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Dubai: Dubai Investments is fully open to any move to classify its properties and land holdings as ‘freehold’ from their current status as ‘long-term leasehold’, according to a top official. But any such transitioning will have to done at the Dubai Government level and not at the corporate, the official added.
“We have had some of our clients suggest they would like to see a switch to freehold — from Dubai Investments’ perspective, we are comfortable with either status,” said Khalid Bin Kalban, Managing Director and CEO at the holding company, whose interests also span light manufacturing activities apart from real estate development.
“As such, the demand for a freehold conversion is voiced only by some clients … and they have not made any formal submissions. We have spend upwards of Dh4 billion on our industrial park (occupying 2,300 hectares) and related infrastructure, and currently more than 95 per cent of the available land is fully leased.
“The remaining area could be utilised for further residential and warehousing assets.
“If the (Government) issues a decree denoting the land and properties as freehold, it gives us another advantage. The land can be classified as an asset in our books after such a switch. Right now, these are booked as projects in our financials.
“It’s for the Government to decide on changes to the status quo and the timing.”
According to the CEO, it also doesn’t make much of a difference to the company in its dealings with financial institutions. “They are aware of our favourable cash flow position and operational abilities. Adding the land we hold as an asset in our books will not radically alter the status vis-a-vis the banks.
“Even through the turmoil in the financial markets, the Dubai Investments sukuk continues to hold up tremendously well compared with other such instruments.”
The Dubai Investments Park has been a major beneficiary from the upturn in industrial realty investments over the last three years. A recent phase that was released also managed to pick up sizeable interest from local and Gulf based buyers, both for the warehousing facilities and as locations for their staff quarters.
Much the same level of investor build up is being recorded at Dubai Industrial City and the city’s various free zones. In fact, any ample space at a free zone is not left without a lease for long.
On whether there is scope for adding more adjacent land at the existing industrial park, Bin Kalban replied in the negative. “Most of the remaining area is with other owners … we have reached optimum land usage with what’s available to us.
“Any further expansion of the industrial park model has to be done outside.”
Dubai Investments also has a joint venture with Union Properties on the Green Community development, one of the prime residential communities in the city and where units are on long-term leasehold. This is as per a decree of 2006-07 and extends to 99 years from that year. Last year, it launched the Phase 3 sales there.
“For property owners at the community, they are quite comfortable with the status of their asset ownership,” said a senior UP spokesperson. “But at the other UP developments such as Motor City, the status has been freehold right from the launch.”
Dubai Investments makes progress with Saudi plans
The first phase of the industrial park in Riyadh will cover 5 million square metres and represents Dubai Investments first major push to recreate the model outside of Dubai. A second phase will take the eventual land availability in the kingdom to 11 million square metres plus. Dubai Investments is part of a joint venture.
Source: Manoj Nair, Associate Editor, gulfnews.com