it is not affected by sudden price surges. Moreover, cultural factors such as high appreciation of continuity, strength, and stability, as well as the desire to contribute to the future and at the same time establish tangible expressions of wealth, assert regional investors in their inclination to apportion substantial portions of their investment portfolios to high-value real estate. Such is this insight entrenched in the minds of Arab investors that the sheer size of total investments in the MENA real estate sector - estimated to exceed US$600 billion in the GCC alone by analysts - has established this sector's importance within the region as comparable to the role of the Arab oil industry vis-à-vis the global economy.
Be it a low-level residential building being developed in Algeria, a brand new city planned in Saudi Arabia or the largest mall in the world being erected in Dubai, the MENA's real estate sector is vast and fast-moving. But while construction activities and real estate transactions are thriving all over the realm, the most enticing slice of this boom is the segment of mega-projects. We estimate that a whopping US$387 billion are currently being invested in over 115 real estate mega-projects across 13 countries in the region. Add to that the daring concept of the region's latest and largest project outline to date, Tamdeen Real Estate Company and Ajial Real Estate Company's vision for the US$86 billion City of Silk in Kuwait and the total figure would grow to exceed US$470 billion. According to our definition, a real estate development qualifies as a mega-project by costing more than US$500 million to build. The amounts involved in mega-projects are distinguished in terms of sheer size but also must be acknowledged for their medium-term and long-term earnings potential and macroeconomic impact. Investment strategies in many emerging and developed markets commonly carry limited recommendations for real estate inclusion in portfolios, not in a small part because many real estate investments do not create as much value as investments in the services or manufacturing sectors, thus are not the center of focus for investors in Western Europe or North America. However, Arab investors appear keen on investing in property and especially landmark projects that can be residential, sector-focused, or mixed-use. One thing that all these projects have in common is that they include strong potentials for functioning as long-term productive real estate, even where projects are residential, by creating new tourism attractions and establishing new urban brands. This aspect of mega-projects can be assessed on two different levels: economically and sociologically. The GCC countries (Saudi Arabia, UAE, Bahrain, Qatar, Oman and Kuwait) are in dire need to diversify their economy to decrease their dependency on oil export receipts - with latest estimates showing oil receipts representing over 80% of total GCC government revenues in 2004. Thus, by heavily investing into real estate mega-projects, it is expected that the oil-focused GCC economies will gradually increase revenues from tourism, retail, commercial, business and real estate transactions - which in turn will decrease dependency on oil. Such a theory has already been tested and proven in the UAE and Bahrain where oil represented a little over 30% of total GDP (heavily skewed towards the emirate of Abu Dhabi) and 23%, respectively, in 2004. And with nearly half the world's population in close proximity to the GCC, developers see a huge potential in successfully selling property at massive freehold residential projects such as United Development Company's US$2.5 billion Pearl Qatar and attracting tourists to resorts and commercial ventures such as Al Areen Holding Company's US$715 million Al Areen Desert Spa and Resort in Bahrain and Ilyas and Mustafa Galdari Group's massive Mall of Arabia located in Dubai. The methodology behind most of these real estate mega-projects is, ‘build and they will come!' And just by looking at the most developed real estate market in the region, Dubai, one can see why every other country in the GCC is trying to hop on the expensive, yet rewarding ride. With the real estate sector already contributing to more than 10% of the GDP and share of oil receipts continuously decreasing, Dubai is currently building nearly 200,000 housing units which are to become home for an expected population of 2 million by 2010 - a 40% increase in population size. That's an extra 600,000 wallets without counting the huge tourism receipts (leisure and business) Dubai will rake in within the next 5 years if its target of 15 million tourists a year by 2010 is met.
