Dubai: Contractors are taking on direct equity exposure in projects and helping developers mitigate some of the risks associated with project and cost overruns.
“Contractors come in on the equity side and defer their payments until such time the project is completed and starts generating a consistent revenue stream,” said Abuali Malik Shroff, chairman and managing director of Sheffield Holdings, developer of the Marina 101 mixed-use development in Dubai. It was last month that a hotel operator for the hospitality component of the project was confirmed.
“When the contractor comes on thus, it will help the developer lower the upfront project costs and that can be substantial. Construction and material costs have generally been going up and having a contractor on board will better help with project management.”
Marina 101 — with 300 hotel units and 420 serviced apartments — will go past the finish line next year, which will keep the developer occupied for some time. Only nearer the completion would it consider launching new projects at locations such as Jumeirah Village where the developer has plots.
