June 25 (Bloomberg) -- A China State Construction Engineering Corp. unit agreed to invest in a $1 billion hotel and luxury-residential project on Dubai’s man-made island.
The state-owned developer, based in Beijing, formed a venture with SKAI Holdings, the project’s owner, the companies said today in a statement. The resort will include a 481-room hotel and 221 suites as well as 250 serviced apartments on the trunk of the palm-tree-shaped island known as the Palm Jumeirah.
“We can’t disclose the size of the investment,” SKAI Holdings Chief Executive Officer Kabir Mulchandani said by phone today. “It’s large enough to give the Chinese company joint management control of the project.”
Dubai’s property market is rebounding from a property slump that saw prices slide by 65 percent on average. Tourism and retail sales are bolstering the economic recovery and construction work in the desert sheikhdom is reviving after the global credit crisis put some projects on hold.
The resort will be the Viceroy Hotel Group’s first property in Dubai and is due to open in 2017, the company said on May 15, when it announced the project. Construction of Viceroy Dubai Palm Jumeirah started last month as buyers paid deposits of 10 percent of the value of the apartments. About 2.1 billion dirhams ($570 million) of properties have been sold in the project, the companies said today.
“The resort has a unique investor model that enables buyers to purchase hotel rooms, which are then leased back in exchange for 40 percent of the room revenue,” the companies said today. “Investors’ annual rate of return is estimated at 12 percent.”
The regional unit, China State Construction Corp. (Middle East), is also the main contractor on the project, according to the statement.
To contact the reporter on this story: Zainab Fattah in Dubai on email@example.com
To contact the editor responsible for this story: Andrew Blackman at firstname.lastname@example.org