DUBAI, 16 April 2006 — A government-owned Dubai developer is planning a commercial and residential real estate project that will cost almost $18 billion and offer foreign investors 100 percent freehold ownership.
Dubai kicked off a Gulf Arab real estate boom in 2002 by opening its property market to foreign investment and is pouring ten of billions of dollars into construction projects that have become a key driver of economic growth.
The latest mega-project known as The Lagoons is huge even by Dubai’s standards. Spread over 70 million square feet (6.5 million sq metres), it will consist of seven islands, with residential units, shopping centres, office space and marinas.
The project will cost 65 billion dirhams ($17.7 billion), said a statement from the developer, Sama Dubai, a subsidiary of government-owned Dubai Holding. The statement, sent to Reuters on Saturday, did not say when construction would begin.
Sama will develop half of the plots in The Lagoons while the rest will be sold to other investors.
“It will offer freehold property with 100 per cent ownership to all nationalities,” the statement said.
Although foreigners have been able to invest in Dubai real estate, the legal status of their holdings has long been ambiguous. Dubai said last month a new law would offer expatriates limited freehold rights and formal 99-year leases for the first time.
The environmental impact of The Lagoons will be studied thoroughly and Sama is consulting environmental groups such the World Wildlife Fund (WWF), the statement said.
Dubai’s other mega-projects, including three palm-shaped man-made islands and an archipelago representing the map of the world, have raised fears about the environment, although the developers have said there is little cause for concern.
Dubai’s giant property developers are facing other pressures.
Swathes of the emirate, home to an estimated 17 percent of the world’s cranes, resemble a building site and construction costs have surged 30 percent in the past year, according to property advisory firm CB Richard Ellis.
Developers have complained about shortages of everything from sand and rocks to cement.
And demand for luxury residential properties is expected to slow sharply as a flood of new units becomes available.
However, demand for commercial real estate and middle income housing is strong and property in Dubai, where rents soared an estimated 40 percent last year, is still drawing in billions in investment.
According to estimates made last month, Dubai is expected to pour more than 300 billion dirhams into construction projects over the next decade.