Emaar Properties PJSC started two new projects and began expansion of its flagship shopping mall as the developer of the world’s tallest tower leads companies seeking to benefit from a rebound in Dubai’s real-estate market.
Emaar is partnering with Meraas Holding to build the 11 million square-meter Dubai Hills Estate, a mixed-use project featuring an 18-hole golf course. It’s also in the final stages of talks with Dubai Holding LLC, owned by ruler Sheikh Mohammed Bin Rashid Al Maktoum, to develop the 6.5 million square-meter Dubai Creek Harbor project, according to a company statement.
“When Emaar focuses on Dubai, and it works on this kind of project at the higher end of the market, it has competitive advantage,” Montasser Khelifi, a senior manager of global markets at Quantum Investment Bank Ltd. in Dubai, said by phone yesterday. “This is positive” for Emaar, he said.
The projects are the latest in a series of announcements as Dubai recovers from one of the steepest real-estate crashes after the 2008 global financial crisis. At the center of recent plans is Mohammed Bin Rashid City, a new district named after Dubai’s ruler that will feature the world’s largest shopping mall and gardens bigger than London’s Hyde Park. Other projects include the world’s largest Ferris wheel and five theme parks costing 10 billion dirhams ($2.7 billion).
Home prices in Dubai are climbing, with the average sale price of mid-range villas soaring 47 percent in the year to May and mid-range apartment prices advancing 32 percent, according to data compiled by Cluttons LLC. Emaar, with the heaviest weighting on Dubai’s benchmark index, has surged 49 percent this year compared with a 45 percent increase for the measure.
The shares declined 2.3 percent to 5.60 dirhams at the 2 p.m. close in Dubai.
Emaar’s projects come as companies such as Tecom Investments LLC, a unit of Dubai Holding, and Nakheel PJSC, the builder of palm tree-shaped artificial islands off Dubai’s coast, started new developments. Tecom said yesterday it will invest 4 billion dirhams in the first phase of Dubai Design District for fashion, design and luxury industries, while Nakheel this year announced plans to build hundreds of villas.
Emaar has also started work on a “massive” expansion of the Dubai Mall, the world’s biggest by area, state-run Emirates News Agency reported on June 8. The expansion is part of efforts to attract 100 million visitors a year to the shopping facility compared with 65 million last year.
Property prices in Dubai, the second-biggest of seven states that make up the United Arab Emirates, fell more than 65 percent from a peak in 2008 as the credit crisis forced banks to cut mortgage lending and speculators left the market. The crisis also forced many companies including Dubai World Corp., one of the sheikhdom’s three main holding companies, to restructure payments on billions of dollars of debt.
“We need to be a bit cautious,” Craig Plumb, head of Middle East research for Jones Lang LaSalle, said by phone yesterday. “There are some worrying signs of over-exuberance coming back into the market.”
Dubai’s property boom started after the emirate opened its market to foreign buyers in 2002, and at its height was driven by speculators seeking to profit from purchasing and selling contracts for yet-to-be-built houses and apartments. The central bank of United Arab Emirates, which comprises seven sheikhdoms including Dubai and Abu Dhabi, is in the process of forming regulations to restrict mortgages to curb default risk.
New regulations, tightened credit and over-supply may help cool growth, Plumb said.