DUBAI // Abu Dhabi-based Aldar Properties and Millennium Development International are spearheading the development of the multibillion dollar Iskandar Financial District (IFD), South East Asia's first Islamic and conventional finance hub at the heart of Medini, a US$20 billion (Dh73.4bn) mixed-use urban development in Malaysia.
Scheduled to be built over the next 15 to 20 years, Medini, formerly known as "Node 1", is being developed on the southernmost tip of Malaysia on the border with Singapore, and is expected to rival the island nation's dominance in attracting finance business. The low cost of doing business operations, tax holidays, repatriation of finance, 100 per cent foreign ownership and free movement of foreign labour are just a few of the attractions offered to financial institutions to set up in IFD.
Arlida Ariff, the managing director of Iskandar Investment Berhad (IIB), a Malaysian investment holding firm, overseeing the development of the Medini project, said that IFD would be 10 to 50 per cent lower in operating costs for businesses compared with neighbouring Singapore. "We already have commitments from leading financial institutions who are keen to set up base in IFD," she said. "We will be revealing some names by the end of this year when the final contracts are done."
Ms Ariff, however, said IFD would not compete with Dubai which was vying to establish itself as the Asian hub of Islamic and conventional finance. "IFD is all about co-ordination and not competition." she said. "We have similar models and we are already co-ordinating with financial authorities here," she said, adding that the market was big enough to accommodate two financial hubs in Asia. When completed, Medini will become Malaysia's single largest urban development.
The total land area of Medini is 103.8 million square feet, while IFD covers approximately 15.3 million sq ft of land and the targeted built-up area measures 42.1 million sq ft. IFD will be first of nine specialised clusters in the Medini project which will be offered to global investors. Aldar Properties, and Millennium Development are both part of Abu Dhabi's Mubadala Development Company-led consortium called Global Capital which will develop six of nine clusters, including IFD. The other consortium, led by Kuwait Finance House, is developing the remaining clusters.
Both consortia have so far made an initial investment of US$1.2 bn, with 70 per cent contributed by Global Capital. IIB holds a 30 per cent stake in the Medini project while 60 per cent is held by Mubadala. The rest of the Medini stake belongs to a Kuwait Finance House-led consortium, according to Ms Ariff. She said that all nine clusters of the project would go into construction phase simultaneously and it was expected the project would have 20 per cent of its built-up area completed within the next five years.
The financial district, which will offer a separate area for banks, financial institutions and corporate headquarters, will boast commercial office buildings, shopping centres, condominiums and serviced apartments, five-star hotels, conferencing and meeting facilities and a dedicated mass transit system. Medini marks the second international venture for Aldar. The company is already building a project in Kazakhstan.
"The Medini is a major project for us and we are currently at the master planning stage," said Ronald Barrott, the chief executive officer of Aldar. According to Mr Barrott, the IFD is already generating a lot of interest from GCC investors. "We decided to launch within Cityscape a limited number of IFD land parcels in response to the pressure we are seeing from financial institutional developers and equity funds, to secure an early position," he said.
However, Mr Barrott said Aldar did not have plans for further international expansion. "The Iskandar Project will run for 10 to 15 years. For the moment, it is only two international projects for us," he said. Meanwhile, Aldar also launched a new subsidiary Aldar Marinas, dedicated to provide a range of leisure marine facilities and services. The first marinas to be developed by the new firm are on Aldar's Yas Island and Al Raha Beach projects in Abu Dhabi.
skhan@thenational.ae
