Dubai: Dubai Pearl, a multi-billion dollar mixed-used project, will be visible from the overpasses within weeks as the developer puts financing in place to complete the project by 2013.
"It wasn't only design changes but also [changes in] the market conditions, which took time to sort out. We were continuing but not at the same speed we should have," Santhosh Joseph, president and CEO, Dubai Pearl, told Gulf News.
The main contract, for the 20 million square foot built up area, was awarded to Al Habtoor Leighton in November 2008 and work started in June 2009.
Joseph explained that the re-design which took place over the last two years, changed usage in favour of more residences than offices, it also added new components. The renegotiation of the construction contract has had an impact on the speed of the construction programme.
"Our total construction cost was Dh8.9 billion originally now it is Dh7.4 billion. We signed our main contractor when everything was at the peak, but, then we could take advantage of the changed market situation to negotiate," Joseph said.
Customers who bought at the peak also benefited from a price reduction by up to 30 per cent, he added.
Project delivery is now slated to start and finish in 2013, when the super-structure will be complete. Phase I, the four main towers, including the residences, the offices and car parking will be handed over. The hotels may still need fitting out and will come on-line in stages.
Slower pace
Whilst it is technically possible to build a floor every ten days, construction is slower at present because the first nine levels are more complicated, including installation of the jump forms, the height of the floors and the mall structure. After this point construction can speed up, as all remaining floors are uniform.
The plan is to build 36 floors by year-end and add another 39 in 2011 with the balance of the structure by 2012. Around 600 workers are currently on-site, but at its peak the site will employ 12,000 people and indirectly create another 35,000 jobs.
"We could complete in two years, but we made a practical decision to look at our resource mobilisation. In early 2008 you didn't have to think about bringing in more capital or future debt. Now we had to think about diluting assets," said Joseph.
The project is valued at Dh18 billion and the total project cost is nearing Dh10.8 billion. Phase I, to be built at a cost of Dh5.5 billion, is what the three shareholders of Dubai Pearl, the Al Fahim family, the Al Fahim Group and Joseph himself are focusing on right now.
The current capital and shareholder money invested in this project is almost Dh1 billion, and we'll be bringing in additional resources of Dh2.5 billion during the construction period, he said.
"The revenue estimate was conservatively set, the project is actually much more valuable. Based on that, we're able to have capital and quasi-equity of that level and our end-user receivables come into play."
More finance is expected to come in the way of investors into the hospitality, entertainment and retail nucleus. Assets valuable enough to represent an attractive mix for investors to spread their risk, and reduce the need to sell to end-users well after 2012, Joseph said.
"We're leveraging on these assets, we'll be able to either hire off or dilute our position in these and bring more capital into the project. We're already talking to some interested parties."
Selective stability
Blair Hagkull, managing director of Jones Lang LaSalle Middle East, pointed out that selective stability returned over the last six months to the market, meaning that a lot of developments continue to decline but exceptional ones are outperforming the market. For a development to complete it needs a strong finance and sales programme to keep the momentum to complete.
"Dubai Pearl has some unique characteristics, is ambitious and sits in a strong location. A depressed market is the right time to build to complete and sell in a buoyant market. Investors are seeking long-term well located opportunities with good building management."
Mixed usage
Offices: 24 per cent (2.5 million square feet)Residential: 42 per cent (1,455 units) Hotels: 19 per cent (7) Retail: 15 per cent
Dubai Pearl plans to launch a subsidiary integrating facility management, security and smart home technology all under one sustainable model reducing maintenance costs.
