The Al Hamra Village, Ras Al Khaimah ... going ahead as planned.
Down but not out
The Northern Emirates have been focusing on instilling confidence in their construction and real estate sectors, despite the setbacks they have suffered on account of the global economic crisis, says MRIDULA BHATTACHARYA.
01 November 2010
HIT by the financial downturn and the property market crash in Dubai, the construction sector in the Northern Emirates has remained subdued over the past year.
Before the slowdown, the Northern Emirates – comprising Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah – were emerging as a lucrative destination for investments mainly in the residential sector – the key driver having been the high rentals in Dubai that forced people to shift base to these emirates. However, following the downturn, there was a reversal with a large number of people moving back to Dubai to take advantage of lower rents and increased supply of units.
As one would expect in these difficult times, projects that were initiated prior to the downturn are progressing but at a slower pace.
Ras Al Khaimah is home to the majority of the ongoing projects, with its construction sector remaining relatively stable. Some mixed-use projects were scaled down or placed under review but other projects such as the Bab Al Bahr at the $1.8-billion Al Marjan Island, the emirate’s first man-made island, are going ahead as planned (see separate report).
Apart from Al Marjan Island, some of the major projects currently under way in the emirate are the $1.9-billion Al Hamra Village, and the $1.1-billion Gateway City and $2.7-billion Mina Al Arab.
The emirate is also focusing on projects aimed at boosting the tourism sector. Eager to capitalise on its tourism potential and develop its own niche as a travel destination in the UAE, Ras Al Khaimah is targeting 2.5 million tourists by 2012 and will be adding more rooms over the coming years. Spearheading this drive is the Ras Al Khaimah Investment Authority (Rakia), the government body established in 2005 to oversee the development of the emirate, which is believed to have a project portfolio worth Dh12 billion ($3.27 billion).
One such tourism and leisure project is the 125-acre Wow RAK theme park and resort destination, which recently marked the completion of its first phase with the opening of the Ice Land Water Park. The project is managed by Polo RAK Amusement, a joint venture between India’s Polo Amusement Group and RAK Properties and Rakia (see separate report).
Also launched earlier this year in Ras Al Khaimah was the Banyan Tree Al Wadi. Owned by Rakeen Development and managed by Singapore-based Banyan Tree Holdings, the luxury desert spa resort offers city dwellers a unique retreat within its own nature reserve, outdoor adventures, beach access and an 18-hole championship golf course.
The emirate also witnessed the opening of its biggest shopping mall, located in Al Hamra Village. Spread over 300,000 sq ft, the Dh265-million ($72.3 million) Al Hamra mall houses more than 200 retail outlets.
Al Hamra Village is a fully-integrated residential lagoon featuring 1,200 freehold villas, townhouses and 2,300 apartments surrounding a five-star hotel and an 18-hole, par-72 championship golf course. Apart from the shopping mall, it also features a 200-berth marina, and Al Hamra Palace – the third seven-star hotel to be built in the UAE – comprising 375 fully furnished hotel rooms and 230 hotel apartments along with a full range of luxurious amenities such as a 1-km private beach and world-class dining options.
The developer of the project, Al Hamra Real Estate Development, recently announced that Phase Three of the development comprising Royal Breeze, a beachside and golf course freehold property development, has entered the final stages of construction, and it will start handing over the units in March 2011. The entire project is scheduled for completion by 2012-end.
Meanwhile, the mixed-use Mina Al Arab development being constructed along the coast of Ras Al Khaimah is pressing ahead particularly on its residential areas, Precinct Four and Precinct Five. The developer RAK Properties has started handing over villas to owners at Precinct Four – a key component of the mega project – which contains 93 villas offering a built-up area of 198,000 sq m. RAK Properties expects to start work on the remaining precincts and hotels by end of this year for completion around 2014.
The project will incorporate six districts including 3,500 residential units and 388 villas, which will cover an area of 2.8 million sq m and will be spread along 13 km of beachfront and a cluster of islands. The resort includes a harbour, restaurants, cafes and water taxi, hotel, an Arabian adventures theme park as well as ecological reserves and wetlands.
Another RAK Properties development Julphar Towers is scheduled for completion by the year-end. Said to be Ras Al Khaimah’s tallest tower, the 45-storey twin tower consists of residential units in one block and commercial units in the other, both set on a three-level podium, which will incorporate a shopping mall and other leisure facilities.
