Property developers are stepping up their push to win work overseas to offset declining demand for new homes across the Emirates. But the era of giant building projects may be drawing to a close as the developers that made their names building multibillion-dollar mini-cities move to more targeted single-building projects as risk appetite wanes.
India is emerging as the latest hot spot for developers seeking to expand their global presence. Residential property prices in the country are starting to creep up again after falling by about 20 per cent at the start of last year. As confidence returns to the market, sales are increasing, particularly in populous cities such as Mumbai, according to a recent report by Jones Lang LaSalle, a property consultant. India's US$1.2 trillion (Dh4.40tn) economy expanded 8.6 per cent in the first three months of the year compared with a year earlier.
Only China and Brazil outpaced that growth among the world's largest economies. Such economic expansion is one reason property companies are looking to India for future growth. ETA Star Property, one of Dubai's largest developers, also has a significant land bank in India that is now ripe for development. "There has hardly been a recession in India," said Abid Junaid, the executive director at ETA Star. "We have several projects in India and there are plans for more - we have land in Bangalore."
Emaar Properties, the builder of the Burj Khalifa, said in April the south Asia region would be a prime target for the developer as projects drew to a close in Dubai. The company will raise cash for its projects in India through a planned Dh2.7bn initial public offering of its local subsidiary, Emaar MGF. Emaar's land bank in the country comprises 4,589 hectares across 26 cities. "There has been an increased appetite for foreign projects among firms across all of the GCC, not just the UAE, as their homes markets have slowed," said Craig Plumb, the head of research for the MENA region at Jones Lang LaSalle in Dubai. "And particularly in markets that offer something that's different to what's going on in the Gulf. It's places like India, China and Africa. But also in terms of Europe, you have Qatari investors and developers buying up projects in the UK. Some are just putting money into projects, while others are actually doing the development."
Emaar is also rapidly progressing in Egypt, Jordan and Saudi Arabia, where construction contracts were issued during the first quarter of this year. The company is due to complete residential property in Egypt and a commercial project in Syria later this year. Meanwhile, Abu Dhabi's Al Maabar, which started in 2006 with a remit aimed purely at foreign development, is making steady progress in Morocco and Libya.
The developer is transforming a piece of land between the historic centres of Rabat and Sale in Morocco into an urban development, called Bab Al Bahr, that will cost about Dh3.12bn. The company also plans to award the first construction contract on its Dh2.75bn Al Waha project in Tripoli, Libya, in September. Al Futtaim Carillion, a Dubai company, is building Cairo Festival City in Egypt, a sprawling development modelled on its Dubai Festival City development. Still, UAE companies planning new projects overseas are likely to scale back the size of developments envisaged in the past, said Mr Plumb.
"What we'll find going forward is that the projects will be smaller and more discrete, just individual buildings rather than whole new cities," he said. However, with any foreign investment move come challenges. For example, high construction costs and excessive red tape are among the hurdles facing developers in Libya, a key market for new projects. "Construction costs are a nightmare, which is making it more difficult for us to sell," said Emhemmed Ghula, a country director for Libya at Al Maabar.
"The contractors and consultants are available, many come from the UAE and other places but it's a matter of building something feasibly - that is the challenge." agiuffrida@thenational.ae
