Meydan Group, the owner of Dubai’s US$1 billion racecourse complex, has combined forces with Sobha Group of India to develop a 400-hectare site as the first stage of the multibillion-dollar Mohammed bin Rashid City project.
Saeed Al Tayer, the chairman of Meydan, said the project could be completed in seven years and would be worth Dh21bn at current market prices.
“This is the most important project we have undertaken since we began Meydan in 2007. It is humungous,” he said.
The development will be known as District One and will comprise 1,500 luxury villas, 7 kilometres of man-made lagoons and beaches and other leisure and retail facilities.
The project is a further sign of the resurgence of the Dubai property market, badly hit in the aftermath of the global financial crisis.
It follows a string of high-profile property launches. This week Damac Properties unveiled plans for its largest ever development in nearby Dubailand.
PNC Menon, the Sobha chairman, said that as part of the 50/50 operating joint venture, Meydan and Sobha will provide their own contractors for District One.
Beyond the current market value, few financial details of the project were made public. Mr Al Tayer said he was unable to disclose the cost, but said the financial relationship between Meydan and Sobha was governed by a “separate arrangement”.
He said: “The challenging times taught us to self-fund as much as possible. The intention is for District One to be self-funded between 40 and 50 per cent.”
He said the first stage of the four-stage plan, on which ground has already been broken, was already funded. Meydan has contributed the land to the project.
With regard to any future funding, he said: “During the challenging times we walked the walk, and we have loyal financial institutions that stayed with us through difficult times. We will deal with those people again.”
Options for further financing included bank borrowing, outside investors or debt issuance, he added.
“Locally interest rates are pretty high. There may be better terms to be had globally. We are ready to negotiate,” he said.
District One will boast a 350,000 square metre water park, with “the largest crystal lagoon body of water in the world”, according to the official statement.
The number of villas to be built at the site is modest by Dubai standards. The property consultant Jones Lang LaSalle estimates that Arabian Ranches has 3,800 villas, while the biggest, the Emirates Living development that includes the Lakes, Meadows and Springs, has 8,300.
But District One will be a relatively small proportion of the total Mohammed bin Rashid City development, which will be home to the world’s biggest shopping mall, 100 hotels and a public park three times bigger than London’s Hyde Park.
Sobha Group was founded by Indian businessmen in Oman in 1976 but rapidly expanded across India and the Arabian Gulf. It has established itself as a contractor for residential and commercial property, with a specialism in luxury hotels and palaces.
“Together, Sobha and Meydan plan to develop District One into one of the world’s prime residential locations,” said Mr Menon.
Under the strains of the financial crisis, Meydan fell out with a former partner, Arabtec, in a dispute over unpaid bills that appears to be nearing a compromise out-of-court resolution.
Meydan Sobha said District One’s master plan made allowance for 65 per cent open and green space among its homes and amenities. “This ratio makes it one of the lowest-density developments in the world and a truly unique proposition on the Dubai property market.”
Mr Al Tayer said the project had been planned with sustainability and the environment in mind. “There are a lot of green components and we are fully in compliance with the most recent environmental regulations. We are adopting features for solar power in the plans.”
Craig Plumb, the head of Middle East research for Jones Lang LaSalle, said: “The Dubai residential market has continued to perform strongly over the first half of 2013. This has led to a number of significant new projects being launched on a pre-sales basis for the first time since 2008. Average sale prices for villas across Dubai increased by 18 per cent in the year to April.
“This growth has. however, been patchy and has been concentrated in more established locations, with significant levels of new supply tempering increases in more peripheral locations,” he added.