In the Levant and North Africa - where oil and gas revenues support the economies in some countries such as Egypt and Syria but, under exception of Libya and Algeria, are overall of considerably lesser importance as economic drivers when compared to GCC countries - real estate mega-projects take a slightly different approach, befitting the economic fabric of these countries. Instead of building the tallest towers, the biggest malls or the most advanced cities, a majority of mega-projects outside the GCC are urban regeneration projects or tourism resorts. Examples of urban regeneration projects include Solidere's multi-billion Beirut Central District and Abdali Investment and Development's US$1 billion Abdali Urban Regeneration project in Amman - both aimed at rejuvenating the life of the capital city on the residential, economic and tourism fronts. Examples of mega-project tourism resorts include Saraya Jordan's US$600 million Saraya Aqaba and Emaar and ONA Group's US$1.2 billion Bahia Bay in Morocco - aimed at capitalizing on the estimations by the World Tourism Organization that tourism to the Middle Eastern region will grow at a rate of 7.1% a year until 2020, coincidentally the highest rate in the world, and on the growing need for GCC citizens to find new luxurious tourism destinations within the region. However, some real estate mega-projects in these non-GCC countries do entail development of new residential districts, examples of which can be seen in Egypt's US$4 billion Cairo Heights being developed by Emaar Misr, in Jordan's US$900 million Madinat Al Sharq being developed by MAWARED, and in Syria's US$15 billion Syria Bonyan City being developed by UAE-based Bonyan International Investment Group. This ambition, which appears stronger in the GCC countries than in other parts of the MENA region, is reflected for one thing in the sheer size of development initiatives, explaining why each mega-project is bigger, better and more expensive than the previous one. In many ongoing and intended mega-projects, the identity creation element moreover resonates in their emphasis on symbolizing Arab achievements and establishing icons of cultural pride and wealth (such as the palm tree and the "desert flower" design of the Burj Al Arab project in Dubai). Developers of numerous mega-projects are moreover highly aware of seeking to build new centers of regional knowledge and productivity, Arab intelligentsia and cultural integrity as demonstrated perhaps most vividly in the vision of the City of Silk for Kuwait, which at present is as much an exercise in formulating anchor points of Arab achievements as a concept for a property development project that could see the light of day within a time frame of decades. Another important challenge for GCC countries is the need to provide sustainable employment and living environments for their growing populations. Building new cities - turnkey style, with entire commercial, industrial, educational, cultural and residential environments - is an answer to this need. This effort at solving socioeconomic dilemmas reflects the recent revenue increases in Arab countries granted by the world's surging thirst for oil combined with the concentration of this wealth in the hands of key national and regional entities which are working to develop Arab economic centers for the future. An example of such future Arab economic centers can be seen in Emaar, Saudi Binladen Group and Aseer's US$26.6 billion King Abdullah Economic City. BACK TO TOP On productive levels, the manufacturing, recreation and leisure, and retail and services universes that are currently emerging as mega-projects in the region's existing and new cities are best efforts for supplying the region's growing populations with the means for earning a living and at the same time enjoy an enticing living environment. While these economic development initiatives could perhaps be augmented by other efforts, they testify in very concrete ways to the capacities and potentials for advancing the Middle East economy - growth which can be seen in GDP increases of nearly 7% on average for GCC economies. En course of this socioeconomic evolution, the mega-projects of course offer, during their current creation phase, also immense business and investment opportunities with short, medium, and long term horizons. The expansion of mega-projects into the non-oil producing countries of the Middle East is indicative of increases in intra-regional economic interlacing of revenue-generating and sustainable business ventures, a factor that if expanded further also would contribute very positively to the region's overall economic growth. The ongoing