| 13 September, 2017

Cityscape: Work on Deira Island moving forward, says Nakheel chairman

State-owned developer has started work on the first two of up to five resort hotels

Nakheel awards AED430 million worth of contracts for Dubai’s Deira Islands.

Nakheel awards AED430 million worth of contracts for Dubai’s Deira Islands.

Nakheel/Handout via Thomson Reuters Zawya
State-owned developer Nakheel has started work on the first two of up to five resort hotels being planned on its Deira Island manmade island project, according to chairman Ali Rashid Lootah "We are starting ourselves" on the resort sites being developed alongside Spain's RIU hotels and with Thailand's Centara, following the signing of deals with the companies in February 2016 and January this year, respectively, Lootah told Zawya in an interview at the Cityscape Global real estate exhibition on Monday.

"One has already started the construction with the soil investigation and piling - RIU. The other one, I think we should go to tender for the first package for the soil improvement tender very soon."

The operating partners for the three remaining hospitality projects have yet to be finalised. "The other plots we have allocated for future partnerships. We are talking to people, but at least we have two serious partners," he said.

Ali Rashid Lootah, Chairman of Nakheel

Elsewhere on Deira Island, which is a scaled down version of the Palm Deira project announced during the height of the Dubai property boom in 2007, the main contractor for the 4.2 billion UAE dirhams Deira Mall project, Unec, has already begun its preparations on the site after it was awarded the deal to build the 10.3 million square feet centre in April this year.

"The soil improvement package is about to be done and then the contractor will mobilise," he said. "I think before the end of the year, the contractor will start."

Lootah also expects an award to be made for the 22 towers containing 2,900 apartments it is planning to build either side of the mall as part of the renamed Deira Central (formerly Deira Boulevard) project. This includes 16 residential, two hotel and four serviced apartment towers - all of which are being retained by the developer for its recurring income portfolio. It will also sell 28 more plots around the site to third-party developers.

Cityscape plans

The developer used the annual Cityscape event as a showcase to reveal plans for 4 billion dirhams ($1.08 billion) worth of new projects, including the new 180m-high Palm Beach Residences tower at Palm Jumeirah, a new 370,000 square foot mall and a 2,500-apartment gated community in Discovery Gardens called Jenan Heights, a new villa project containing 174 homes and a leisure centre in Jumeirah Park and a new hotel in Jumeirah Village Circle.

Lootah said he was confident of selling the 250 luxury apartments on offer at Palm Beach Residences, because of the facilities it will have include a large roof garden and a large podium with a tennis court, swimming pool and a clubhouse.

"No other building has got those facilities," he said. I hope we will start tendering this project this year and I think by the second quarter [of 2018] we will award it."

He appeared slightly more circumspect about the Jebel Ali Gardens scheme unveiled at Cityscape two years ago, comprising 42 towers and containing up to 10,000 affordable apartments.

Lootah said that it is "in the final stages of design and approval" for the project, but added that "we will have to look at the market next year" before deciding on how and when to bring the various phases forward. "But we are preparing ourselves already," he said. "We have started the infrastructure on there. We will be ready."

He said the developer, who is famous for its series of palm-shaped manmade island projects, will continue to launch in order to boost its portfolio of leased properties, adding that he expects the company to reach a target of generating 7 billion dirhams ($1.9 billion) in revenue from this sector by 2021.

Although the company announced a 10.5 percent decline in profit for the first half of 2017 in July, it said the amount of recurring (i.e. non-development) revenue has jumped the 2.5 billion dirhams - up from just 800 million dirhams back in 2010.

“We will continue launching projects to increase our [leased] portfolio. I think we will meet our target by 2021. I think we will reach our announced target of 7 billion dirhams [of recurring revenue] for sure,” he said.

© Zawya 2017