The private developer behind some of Dubai’s biggest private gardens has said it will finally press ahead with plans to build an organic-themed housing, shopping, dining and hospitality project set to be one-and-a-half times bigger than Dubai Marina.
The Zaal family, owners of the Farm organic restaurant and the Greenworks nursery, said after four years of waiting, it was ready to relaunch plans for 9 million square feet of homes, gardens, shops and offices. The project will also feature the city’s first Thai-style floating market at its Al Barari development in Dubailand.
The family, which is putting the final touches to the last of its 217 super luxury villas surrounded by lush gardens and greenery at Al Barari’s 6 million sq ft first phase said yesterday it had started to sell off-plan apartments for its adjacent second phase.
Al Barari originally planned to start work on phase two, which includes 1,250 apartments, a resort hotel and 13,000 square metres of organic themed shops and restaurants including art galleries, an organic supermarket and a floating market, back in 2010.
However, as the global financial crisis hit, the family took the decision to delay and spent its time completing work on its parkland and signature palatial villas which sold for Dh15 million to Dh75m and are currently 95 per cent occupied.
The Al Barari chief executive Mohammed Zaal told The National it had started selling a first block of 157 off-plan luxury apartments with prices starting at Dh3 million.
“We were due to start six months or a year into the recession which wasn’t suitable,” Mr Zaal said. “I think Dubai is back. There’s high demand for property in Dubai and this is just the right time commercially to do it.
“We’re trying to create a destination so you come and spend a whole day out here shopping, eating, coming for plays or the cultural side of it,” he said. “We want to attract butchers, bakers, delicatessens. Things like the Farm. Things which represent Al Barari and not your standard shopping mall experience which is what we hate. Eighty per cent of the space will be gardens which will be open to the public.”
Al Barari has emerged as one of the few success stories of Dubailand, a 278 square kilometre entertainment district located on the outskirts of Dubai. The family, which operates a number of other interests including plans for a UAE-based organic farm, said it had no debt and would fund the entire project through off-plan sales and its own balance sheet.
Mr Zaal, who lives in the existing Al Barari gated community with all of his extensive family, said that standard one-bedroom apartments would measure 1,980 sq ft while three-bedroom flats would go up to 3,850 sq ft. Other apartments will be even larger.
“These are not blocks of flats,” Mr Zaal said. “We don’t know what to call them. They are the size of villas but not separate.
“If you’re looking at scale the land size is one-and-a-half times bigger than Dubai Marina. It’s bigger than the trunk and most of the fronds of the Palm,” Mr Zaal added. “The density is very very low.”
Al Barari’s decision comes amid a flurry of announcements that major schemes planned in the UAE before the property crash are finally going ahead.
“The positive sentiment prevailing in Dubai, coupled with economic growth and the anticipated increase in demand have led a number of developers to announce pre-sales within large scale developments,” said Craig Plumb, the head of research at Jones Lang Lasalle’s Dubai office. “Projects in Dubailand account for 33 per cent of announced future supply.”
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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