and intended investments of MENA countries into real estate mega-project currently stand at mind-blowing levels of over US$387 billion in comparison to their combined GDP of US$804 billion - a 48% ratio. It is important to take into consideration that the time lines of these projects extend in some cases up to a quarter century or are until now merely conceptual, thus these ratios have to be seen as mere indicators. However, they are indicators that do illustrate the sheer size of investments into productive real estate intended to spur the economy in the business, residential and tourist sectors. According to our research, out of the total US$387 billion, Dubai alone represents an amazing US$153 billion - a figure which is not fully representative since many projects in Dubai don't have a disclosed price tag on them. Abu Dhabi ranks second in the MENA region with over US$45 billion of mega-projects under development. In total, the UAE represents a whopping US$214 billion of mega real estate developments - which is 182% its current GDP. It is important to note that the Top 10 mega-projects represent over 50% of overall investments in MENA mega-projects. Surprisingly, Syria's ratio of mega-projects to GDP is the third largest in the region with some US$22 billion under development - representing 95% of its current GDP - just after Bahrain with 96%. Mega-projects in Syria were mostly disclosed throughout 2005, a year in which the Levant country faced continuous international pressure. Syria's large population, intertwined with its enormous tourism capacity has made it very attractive for developers, especially in 2005 since land prices were at an all time low. With a total of US$17.5 billion of mega real estate projects under development, Oman is the fourth on the list with a ratio of 55%, followed closely by Kuwait with 47%. However, Oman has one major mega-project - the US$15 billion Blue City - which represents 85% of all mega-projects in this Gulf country. Mega-projects in Jordan are also playing a major role, representing over 42% of the GDP. This figure is however not fully accurate and should represent a larger percentage since further major projects are to be developed in Aqaba within the Aqaba Special Economic Zone Authority's (ASEZA) economic zone. In Qatar, real estate mega-projects nearly represent 30% of current GDP (total construction projects in Qatar exceed US$100 billion), while this figure stands at 20% for Sudan, 12% for Saudi Arabia, 9% for Morocco, 8% for Lebanon and 1.3% for Iran. Tunisia had no private sector real estate mega-project - surprisingly - neither did Yemen, Algeria and Libya. It is important to note that Emaar and Dubai Properties both recently (March 29) announced that they will both invest US$18.9 billion in Morocco over the next 10 years - boosting Morocco's mega-project ratio from 8% of GDP to 37% of GDP.
Nearly every week, a news report is released with the announcement of a new mega-project. Chances are that mega-project is located in the UAE since the country represents over 50% of total of such MENA projects. However, more and more mega real estate projects are being announced throughout the region, especially since GCC developers - and in particular UAE developers - are in dire need to diversify their portfolio of countries to reduce any possible risks of a real estate bust. Here is a set of examples of the most important mega-projects being developed in the GCC, Levant and North Africa. UAE - Dubai However, among all projects under development in Dubai, none are more important than the flagship projects of the three main developers: Nakheel, Emaar and Dubai Properties. And among all the projects by these three massive developers, it is noteworthy to mention the Palm islands since they are the first mega-projects to grab international headlines and the first waterfront developments of their kind. Government owned Nakheel is currently developing five waterfront developments. Three of the developments' shape resembles a palm tree and are called the Palm Jebel Ali, Palm Jumeirah and the Palm Deira. Exact cost of development is not known, however estimations value them at a total of US$25 billion - the most expensive being Palm Deira and the least expensive Palm Jumeirah. Palm Jumeirah, which was the first of the palms to be announced, currently encompasses a couple other major projects such as the massive 2,000 rooms Atlantis Hotel which includes a water-theme park covering an area of 40 acres, a snorkel trail and an Entertainment Village, to name a few. Atlantis Hotel will cost a total of US$1.1 billion. Additionally, the Palm Jumeirah will include the region's first Trump