DWC plans arm to manage real estate portfolio next year

Dubai World Central (DWC) plans to set up a subsidiary to manage its real estate portfolio in the first quarter of 2009, a top company official has revealed.

Real estate sales at the giant aviation development being built around Al Maktoum International Airport in Jebel Ali are expected to generate revenues of Dh330 billion. The total cost of developing DWC has been estimated at Dh120bn.

"When DWC started operations the Dubai Government supported us," said Khalid Harib bin Harib, Chief Executive, Real Estate.

"But hereafter it will be the responsibility of DWC to generate its own funds and we are open to raising more capital," he said.

DWC's real estate elements include Commercial City, Dubai Residential City and Golf City. A quarter of the real estate component will be freehold and 10 per cent will be in a free zone.

"Sales from the Residential City will generate Dh30bn, Commercial City will generate Dh200bn and Golf City will generate Dh100bn," said Harib.

"We calculated these estimates by doing a land evaluation and based our estimates on real estate market values in Dubai."

DWC has sold the first and second phases of the five-stage Residential City, which will be home to 250,000 people. The first phase, comprising 225 plots of land, was sold in March 2007 for Dh2bn at an average of Dh110 to Dh150 per sq ft. Construction on these plots will begin next month.

"We started with a low price for the first phase as we wanted to encourage people to come and buy the land. From the third phase onwards we expect a year-on-year appreciation of up to 50 per cent on the rest of the phases." The second phase, comprising 283 plots, was sold in March this year for about Dh6bn.

Maisoon Thani, general manager, Real Estate, for Residential City, said: "These plots were sold for Dh300 a sq ft – representing a 100 per cent increase in the price of land at DWC over the last one year. Twenty-five per cent of the second phase will be retained by DWC and we will develop the land."

DWC is taking measures to limit speculative investment. Harib said: "We do not allow Residential City investors to resell until construction begins and they have paid the full value for the land."

Thani added: "From an infrastructure perspective there are construction roads ready in the first two phases of Residential City. There will be three electricity substations in the first two phases and these are under construction."

Commercial City, where 150,000 people will live and work, is currently at the design stage. Golf City, which will be home to 150,000 people, will be formally launched at Cityscape Dubai in October.

It will have 18-hole and nine-hole golf courses.

Harib said: "As regards the free zone area within DWC, we will just provide facilities for overseas companies to come and conduct business in Dubai.

"It will not be the same as other free zones in Dubai. It will focus on logistics.

"The first phase of the free zone facilities is fully leased at between Dh35 to Dh45 per square foot depending on the location."

There will be staff accommodation for 94,000 at DWC. Obaid Rashid bin Dafoos Al Muhairi, Real Estate Manager for the staff village, said: "Construction has begun and is due to be completed within 24 months. DWC plans to start signing contracts with companies for their staff accommodation by the first quarter of 2010. The idea is to sign the contracts after the homes become ready for people to move in."

Harib said DWC planned to develop a concept and design that would be replicated in other parts of the world. "We have already received five requests from different countries to come and develop airport cities."