Thursday, July 31, 2008

Dubai will soon be at the forefront of sustainability

Original Article

Chris O'Donnell expects Dubai's construction
activity to continue at a strong pace in
line with the projected growth in the
city's population.
Dubai: As Dubai-based real estate developer Nakheel's chief executive officer, Chris O'Donnell oversees all company operations and developments.

Nakheel has a landbank of 3.5 billion square feet and 17 projects. The company's newly launched development company Tahiya, a joint venture with Dubai Islamic Bank, will ensure development continues at full speed, O'Donnell told Gulf News recently.

The company also unveiled the Trump International Hotel and tower project on the Palm Jumeirah. O'Donnell expects Dubai's construction activity to continue at a strong pace in line with the projected growth in the city's population.

Before joining Nakheel in June 2006, O'Donnell worked for five years as managing director of Investa Property Group in Australia. He holds a Diploma in Business (Real Estate Management) and New Zealand Certificate in Building.

Gulf News: There have been many complaints, especially regarding International City. Why is the quality of building so different between the Palm Jumeirah and International City?

Chris O'Donnell: The positioning of the product is obviously at a different level from, say, the Palm. But when it comes to the quality of the finishes, the quality needs to be at a reasonable level.

Wouldn't it make more sense to have ensured the quality before handing over properties so nothing would need to be rectified?

In International City, we have delivered just under 300 buildings at one time, so with that amount of construction going on, there will always be some issues that you have with new buildings completed.

There has been lots of talk recently on the issue of residency visas. What is Nakheel's position?

As with all visas, they are issued by the government of Dubai. So if there are issues associated with any individual, which would stop them from gaining access to Dubai they will be picked up through the purchase of property.

We just sponsor the applicants, who are subject to the same security checks as all of us when we come to Dubai.

Do you think Dubai has developed too fast?

I think people who say we are developing too fast, do not quite understand the vision of the Ruler [His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai]. Shaikh Mohammad has a view that, if we can put it in place now, why wait? Over the last couple of years, fantastic work has been done in implementing that vision, the infrastructure and the metro rail system.

We are building the world's largest airport and we have already got an airport that's being upgraded to handle 70 million passengers. So once the infrastructure is in place, we have an obligation to build quickly to maximise that use. Dubai is going to have a population of about 4 million by 2020. So, Dubai is on the fast-track to cement its place in the Middle East as commercial hub and tourism hub.

Maybe it is too early to ask, but any further collaboration plans with Trump?

You have got to look at the exclusiveness of the project and therefore I think there is room for another one or two Trump towers in Dubai. But I think you have to protect the certain exclusive nature of what we have. But it is a possibility. If the relationship works together then yes, we'll definitely look at that.

Why did Nakheel recently launch a new development company, Tahiya, with Dubai Islamic Bank?

At Nakheel we have over 3.5 billion square feet of land to be developed. If we want to develop it in reasonable time frame, we are better to involve a whole range of sub-developers.

The development we are looking to do in Dubai over the next 20 years, there is a shortage of good quality sub-developers. Going into a joint venture with DIB, where we provide the development expertise and they provide the financial expertise, it creates a very strong partnership.

Ultimately, we see this company as being a strong, stand-alone sub-developer who potentially one day could be an IPO as a development company.

The first two projects will be residential and both in Dubai on Nakheel land in International City and Jumeirah Heights. Construction will start in the next six months.

How many projects are being developed on this 3.5 billion square feet?

We have 17 projects. The definition of our projects is quite different. I come from Australia where a project is one building, 20,000 square feet. But our 17 projects, Waterfront, Palm Jebel Ali, they are enormous. Palm Deira is 4,400 hectares and that is one project. It is nine times the size of Palm Jumeirah.

We are focusing on the islands closest to shore. The first one, semi-circular Deira island is 560 hectares.

We have already got bridges being built and we are building our first sales centre. We expect to be selling land and potentially apartments later this year.

Where is Nakheel developing internationally? What are the new hotspots?

We are looking at Eastern Europe and China and that part of Asia. It is a matter of doing research and ensuring there is GDP growth and that is the thing for us in Eastern Europe, is that a lot of those countries have access to oil and gas wealth.

And what that does in then drive the economies. I think with the issues of sub-prime, we are definitely taking a well-considered view of what we are investing in and the time frame. Today is definitely not the time to be rushing into investment.

How is Dubai doing in terms of sustainability?

What is interesting for us now in Dubai is that every building that is being built, has to have a LEED certification. If you think about that, in 20 years time, Dubai is going to be full of buildings at LEED gold certification.

There is no other city in the world that can achieve that. New York cannot achieve that because a lot of the existing buildings do not qualify to get gold rating. So I think the Palm is the start and in 20 years time, you will see a city that is at the forefront of sustainability.

Is construction in Dubai now at its peak?

I think what you are going to find is that the population by 2020 is going to be around 3.5 to 4 million. With that being the case we definitely need to provide accommodation.

There is a construction capacity constraint in Dubai which means you can probably only build a max of 100,000 dwellings in any one year.

You will find construction at its current levels will continue right through to 2020, assuming population growth continues at current rate. At Nakheel, we do not build and hope we can sell. You do not build it unless you know you have sold it.

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