International Hotel and Tower - a $US400 million hotel shaped like an opening tulip. The 50-storey tower will be 360 meters high and will be located at the trunk of the Palm Jumeirah. Nakheel is also developing the US$1.8 billion the World which will consist of 300 small private artificial islands - ranging from 250,000 to 900,000 square feet in size, with 50 to 100 meters of water between each island. The World will cover a total area of 9 kilometers in length and 6 kilometers in width and will be located 4 kilometers off the shore of Jumeriah. Each island will be sold to selected developers and are expected to start at $US6.85 million tag price each. The last waterfront development of Nakheel is the Dubai Waterfront - a development which will comprise the 750 meters Al Burj, contending to become the tallest tower in the world. Dubai Waterfront will extend Dubai's coastal line by an extra 820 kilometers - 12 times the current length of the coastline - and being larger than Manhattan or Beirut, it is intended to be the world's largest beachfront development and the largest man-made development. Another Dubai-based developer, publicly listed Emaar Properties, also has big plans for the emirate. Emaar's flagship development is Downtown Dubai - estimated to cost some US$20 billion. The development will comprise one of the world's biggest malls - the 836,000 square meters Dubai Mall - thousands of residential units and at its center the Burj Dubai - a tower which is contending to become the tallest tower in the world by exceeding 700 meters in height. Emaar is also building the world's largest man-made marina - the Dubai Marina. The project, which will cover an area of 53 million square feet will accommodate over 120,000 people in over 200 high-rise buildings, with the 395 meters tall 23 Marina being the longest. Dubai Properties, a government owned developer, is currently developing a US$20 billion freezone business, commercial and residential district that will cover an area of 64 million square feet (5.95 million square meters). The project, called Business Bay, is intended to transform Dubai as one of the world's business capital and will be located adjacent to Emaar's Downtown Dubai. The project will include hundreds of skyscrapers. UAE - Abu Dhabi Currently, the largest real estate mega-project in Abu Dhabi - being undertaken by the newly formed Aldar Properties - is the US$14.7 billion Al Raha Beach. The listed company's mixed-use project will cover an area of 12 million square meters (out of which 6.8 million square meters will be reclaimed) and will include over 60 towers. Al Raha Beach will become the future gateway to Abu Dhabi and will house over 120,000 inhabitants. Aldar Properties is also planning to develop a multi-billion dollar entertainment complex to be named Ferrari World. The concept envisages a race track, numerous rides and attractions, a Ferrari museum, hotels, retail, residential and hospitality elements embracing the design ethics of the Ferrari brand. The most noteworthy project to date in Abu Dhabi is the development of Al Reem Island. The island is to be developed by three companies: Tamouh Investments, Reem Investments; and Sourouh Real Estate Company. The latter was the first to announce its project on Al Reem Island and will invest some US$6.8 billion to develop 25% of the island through an iconic project called Shams Abu Dhabi. The mega-project will comprise some 100 towers and other buildings for mixed-use. One of the main projects in Shams Abu Dhabi is the unique project called the Gateway: four 60-story residential towers and a single 75-story mixed residential and commercial tower. The massive project will cover an area of 1.32 million square meters (25% of the island) and is expected to accommodate some 100,000 people. Reem Investments on the other hand is expected to invest some US$5.5 billion to develop another 25% of the island which is expected to house 80,000 people in total. Project details have not been released yet. UAE - Other Emirates Other major developers in Ras Al Khaimah include Saraya Islands Real Estate Development which is developing the US$500 million Saraya Islands project. In Umm Al Quwain, Tameer Holding is developing its largest project to date: the US$8.3 billion Al Salam City. The 220 million square meters large project will house over 500,000 residents and its first phase alone will include the construction of 1,000 residential villas and 20 residential and commercial towers of 20 to 25 floors high. Emaar and Al Oula Development also have a mega-project in Umm Al Quwain, the US$3.3 billion Umm al Quwiam Marina - a project which calls for the construction