Dubai-based real estate firm Middle East Developments is seeking US and European investors for a string of cities across the Middle East and Africa.
The developer, which is owned by Tarek bin Laden, who is also a principal shareholder in construction giant Saudi Binladin Group, is already planning a $170bn scheme to create two cities, in Yemen and Djibouti, linked by a 28.5-kilometre causeway across the Red Sea.
In an exclusive interview with MEED, Bin Laden says he plans to replicate these cities across Africa.
“We are already planning to spread the developments through Africa,” he says. “We are in negotiation with governments in Mauritania and Morocco. These projects will give stability and fight poverty.”
In July last year, MEED first reported that Bin Laden was planning a $20bn causeway linking Yemen with Djibouti. The causeway is designed by Danish firm Cowi (MEED 27:07:07).
Bin Laden says the privately financed project has the support of both the Djibouti and Yemeni governments, and he has permission to build across the mouth of the Red Sea, providing adequate clearance is given for ships.
Middle East Developments is now seeking to attract investor interest in the cities. “We are expecting a lot of South African industry to come to Djibouti and Yemen,” he says. “We also think that we will appeal to a lot of US and European factories, and investors from all over the world.”
The firm will launch an inter-national roadshow within the next two months, with Singapore and the US expected to be first markets to be targeted. “It is the project of the 21st century and we hope that US and European firms will invest and participate, otherwise the others, such as China and India, will take most of it,” he says.
The US is already known to be concerned about China’s rising influence in Africa, which is seen by Beijing as a key source of raw materials.
The Export-Import Bank of the US has identified the growth of Chinese firms in Africa as a key challenge to US commercial interests, and is trying to double the number of US firms working in the continent.
Chinese trade with Africa was worth $56bn in 2006, compared with $71.3bn for the US. However, the pace of growth for China is faster, at 20 per cent a year, compared with 17 per cent for the US.
Another measure Bin Laden hopes will attract firms to the cities is the potential availability of Yemeni gas. Plans for the causeway include a pipeline that could carry gas from Yemen and provide energy for industrial investors in Djibouti. Although Yemen does not export any gas, it has proven reserves of 479 billion cubic metres and Bin Laden says negotiations are under way with Yemen’s Oil Ministry.
A $3.7bn liquefied natural gas (LNG) export terminal, which is being developed by France’s Total and the US’ Hunt Oil, is due to begin production at the end of 2008.
Economic analysis is also under way to decide on the investment model for the two cities. Several build-own-transfer contracts are expected to be used for the infrastructure elements of the project, such as the causeway and associated road and rail links.
“Border controls will be handled by the governments and both have agreed on this,” says Bin Laden. “The area is a free-trade zone and will have its own law, court system and administration.”
About $100bn will be invested in Al-Noor City in Yemen, with a further $50bn for the city in Djibouti and $20bn on the causeway.
Al-Noor Yemen consists of seven districts with heavy industry at its core. Bin Laden is already constructing six cement plants in the city and plans to develop a shipyard, airport and automotive industry.
“For the cities, we plan to set up a number of developers, in a similar model to that of Emaar in Dubai,” he says. “There would be seven for the districts in Al-Noor Yemen and two in Djibouti.”
In Djibouti, the city, running along 120km of coastline, will have two districts and Bin Laden is pushing for international banks to populate a financial zone. “Djibouti could become the financial hub of Africa,” he says.
Unemployment rates in Djibouti are 59 per cent in urban areas and 83 per cent in rural communities. It has little industrial or natural resources. The majority of its gross domestic product comes from providing port services for land-locked Ethiopia. Its port is operated by Dubai’s DP World.
“The unemployment rate in the Arab world is among the highest in the world, and levels of poverty are high too,” says Bin Laden. “The disparity between the very wealthy and the poverty stricken is growing. The vision for these cities is to reduce this gap. We think these cities will initially create 1 million jobs, with 2 million upon completion.”