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Dubai: Emaar Properties, which has nearly exhausted its land bank of 92 million square feet in Dubai, yesterday announced a joint venture project with Bawadi to develop a Dh60 billion mixed-use project which will increase it by 76 per cent to 162 million square feet, the company said in a statement.
Bawadi is a tourism development company under Tatweer, part of Dubai Holding - the Dubai government's investment arm.
Emaar Properties, which is developing the world's tallest tower Burj Dubai, is 32.5 per cent owned by the government.
Equal equity
"The Dh60 billion project will be a signature development by the joint venture with equal equity participation by Bawadi and Emaar. Bawadi will contribute 70 million square feet of land valued at Dh3.85 billion in lieu of its ownership interest. Emaar will contribute Dh3.85 billion in cash to the joint venture over the construction period," the statement said.
This translates into Dh55 per square foot of land.
"This is a moderate price for undeveloped land," Raju Menon, a Dubai-based investment adviser, said.
"Emaar has the capability to turn it into a win-win situation for the joint venture. By the time they begin offering to the investors, I am sure, the price will further appreciate."
Bawadi will transfer corresponding land rights to the joint venture and Emaar will contribute its equivalent portion of cash to the joint venture, phase by phase.
"The joint venture is expected to generate earnings by 2009. The management expects that the compounded annual rate of returns on the project will exceed 15 per cent," the statement said.
The joint venture will be governed by a board that will have equal representation by both Emaar and Bawadi, with its chairman appointed by Emaar. The joint venture will be managed by Emaar through a management and technical services agreement.
Mohammad Al Abbar, chairman of Emaar Properties, said, "As the pioneer of master-planned communities in Dubai and with an accomplished track record in creating world-class developments, Emaar has established credentials in property development."
Theme park
The joint venture will add a 15 million square foot theme park. Reflecting the project's brand name, it will be at the heart of Bawadi, a part of Dubailand, and located close to Arabian Ranches.
"The partnership compliments their strengths and expertise and adds value to the overall growth," said Sudhir Kumar, partner and executive director for properties at Morison UAE Consulting.
The new development will have a total built-up area of 60 million square feet including multiple business hubs offering 2.7 million square feet of commercial space, 3.2 million square feet of retailing activity, six hotels offering 5,150 rooms and 1,200 serviced apartments.
The residential community will feature 18,000 residences.
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