Sharjah
Meanwhile, Sharjah, the largest of the Northern Emirates, continues to lay emphasis on industrial development. The emirate already accounts for about 48 per cent of the UAE’s industrial GDP, according to an Oxford Business Group report. Its non-hydrocarbons exports are pushing towards the $1-billion mark, accounting for just under 18 per cent of the emirate’s total GDP, the report says.
This growth has been achieved through 11 industrial zones spread over 26 sq km. The industrial and logistics sector has typically been the least affected of the property sectors. Sharjah’s industrial sector remains robust with the outlook being stable over the coming months, the report says. There are more than 1,600 industrial enterprises operating in the emirate. The report adds that the emergency of Sharjah as a regional industrial centre is having an effect on supporting sectors. Earlier this year, DHL announced the opening of a new bonded facility in the Hamriyah Free Zone (HFZ) in response to increasing demand from customers for a logistics solution that will reduce costs and shipment times to and from Sharjah.
The HFZ has benefited from Sharjah’s rapid industrialisation. Five major expansion projects worth a total of Dh800 million ($217.98 million) have been completed while another Dh200 million ($54.5 million) worth of developments are in progress. The completed projects include the expansion and development of the Hamriyah inner harbour, two housing developments to accommodate 9,072 labourers, and two road projects that have added a combined 50 km of new and reasphalted roads.
The Dh355-million ($96.7 million) inner harbour development is the largest single project undertaken in the emirate. It was designed and overseen by Halcrow, and the work was carried out by Six Construct. With major dredging of the main harbour completed, the Hamriyah port is now able to cater for any vessel with a draft of up to 16 m. Additional spending on 48 new warehouses has paid off too with almost all being occupied. Work on the Dh120-million ($32.7 million) Free Zone interchange has also been completed.
Though Sharjah has consolidated its position as the industrial heartland of the UAE, there are still a few issues that could slow its growth momentum, one being the power shortages that have occurred over the past couple of years. Though the state utility company, Sharjah Electricity and Water Authority, has been stepping up investments in generation capacity, the demand for power is continuing to outstrip supply, in part a result of the growing requirements of the industrial sector.
In line with its ambitions in the industrial and logistics sector, Sharjah is expanding its international airport with a Dh500-million ($136.32 million) Cat III runway under construction. To be completed within two years, the new runway will be as long as the existing one at 4,000 m and will be 250 m away from it. The development will include another tier with holding lounges and an air bridge.
Between January and August this year, Sharjah International Airport handled 104.2 million passengers, a 10.5 per cent increase over the same time last year. Aircraft movements surged by nine per cent to 44,000 and cargo rose 30 per cent to 300,000 tonnes.
Among other developments, in line with regional trends towards redevelopment and regeneration, Sharjah Investment and Development Authority (Shurooq) has recently launched one of the Gulf’s largest heritage projects called the ‘Heart of Sharjah.’ To be completed over the next two years, work on the first phase will include rebuilding the ruling family’s houses near the fort and redeveloping the Al Midfaa family house as a hotel. The work also includes reconnecting Saqr Suq with Al Arsa Suq by rebuilding Al Shanasiah Suq which disappeared as a result of building extensions; improving air-conditioning and lighting works in these suqs; and restoring and, where necessary, reconstructing the gates and coverings of these suqs.
The project, due for completion next year, aims to revive the historic and heritage areas and transform Sharjah into a tourist and trade destination with modern contemporary artistic touches.
Meanwhile, Shurooq has announced the completion of the link between Al Majaz Waterfront and Khalid Lagoon, as part of Al Majaz park renovation and expansion, in a bid to transform the area into one of the major tourism destinations in the region. It is also on track to finalise work on the other facilities of the project, which is scheduled for completion next month, to coincide with the launch of the 2010 Sharjah Water Festival and the UIM Formula One Powerboat World Championship – Sharjah Grand Prix.
The first phase of the project comprises construction of a musical fountain on the Khalid Lagoon and new buildings featuring six new restaurants and cafes. Sharjah Contract Company is doing the roadworks for the project, whilst Sharjah Municipality is handling the soft landscaping. The second phase will involve the construction of six additional restaurants and cafés, a special play area for children, and a wide range of new landscapes.
Meanwhile, Sharjah Planning and Survey Department has confirmed that it is going ahead with Al Nujoom Island project. The first 1,000 villas will be completed in the second half of next year. The project features Andalusian-style architecture and comprises residential, commercial, retail and hospitality facilities.
Ajman
Sharjah’s neighbouring emirate Ajman is going ahead with most of the projects launched during the property boom. According to a recent report, Ajman Real Estate Regulatory Agency (Arra) has confirmed that 98 out of the 160 registered projects are under construction in the emirate.