of a waterfront community on the shore of Khor al-Beidah. In Sharjah, Al Hanoo Holding Company is developing the emirate's largest real estate project - the US$4.9 billion Nujoom Islands. The project will cover 5.6 million square meters of coastal land 15 kilometers from the center of Sharjah. Nujoom Islands will increase the area's coastal area by 30 kilometers and will comprise of 40 high-rise towers for residential and commercial purposes, 145 apartment buildings, four hotels, two resorts, 1,400 water-front and park-side villas, five marine clubs and six centers for light industries. The project is expected to accommodate 40,000 residents. Bahrain Durrat Al Bahrain is a 20 square kilometers seaside resort which includes 13 different islands with over 2,000 villas, more than 3,000 apartments, luxury hotels, restaurants, promenades, shopping centers, spas, a 450 berth marina and an 18 holes golf course. The resort will be able to accommodate 30,000 residents and up to 2,000 daily visitors. Bahrain Bay, which is set to change the face of Manama, will be built in three distinct phases which will call for the construction of a built-up area of 1.1 million square meters. Phase one will involve a 430,000 square meters land reclamation and infrastructure development. Phase two will involve the construction of the two anchor developments, the Four Seasons hotel and the new global headquarters building for Arcapita and is scheduled for completion in early 2008. Phase three will involve the development of residential, retail and commercial sub-projects around the anchor developments. The entire project is set for completion by late 2010. Bahrain Financial Harbour is a waterfront development designed for commercial, residential and leisure purposes. It will include 30 individual development units spread over 380,000 square meters of reclaimed land offering office, residential, retail and leisure space. The project will become the financial center of Bahrain. Oman Qatar Lusail will eventually cover a 35 square kilometers area along 8.5 kilometers of shoreline and consist of 10 self contained district, each with its own infrastructure and amenities. The project will include a lagoon, two marinas, residential and commercial areas, hotels, residential units and retail and leisure facilities. Lusail is expected to house some 150,000 to 200,000 residents. The Pearl Qatar 4 million square meter man-made island is shaped like a string of pearls and diamonds and will encompass 7,600 freehold residential units that will accommodate 30,000 residents. The residential units will be contained in twenty-one 20 storey towers with 3,116 apartments and 410 town houses. The project will contain 10 themed districts, three luxury hotels, four marinas, leisure facilities and 60,000 square meters of retail and restaurant space. Saudi Arabia The financial island will offer 500,000 square meters of office space for up to 60,000 professionals, while the industrial district will cover 8 million square meters to cater for a range of manufacturers. BACK TO TOP Syria Lebanon Phase Two of the project (2005-2015) will focus on the redevelopment of the Martyrs' Square axis and the new Waterfront District, as well as the Saifi II and Wadi Abou Jamil residential neighborhoods, the Serail corridor, the hotel district and the completion of the Souks of Beirut. High-density zones will also be developed during this phase. BACK TO TOP Egypt Arab Contractors' multi-billion dollar Future City on the other hand will be built on a 46 million square meters plot of land and will accommodate at least 200,000 people. Future City will be linked to the rest of the city through a rail-based transport system and will offer a mix of commercial, residential and office real estate. Morocco However, in terms of size the Mediterranea Saidia resort will be the largest in Morocco. The US$1.6 billion resort, being developed by Fadesa Maroc, will cover a 7 million square meters area an a 6 kilometers long beach front. It will consist of three 18-hole golf courses, various luxury hotels, a lighthouse with a restaurant on top and a 740-berth marina surrounded by 20 restaurants and shops. The resort will include 3,000 accommodation units (villas and apartments), while 40% will be green zones. BACK TO TOP To own or not to own: the Concept of Freehold One of the most important turning points for the region's real estate market- and especially for the GCC - was the introduction in May 2002 in Dubai of a law that looked, smelled and felt freehold but in reality was a leasehold title with a 99-year shelf life for selected developments. The law, which allowed foreigners to own property