Tatweer, a member of Dubai Holding, is reviewing its partnerships with building suppliers on the Dh4.7 billion (US$1.3bn) Universal Studios project in Dubailand, as well as the construction schedule, to try to cut costs. Universal Studios, which was expected to include rides based on famous Hollywood films, 4,000 hotel rooms, retail outlets, and office and residential areas, was supposed to be finished next year, although it is now likely to be delayed by at least two years.
The move comes as a number of major Dubai projects in Dubai are being reviewed to accommodate tight liquidity, a slower sales environment and a fall in tourism. Tatweer entered a joint venture with the US-based Universal Parks & Resorts to build the park in 2007, making it a key component of Dubailand, the emirate's biggest planned tourist attraction. While initial construction began in the middle of last year, work has since been hampered by the downturn.
"Given the dynamic changes in the market, the Universal Studios Dubailand team is reviewing both contractual agreements with some of its vendors and different project management options to deliver the project at the highest quality and lowest cost," Tatweer said in a statement. "Progress on the theme park continues and we will announce an opening date to the market in line with project milestones."
The company insisted there had been no change in the plans for Dubailand, which was launched in 2003 and is estimated to be worth Dh325bn, and that Universal Studios remained an integral part of it. The fate of a project planned by Six Flags, another US theme park giant, at Dubailand was called into question in June after the operator filed for bankruptcy protection in a US court. At the time, Tatweer said it was still committed to bringing the Six Flags project to Dubailand.
"While we are aware of the restructuring we do not comment on the financial details of any of our partners," the company said. Tatweer said in December that the entire Dubailand development was under review because of the financial crisis, although details of the review are unlikely to come to light until a planned joint venture between Tatweer, Sama Dubai, Dubai Properties and Emaar Properties is finalised.
But developers are making the most of the lower construction costs caused by the downturn. Those costs are about 30 per cent lower than they were at their peak early last year. Property consultants such as CB Richard Ellis, Colliers International and Cluttons have also been brought in to revalue projects. "Construction and financial costs are the two burdens right now," said Ian Albert, the regional director at Colliers. "Developers are looking quite closely at the phasing of projects and how phases will support each other financially.
"They're looking at bringing construction costs down, which is very achievable in today's market, are reviewing delivery timeframes and assessing which components fit together and at what stage." firstname.lastname@example.org