“We haven’t cancelled any project without getting the developers and investors to try and reach an amicable solution,” says Arra director-general Omar Al Barguthi. “Developers are being given the option to move to master developments that are currently under construction, while investors are given the choice of moving to ongoing projects from the stalled ones.”
Over the past year, developers have exerted efforts to assure investors of the progress being made on their developments. UAE developer Sweet Homes Holdings has indicated that the first phase of its Dh2.2-billion ($599.45 million) Ajman Uptown community development is on track and will be delivered by August next year. It is also developing a Dh149 million ($40.6 million) shopping mall which will have a total built-up area of 78,387.22 sq m and be completed by the end of 2012.
Two important sub-contracts for the development’s 1,504 villas were recently awarded by Sweet Homes General Contracting (SHGC), the in-house contracting arm of Sweet Homes Group and the main contractor for the Ajman Uptown project. This included the MEP (mechanical, electrical and plumbing), air-conditioning and fire-fighting subcontract, to Al Ibhar Electrical Contracting and Elegant Electromechanical Contracting; and the civil sub-contract to Liwa Building Contracting.
According to the developer the sub-structure of all villas was completed earlier this year and superstructure works are progressing rapidly across all two, three and four-bedroom townhouses and exclusively designed five-bedroom VIP villas within the project.
Another major developer Aqaar Properties has announced that the first phase of Ajman One project is on schedule for completion in the second half of 2011. Phase One of the project consists of a mix of 32 and 26-storey towers offering 3,500 residential units in total (see separate report).
Umm Al Quwain
In Umm Al Quwain, some of the projects under construction include the Dh8-billion ($2.18 billion) White Bay, a resort-style community project covering an area of over 1.77 million sq m along the natural shoreline, built around two man-made islands.
The project features 8,000 residential units as waterfront villas, park-view villas, terraced condominiums, mid-rise apartments and townhouses not exceeding 15 floors. The development also incorporates a marina, a town centre and a harbour with hotels and shopping strip offering cafes, restaurants, fashion and entertainment. The project is being developed by Emirates Sunland Group.
The developers of the Dh30-billion ($8.3 billion) Al Salam City have been reticent about the progress on the mixed-use development. Expected to cover an area of 20.5 million sq m, the project will consist of residential districts, high-rise towers, parks, playgrounds, and entertainment centres. The downtown area of the project will contain a shopping mall, a 50-storey hotel tower, 20 residential and commercial towers each ranging between 20 to 25 floors, 1,000 residential villas/townhouses, and 200 residential buildings of five to 10 floors. The project, a joint venture between Tameer Holding and Al Rajhi Banking and Investment Corp, was earmarked for completion in 2020.
Emaar Properties is developing Umm Al Quwain Marina, a master-planned waterfront project at the cost of Dh12 billion ($3.27 billion). As a freehold development, the project covers an area over 6 million sq m and is being built on the shores of the Khor Al Beidah along Al Ittihad Road.
The project, to be completed in 2015, will have a 23-km waterfront and comprise 6,000 villas and 2,000 townhouses, some of which will be located on islands. The development will also include 1,200 resort and hotel rooms, parks and recreational areas, retail facilities, schools and community centres.
Fujairah
In Fujairah, the UAE’s fifth largest emirate, one of the major contract awards this year was made by Escan Investment and Real Estate Development for Al Fanar Towers. The Dh1.2-billion ($326.97 million) contract awarded to Al Qabdha Building Construction for the construction of a residential tower, a commercial tower and a shopping mall, with a total built-up area of 241,500 sq m. Scheduled for completion in 2013, it will be the first set of high-rises in Fujairah.
Most of the activity in Fujairah has been in the oil sector with key contracts awarded to boost storage capacities. Vopak Horizon Fujairah, the leading storage and handling service provider for petroleum products in Fujairah, is expanding its terminal by 606,000 cu m to meet market demand. The total storage capacity will be more than 2.1 million cu m when the expansion is completed in the first quarter of 2012.
Meanwhile, Topaz Engineering, a division of Topaz Energy and Marine has recently been awarded a $100-million engineering, procurement and construction (EPC) contract for Phase Four of the oil storage terminal for GPSChemoil – a partnership between Gulf Petrol Supplies (GPS) and Chemoil – in Fujairah. The company has won one of the major tank terminal repeat contracts in Fujairah through its subsidiary, Nico International Hydrospace.
Earlier this year, the company was awarded a $45-million Gulf Petrochem EPC contract covering Phase One of a major petroleum storage terminal in close proximity to the Port of Fujairah.