for the first time in the UAE, sent shockwaves throughout the entire region. And even though Bahrain was the first GCC country to allow limited non-GCC property ownership in 2001, Dubai capitalized enormously on the boom it created and is recognized as the leading entrepreneur in this field - mostly because of its effectiveness in creating the first unique ‘freehold' waterfront properties such as the Palm islands. Before this law was passed, GCC countries were very reluctant to accept foreign ownership of land and were only open to nationals and in some cases to nationals of other GCC states. However, the success of the legislation in Dubai had suddenly transformed the mindsets of other GCC countries. Authorities realized that their large, deserted lands could be transformed into magnets for foreigners looking for luxurious property - which in turn meant spurring the national economy through foreign investment. In mid-2004, Qatar was the third GCC country to offer rights to own properties in designated areas by allowing both GCC and non-GCC nationals to take out renewable leases of up to 99-years in certain investment zones. Qatar's ruler, Sheikh Hamad bin Khalifa Al Thani, authorized that ownership rights in United Development Company's US$2.5 billion Pearl Qatar, West Bay Lagoon and Al Khor developments be offered in perpetuity - resolving all matters relating to inheritance and self-determination to the title owner. Purchase in any of these developments will grant owners and their entire family automatic residential rights which will remain valid until the property is sold. In November 2004, Oman enacted a freehold law for foreigners only within government-recognized tourism complexes such as Waterfront Investments' US$1 billion the Wave or Al Sawadi Investment and Tourism Company's US$15 billion Blue City. The Omani law permits freehold owners full rights of inheritance according to the laws of the owner's country of origin, as well as residency status for landowners and their immediate family members. However, the law does not apply to commercial real estate, which cannot be owned by non-GCC nationals. In the UAE, Ras Al Khaimah (RAK) was the first emirate to emulate Dubai's lead within specific projects such as Al Hamra Village, the Cove and Saraya Islands Real Estate Development Company's Saraya Islands. In November 2005, the government of RAK permitted 100% freehold ownership for all RAK Properties' projects such as Julfar Towers, Mina Al Arab and Mangrove Islands. Ajman then followed suite with National Center for Real Investment's Al Naeemiya Towers and Tameer Real Estate's Al Ameera Village. In August 2005, Abu Dhabi opened up to foreigners by enabling expatriates to own property under a 99-year land title agreement or a renewable 50-year surface area ownership deal in specific investment areas in the emirate. The law also allowed GCC nationals to own property within designated investment areas. The emirates of Sharjah, Umm Al Quwain and Fujairah still need to move more aggressively in promoting such property laws, even though the latter will soon include a $US800 million tourism project called Fujairah Paradise. It is important to note, however, that the UAE doesn't have a federal law defining freehold - an issue expected to be solved by 2006 when Dubai will offer fully compliant freehold properties. The two remaining GCC countries - Saudi Arabia and Kuwait - have just started flirting with the idea of either offering long-term leases or even freehold rights. Currently in Kuwait, only ownership by companies registered in the GCC is allowed, while in Saudi Arabia foreigners are allowed to sign lease agreements of no more than two years in length. However, change in property laws in Saudi Arabia seems to be emerging from the two holiest sites in the Muslim world - Makkah and Madinah. Saudi authorities have recently relaxed housing laws by offering timeshare and other ownership possibilities to Muslim pilgrims. In Makkah for example, homebuyers have the option of a 24-year lease called Sukouk, allowing leasers to spend a period of time in the property each year. The property can be sold for profit several times within that period, but is then handed back to the government when the lease expires. In Madinah, homes can be purchased on a 99-year lease, which could then become freehold if a proper law is enacted. Foreign ownership of property in the Levant and North Africa is not taboo as many foreigners own apartments in the trendy districts of Cairo, Beirut and Marrakesh. More recently, in Jordan, foreign ownership of property has been intertwined with residential visas in projects such as Saraya Aqaba.
