Sticking to its mandate of being a catalyst for growth in Abu Dhabi, Mubadala Real Estate & Hospitality (MREH) is pulling out all stops to clinch land sales and lease premium commercial space on Sowwah Island, the emirate's central business district as designated by its Urban Planning Council. The government's strategic investment company has so far managed to attract international operator brands such as the Four Seasons Hotel and Resorts, Rosewood Hotels & Resorts and MGM Grand to Abu Dhabi during the most inclement investment climate.
Despite commercial tenants staying put in their existing premises, waiting for prices to hit bottom, there is keen interest in plots in the capital's upcoming CBD. Of the ten plots being marketed in Phase 1 of Sowwah Island, two have been taken up by the National Bank of Abu Dhabi and the Al Hilal Bank while seven are either under reservation or serious negotiations. International developers, a few backed by private equity and funds, from the US, Europe and Asia are showing interest in the remaining plots.
"Phase 1 is the prime part of Sowwah Island. We're selective about who our partners are on Sowwah Island. They should have the right amount of capital, need to build within four years and have the right vision for the island," explains John Thomas, executive director, MREH.
Phase 1 of the 105-hectare island includes prime development plots and major infrastructure works — four bridges, utilities, a two-tier road network, pedestrian passageways and an extensive sea wall. In addition, there is Sowwah Square, the new headquarters of the Abu Dhabi Securities Exchange, Four Seasons Hotel Abu Dhabi, Viceroy Abu Dhabi and Cleveland Abu Dhabi. Three of the four commercial towers comprising Sowwah Square have reached their final height and are scheduled for completion next year. The podium, parking structures and pedestrian corridors are also substantially complete. "We're trying to accelerate matters on Sowwah. This is critical government infrastructure. We need to make sure the place where people are working and living are not construction zones," affirms Thomas.
To expedite work and abide by project timelines, the developer claims to have issued a two-staged tender for construction of the Rosewood Hotel and the Four Seasons property. Comprising 200 rooms and 125 serviced residences, the Four Seasons Hotel Abu Dhabi will open in 2013 and lay claim to being the hospitality group's first UAE property. Insisting that infrastructure will be ready in tandem with Phase 1 in 2013, the official claims not to have scaled down the masterplan. "We've only adjusted the gross floor area to deal with what the market is looking for."
With the first tower in Sowwah Square being substantially let to accounting and law firms, banks and private equity firms, the developer says the leasing velocity is "on track". The collapse of the off-plan sales model has, however, forced MREH to pre-lease units at the flagship project at a premium.
"There is a commoditisation of real estate in the market. People compare commercial space in Mussaffah to that in Sowwah. That's not comparing apples with apples. This is premium real estate and it will attract premium rents. We're getting a better rate than the rest of the market and it is reflective of the quality," Thomas adds.
The column-free floor plates at Sowwah Square will release approximately 180,000 square metres of premium commercial space onto theAbu Dhabi market.
While John Buck International — in which Mubadala has a 24.9 per cent stake — is managing the leasing and property management of Sowwah Square and Rosewood Abu Dhabi, the service fees will be finalised when the buildings are operational.
Modelled after Manhattan, Sowwah Island is expected have a working population of 75,000 and be home to 30,000 residents.
"We want Sowwah Island to remain active throughout the day. That can only be achieved by having residential units on the island. Some of the plots on Phase 1 are residential. Those will come online as per schedule — in four or five years from now," notes Thomas.
True to its mixed-use credentials, Phase 2 of the project will house a cluster of clinical facilities that will complement the specialist medical services provided by Cleveland Clinic while the subsequent phase will feature a transit centre with an underground Metro stop and a street-level light rail network.
Sowwah Square has achieved the Leed (Leadership in Energy and Environment Design) core and shell Gold pre-certification from the US Green Building Council. The project will feature photovoltaic panels on the roof ofthe Securities Exchange to capture solar power and double skin facades toinsulate buildings. In addition, it will use regional materials and those made from recycled content and provide for alternative methods of transportation such as mass transit.
Global outlook on hospitality
With a 50 per cent stake in the Viceroy Hotel Group, Mubadala Real Estate & Hospitality (MREH) has made the group the centrepiece of its international hospitality portfolio. Besides attracting the brand to Abu Dhabi to boost the local tourism industry, it is also driving Viceroy's expansion globally.
"For us, real estate development willbe very local. On the hospitality side,we are looking internationally for our Viceroy brand. We're looking at London, New York, Paris and Beirut. We're looking to find hotel assets and put our brandon it," says John Thomas, executive director, MREH.
The investment company recently signed a deal with a Maldives-based luxury resort developer, EoN Resorts, to develop a 61-room property on the island of Vagaru in the Maldives. Scheduled for completion in 2010, it will comprise 61 over-water and beachfront villas and be operated by Viceroy Hotels and Resorts.
The developer has also modified the masterplan of the Mina Zayed Waterfront to make the project more human scale. Expected to be a catalyst for the regeneration of the Mina Zayed area, the project will no longer feature the 17,000-seat arena. Instead, low-rise buildings, retail and food and beverage offerings, two marinas and a 3,000-seat performing arts centre have taken its place.
While the design of the MGM Grand Hotel has been retained, Mubadala officials claim that land reclamation work will start this summer.
As part of its 18 per cent stake in a consortium of international investors, Global Capital, MREH is also involved in the masterplanning of a large component of the Medini Iskandar project in Nusajaya, Malaysia.
Thomas claims the strategy is to bring in key anchors, developers and investors to this project — MREH's first international real estate development. "Infrastructure is progressing. It's the role of the government. As a consortium, our strategy is different from that in Abu Dhabi," he adds.
