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Dubai realty is getting a brand new developer — but one that has been associated with the sector indirectly for 40 years. The Indian construction giant Shapoorji Pallonji intends to have a development portfolio of 5 million square feet over the next five years in Dubai.
It has chosen the Downtown for its first project, while some of its succeeding ones will be done through joint ventures. But it's the fact that the firm has been a contractor for all this time without moving into real estate development that is most interesting.
In fact, this represents the first overseas foray donning the developer's garb. A tentative decision was reached in 2013 but it's only now the push has assumed a concrete form.
''It's not that we didn't consider such a plan — but land prices at the time were too high to make it worthwhile,'' Jacob Varghese, Director — Development at SP International Property Developers, the real estate arm, said. ''Now, land values have turned more realistic, and [in] hindsight it was better to wait.''
In India, the 150-year old company has been closely linked to high-profile real estate asset creation including business parks, particularly in Mumbai. Here, the construction side of the business is working on nine Rove Hotels owned by Emaar Hospitality Group.
''Our construction side will assume all of the developmental work the property side takes on,'' said Varghese. ''That's part of the game plan and will work well on managing costs.''
Until the 2014 correction set in, local contractors had assumed a more direct role in realty development through joint ventures and the like. This way, it helped the developer share the tab for development related costs while for a contractor it afforded a chance to get into a relatively higher margin business.
Meanwhile, the local construction sector has seen a new joint venture coming in. The Italian firms Cimolai and Rimond have set up their Middle East base in Masdar City.
Rimond, which previously operated an office independently in the UAE, was the construction contractor for the showpiece Foster+Partners designed, the UAE Pavilion for Expo Milano 2015. Cimolai, a structural steel maker and contractor was earlier involved in the delivery of Doha's landmark Aspire Tower and the maintenance hangar at Hamad International Airport.
Get a glimpse of Dubai South - A city for all
Source: Manoj Nair, Associate Editor, gulfnews.com