The real estate build-up craze in the GCC has not spared the retail sector. According to figures from Retail International, 2.5 million square meters of Gross Leasable Area (GLA) is currently under development in the GCC - that is half the present GLA of nearly 5 million square meters. Additionally, the UK-based organization estimates that by 2010 an additional 4 million square meters is expected to be added if all projects in the pipeline - either announced or disputable - are fully implemented. And with malls such as Mall of Arabia (GLA of 929,000 square meters) or Dubai Mall (GLA of 351,000 square meters), the estimated total increase of GLA is not far fetched. In terms of sheer size, Saudi Arabia is the largest retail market followed by Egypt and then the UAE. However, with estimations indicating the GDP of Dubai increasing by 50% by 2009 due to retail gains, one can easily say that the booming emirate is sure to become the retail destination of the region. Out of the Top 20 malls in the region (built and upcoming) the top 4 will be Dubai-based and comprise an unbelievable total GLA of 1,744,578 square meters. The top 3 malls in the region are currently under construction and include Mall of Arabia, Dubai Mall and Mall of the Emirates - expected to open by 2008, 2007 and 2006 respectively. These three malls will alone add a total GLA of 1,521,578 square meters to Dubai - 60% of the 2.5 million square meters estimation made by Retail International for the entire GCC. Second largest retail destination will be Saudi Arabia (more specifically Jeddah and then Riyadh). Out of the Top 20 malls, the Kingdom will be adding six new malls in the next three years, toting up a total GLA of 627,026 square meters. Additionally, Benaa al-Kawaaed will be constructing three identical malls in Riyadh, Jeddah and Dammam - with total size reach 700,000 square meters. This would make the three malls the second largest in the region in terms of size, however, the GLA has not been disclosed thus not allowing us to compare the letting space. The first of these three malls, called Benaa City, will open in Riyadh with a total cost of US$533 million. For non-GCC countries, the largest current retail destination is Cairo. The Egyptian capital is closely followed by Beirut, while Amman treads further behind. However, by 2010, it is estimated that Beirut - with constructions of malls such as Solidere's Souks of Beirut (GLA of 60,000 square meters) or Landmark - will quickly catch up to Cairo's total GLA. Retail International predicts that both Beirut and Cairo will have a total of 600,000 square meters apiece by 2010, while Amman, with the opening of new malls such as City Mall (GLA of 55,000 square meters), will have a total GLA of 250,000 square meters. Closer to our times, real estate giant Emaar announced that it will be aggressively expanding in the retail sector by investing US$4 billion to develop approximately 100 malls in the emerging markets of the MENA region and the Indian subcontinent. The move is quite significant since Emaar - the developer behind Dubai Mall - is looking into tapping in countries such as Saudi Arabia, Jordan, Syria, Lebanon, Algeria and Morocco, which in turn will start an all out war by other regional mall developers to move into these markets quickly before they become saturated. As an example, United Properties Company is developing a total 14 retail developments during the next 4 years at a total cost of US$500 million in order to increase the GLA under management in Saudi Arabia from the current 180,000 square meters to 750,000 square meters by 2009. It is important to note that Saudi Arabia will become mall developers' main battlefield as the country boasts the largest population of all GCC nations.
Affordable Property: the new trend? One of the main questions that has been endlessly arising is who will all these mega-projects cater for? Dubai for example is building some of the most expensive property in the MENA region. Shortages in residential apartments in the booming emirate have forced double digit growth in rental prices with year-on-year increases reaching 50% in some cases. These price increases have made many projects unattainable for a large part of the population in Dubai, especially since salaries have been treading behind the increases in cost of living. Add the fact that these projects are mainly catered for regional and international high-end customers, and a lot of Dubai has already been scraped off the customer list. It is true that Emaar, on behalf of the government, is building thousands of housing units, but these projects are mainly geared for UAE nationals, who coincidentally represent a small percentage of the total population of Dubai. According to Asteco - a property management firm - the minimum requirement to purchase a one bedroom apartment in Dubai requires that a monthly household income should be no lower than US$5,500, inclusive of a housing allowance of US$1,630. This would have already priced out a vast majority if the local residents from the property market. Developers have recently seen this gap and realized that an entire market is at their disposal - a market with a monthly household income between US$2,777 and US$5,500. One first such mega-projects aiming to target for the medium to low income bracket is Dubai Lagoon. To live in the US$810 million project, buyers are required to pay some US$40,000 in the first two years, an average of US$1,730 per month. As per assumptions, to pay this monthly installment, the household income needs to be between US$2,600 and US$5,150 per month. And it seems that this trend is slowly picking pace as starting prices at Royale Residence in Dubai Sports City will commence at approximately US$55,500 - much lower rates than the average prices in Dubai. However, can this be achieved with construction costs shooting off the roof?
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