Momentum gathers on Dubai mega-projects

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• Residential sales hit record highs in 2022 and prices keep going up 
• Major announcements expected on Dubai Pearl and Palm Jebel Ali
• Foreign investors jostling to get involved in the plans  

Rising property prices and demand from wealthy buyers is encouraging Dubai to accelerate plans for several high profile projects that could represent the biggest real estate investment opportunities in the emirate in years. 

Among the key opportunities are fresh plans for a 300-acre plot once intended to house a 22 million square foot mega-project known as the Dubai Pearl, Nakheel’s relaunched Palm Jebel Ali off the coast of Dubai, and the same developer’s Dubai Islands – previously known as Deira Islands and already under construction. 

These projects are likely to move forward and AGBI understands from industry insiders that plans are likely to accelerate in the coming weeks and months, with major announcements pending.

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The owners of the Dubai Pearl site, which overlooks the Palm Jumeirah, put out a tender late last year and are currently evaluating design proposals from global firms eager to develop the land. A winner is due to be selected in the coming months, sources said.

Meanwhile, state-owned Nakheel aims to relaunch the Palm Jebel Ali, one of a series of planned manmade, palm-shaped islands off the Dubai coast, of which the Palm Jumeirah is the only one to have been completed. The Palm Jebel Ali launched in 2002 but has been on hold since 2009. 

This week, it was reported Nakheel has appointed contractors to complete reclamation works on the island, which is about three times larger than the Palm Jumeirah.

AGBI reported in December that real estate agents are lining up to sell off-plan property there. Nakheel declined to comment on the updated plans.

Work is already under way at the state-owned developer’s 17 sq km Dubai Islands project, the masterplan for which was unveiled in August.

The original Deira Islands development was launched in 2008 as the largest of the palm-shaped developments and set to be about eight times bigger than the Palm Jumeirah.

Under the new plans Dubai Islands will comprise five islands and house more than 80 resorts and hotels and 20 kilometres of beaches, as well as parks, open spaces and golf courses. 

The emirate’s booming real estate market, with record sales and rising prices, are making these sorts of mega-projects viable again, experts explain.

The total volume of residential transactions in Dubai in December was up 63 percent year-on-year to 8,662, supported by a 92.5 percent rise in off-plan sales and a 35.4 percent increase in secondary sales (existing units), according to CBRE Middle East. 

The consultancy’s January market update, published this week, noted that Dubai registered a record total of 90,881 residential transactions in the full-year 2022, exceeding the historic record high of 81,182 in 2009.

The Palm Jumeirah registered the highest sales rate per square foot at AED3,921 ($1,067) and was the most expensive location for both apartment and villa sales, CBRE said. 

Overall average property prices in Dubai rose by 9.5 percent in the year to December to AED1,385 per square foot.

This is below the record highs of 2014 by 21.5 percent for apartments and 4.2 percent for villas, and Nicholas Maclean, CBRE Middle East’s managing director, said he thought the market had yet to peak.  

“Demand is continuing to outstrip supply,” he said in December. “Prices across all segments of the market are growing as a result and I think the market will keep heating up in terms of residential and commercial values and rents.”

One of the key factors driving demand and pushing up prices is a shortage of luxury homes and prime development plots catering to the rising number of wealthy buyers moving to Dubai.

The UAE was expected to attract the world’s largest net inflow of high net worth individuals (with assets over $1 million) in 2022, estimated at 4,000 people compared to around 1,000 per year pre-pandemic, according to researcher Henley & Partners. 

But most of the emirate’s ‘master communities’ – those already connected to infrastructure and amenities – are full, and prime beachfront plots are scarce.

Increasing the amount of developable beach front, and drawing up a comprehensive real estate strategy that strikes a balance between supply and demand and boosts investor confidence, are among the priorities set out in the second phase of the government’s Dubai 2040 Urban Master Plan, published last month. 

In the case of the Dubai Pearl, a viable proposal could enable the much-needed redevelopment of one of Dubai’s largest and most valuable sites, occupying a prominent position at the entrance to the Palm Jumeirah.

The emirate sees the current fiscal context – with the Gulf’s high oil price environment and resurgent post-pandemic economy – as a good time to resurrect former ambitions. 

“The Pearl site, which has seen multiple reincarnations, now finds itself located in the heart of New Dubai, on the doorstep to what is arguably the most famous island in the world – the Palm Jumeirah – and it also benefits from pre-existing transport infrastructure, making it a prime site in the city,” said Faisal Durrani, partner and head of Middle East research at property consultancy Knight Frank. 

“With most of Dubai’s most sought-after communities now almost fully built out, the emirate is running low on prime development sites. Any plans for a revival of the site will go a long way to alleviating the drought of development land.”

It would give renewed clarity to the site, which has remained dormant for over 10 years. The Pearl was intended as a huge, upmarket, mixed-use scheme – a “city within a city”, according to the original masterplan unveiled in 2002.

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Spanning 22 million sq ft, it was to comprise four 79-storey towers with 1,500 apartments, seven five-star hotels, 60 restaurants, offices, shops, 15,000 car parking spaces, and a 1,600-seat theatre. 

It was originally scheduled for completion in 2007 but work slowed in the wake of the 2008 global financial crisis. Construction work stopped entirely in 2012 when the Pearl was 12.75 percent complete, according to the government’s Dubai Land Department (DLD).

The project was officially “cancelled” by the DLD some time afterwards. Last year demolition of the site started in a bid to clear the land ahead of the new plans.

The DLD is understood to have put the site up for auction last summer. It attracted interest from some of the emirate’s biggest developers, with state-owned investment vehicle Dubai Holding submitting the winning bid, four sources told AGBI. 

Dubai Holding is now understood to be working with First Abu Dhabi Bank (FAB) on fresh plans, a different source said.

The parties put out a tender late last year inviting design proposals from architects and developers all over the world, and work is ongoing to value the land and check bids are viable.

FAB declined to comment and Dubai Holding said it was unable to provide comment or information at this stage. The DLD also said this week it had no new information it could give.

However, a source said “a lot of people are bidding” to win the contract to develop the prime site, but Dubai Holding “wants someone who has the funds to be able to deliver”.