Jubail Island developer plans bank financing for Dh5bn project

Developer plans to finance mega-development through a mix of bank lending and equity contribution

Mounir Haider, managing director of the Jubail Island project, says the development offers a different value proposition to investors.  Victor Besa / The National

Jubail Island Investment Company, the developer behind Abu Dhabi’s Jubail Island, plans to finance the Dh5 billion project through a mix of bank loans and equity contributions and aims to sell about 60 per cent of the land plot earmarked for private investors within the next 18 months, a senior company executive said.

The developer is currently in talks with a consortium of UAE banks to finance the project, Mounir Haider, managing director of the firm told The National at Cityscape Abu Dhabi. The amount being raised has yet to finalised, he said, declining to name the banks or when a funding deal could be reached.

“We as a developer are committed to finance the infrastructure cost and the town centre through a combination of private funds [owner’s equity] and bank financing," Mr Haider said. “A big percentage of that [funding] will come from the owner of the project.”

The size, business plan and nature of the development, opens up a “big opportunity” for the lenders to part finance the project.

Banks in the UAE, which had to book provisions for their exposure to property and project finance after the 2008 financial crisis, have been reluctant in lending to new property launches. The lenders are exercising extra caution, especially after the fall in real estate prices in the last two years on the back of a global economic slowdown, a fall in oil prices and as more supply hit the market.

Jubail Island is the latest mega project to be launched in Abu Dhabi’s real estate market dominated by players like Aldar Properties, which is developing several projects at Yas and Saadiyat Islands.

Mr Haider, however, argued that the value proposition of Jubail Island is different and competitive.

“We are offering to investors what has not been offered, especially, an offer that caters to Emiratis and expatriates both,” he said.  “It’s an offer for investors who want to have a good size house on a good size plot and at affordable prices, which we don’t believe the market caters for.”

A one-bedroom apartment on the island will cost around Dh990,000, while a three to four-bed villa in the development will range between Dh2.5 million to Dh3m.

“We are very competitive [in terms of developments] within 15-minutes radius of Abu Dhabi compared with any of the recently launched or built developments,” he said.

The company has already started selling the project and hopes to complete the sale of about 60 per cent of the plots reserved for investors within the next year and a half. The initial uptake is very encouraging, as the property market heads towards stabalisation, he noted.

The project, located between Saadiyat Island and Yas Island in Abu Dhabi, will be home to 5,000 to 6,000 residents within the next four years, who will live across six “villages”. The developer plans to build villas on 40 per cent of the plots, he added.