Nakheel to scale up its multibillion dirham contracts for 2017
Plans to award an additional Dh2b worth of tenders against earlier estimate of Dh10b
It will come on top of the Dh4.2 billion main contract for the Deira Mall at the same location, which was announced on Wednesday. United Engineering Construction was the winner. In 2016, it had awarded a combined Dh6 billion in new contracts.
“This year and the next, Deira Islands will be our main focus of new investments,” said Ali Rashid Lootah, Chairman. “We will be launching plot sales at two of the islands this year. The higher construction award value will be a result of us bringing forward some of the projects.”
Deira Islands is a four-island cluster and which the developer is using as the centrepiece of its push into hospitality. Hotel projects that will add 25,000 keys are in various stages of planning and development for Deira Islands, which includes those by other developers too. The first phase of plot sales had gone through well.
With Nakheel pumping out the mega contracts and Dubai Government already committed to $3 billion worth of new ones this year exclusively for Expo 2020, the construction sector should be well-lubricated with work. Also, the real estate development cycle in Dubai is recording increased activity from the levels at the same time last year. At some point, the liquidity situation in the construction sector should see marked improvement and flow through all levels and into the subcontractor space.
Apart from Deira Islands, the master-developer has three new residential high-rises in the pipeline at its Ibn Battuta cluster, with the apartments to be offered on leases. There is also the upscale twin-tower Palm 360 at the Palm Jumeirah, for which construction is to start this year.
Sales of the Palm 360 units, which will include 12,000 square feet penthouses, are set for later in the year — “It’s been a while since Nakheel has had a sales launch,” said Lootah, who was speaking at a media tour of the Jumeirah Islands community. (A cluster of 46 “islands”, the destination has 767 super-luxury villas and 246 apartments under the “Jumeirah Heights” banner. A new retail pavilion opened Wednesday, similar in scope to the facilities Nakheel has at some of its other residential communities.) “The focus had been on creating a leasing portfolio, plus expand retail and hospitality.” (During the first three months, there were a handful of big-ticket transactions involving Palm properties in the secondary market. Price corrections had taken place during the recent soft cycle and new investors seem to have used this opportunity to lock in favourable rates for themselves.) By the end of the decade, Nakheel will have a 17 million square feet retail leasing portfolio, including the whopping 4 million square feet at Deira Mall and which is to make it the city’s biggest in terms of available retail space alone. It is to open in 2020.
The retail portfolio includes the Nakheel Mall on the Palm, with 1.2 million square feet of leasable area and due to open in 2018. It is currently 60 per cent leased.
“We don’t have a high turnover rate of retailers leaving at any of our current locations,” said Lootah. “The big names have rationale expectations of what their turnovers are likely to be and plan accordingly. Retailers who have been able to secure the most productive locations continue to do well.”
Later this month, the developer is to release its first quarter financials.