Local developer Nakheel will restart work on its Dubai Waterfront project as part of its plans to start work on AED7bn ($1.9bn) of new schemes in 2015. The developer is already one of Dubai’s busiest, having awarded AED5.3bn of new contracts in 2014.

The plans involve building 80 towers with 4,000 residential units close to the Jebel Ali port and free zone. The units will become part of Nakheel’s leasing portfolio and will be aimed at the middle-income market.

“We have 4,000 units next to Jebel Ali port; they will be for leasing,”  said Nakheel chairman Ali Rashid Lootah, speaking on 21 December.

The Waterfront was one of the largest projects planned in Dubai before the emirate’s property market crashed in late 2008. Since then, the scheme has stalled and investors that had bought land at the development signed extended payment plans in 2011 that called for them to start developing by 2015.

Catalyst for work

The new towers planned by Nakheel should act as a catalyst for other developers that are planning projects at the Waterfront. To assist with these schemes, Nakheel plans for construction work to start on the infrastructure in early 2015.

For Nakheel, the Waterfront towers will help it meet its target of generating AED7.5bn of recurring assets every year in three years’ time. “We want to raise our recurring income to AED7.5bn,” said Lootah.

New residential towers on Nakheel’s Deira Islands development will also help drive recurring revenues. The developer plans to build four clusters of four towers next to the proposed Deira Islands Mall. Like the Waterfront project, the towers will be for leasing and will sit on a common podium, with facilities such as gyms and swimming pools.  Some 30 per cent of the units will have one bedroom, 50 per cent will have two bedrooms and 20 per cent will have three bedrooms.

“If you look at the leasing rate in Deira, we expect a good return,” says Lootah. In the long term, Deira Islands will be part of Deira. The demand is very strong when compared with other parts of Dubai because the land is limited.”

Deira Islands Mall

There will also be two hotel and two serviced apartment buildings that will be connected to the Deira Islands Mall project. Nakheel plans to tender the construction of the AED1.7bn shopping centre in January. It will have a built-up area of about 480,000 square metres, with about 280,000 sq m of leasable space. It will also have 9,000 parking spaces. The hotel and serviced apartment buildings will be built as separate contracts that will be tendered later.

Deira Islands Mall together with other retail projects across Dubai will give Nakheel more than 1 million sq m of leasable retail space in three years’ time.

Nakheel will also sell freehold plots near the mall that will be developed by third-party developers. Sales are expected to be launched by the end of 2015. “We are not in a hurry to sell the freehold,” says Lootah. “If we wait, the value of the land will go up.”

Nakheel is tendering infrastructure work for Deira Islands. Lebanon’s Dar al-Handasah is the consultant.

The main infrastructure for the islands will run along a central boulevard that will act as a corridor for future lines of the Dubai Metro. Before 2008, a metro line serving what was then known as Palm Deira, which would connect to the existing Red and Green lines, was planned.

Ibn Battuta

The third new project that Nakheel is planning is another expansion to Ibn Battuta Mall. That involves expanding the mall out to the road that runs between the development and Sheikh Zayed Road. The estimated AED500m expansion will take the total leasable area of the mall to more than 200,000 sq m. The construction contract will be tendered in the first quarter of 2015.

In May 2014, Nakheel awarded a AED160m ($43m) contract to the local United Engineering Construction (Unec) to build its new hotel at Ibn Battuta Mall. The developer also signed a management agreement with UK-based Premier Inn to run the hotel, which will be directly linked to the Dubai Metro and Ibn Battuta Mall.

Premier Inn at Ibn Battuta, scheduled to open in 2016, will have a restaurant, a swimming pool and a gym.

These three new projects are in addition to a range of contracts that Nakheel has tendered during the fourth quarter of 2014. They include the Palm Gateway, the West Beach Club, the Palm Tower and various packages on the Deira Islands development. In addition to the deals that have already been tendered, Nakheel plans to tender other new projects soon. “Nad al-Sheba will be out [to tender] very soon,” said Lootah, speaking to MEED on 16 December. “It is 1,500 villas, and it will be [split into] about four packages.”

The Nad al-Sheba project was launched in July. It will comprise villas that Nakheel will own and lease as part of the developer’s strategy to treble its revenues from its leasing, hospitality and retail properties.

Strong finances

Lootah says the company is financially strong enough to develop all the new projects without securing new funding. “At the moment, we have enough finance to cope with our expansions,” he says.

In the past, Nakheel has been linked with an initial public offering (IPO). Lootah says this will not happen until the company has a much larger portfolio of assets generating recurring revenues.

The drive to build assets that Nakheel will retain ownership of comes after a three-year period of strong sales that allowed the developer to clear all its bank debts this year ahead of schedule. As 2015 approaches, the market has softened and Nakheel is not planning any major sales launches until market conditions improve and the new supply that is being delivered is fully absorbed.

“There is a slowdown, so we do not want to oversupply the market, we are not dropping our prices, we do not want to rush. We have to see how the market is moving,” says Lootah. “The villa market, there is supply in the market and we don’t want to depress that, we have to think about the bigger interests of the economy. “

Once the market does start to improve, Nakheel will be quick to respond. “We have some villa plots available in the Al-Furjan area and others, but we have to wait and see how the market is,” says Lootah. “If there is a sign of pick-up in that sector then we will move; the designs are ready, it will not take time to launch a new project.”