Mubadala Development has bought buildings in its US$5 billion (Dh18.36bn) Arzanah property development, increasing its exposure to the flagship Abu Dhabi project it helped to fund after sales turned out weaker than expected. Mubadala, a strategic investment company owned by the Abu Dhabi Government, in 2008 formed a joint venture with Singapore's CapitaLand, called Capitala, to be its Abu Dhabi "residential development arm".
Sales were launched just before Cityscape Dubai 2008, when the market started to dip. But since the onset of the property slowdown, Mubadala has acquired 59 per cent of the development's first phase. The project is now 85 per cent sold out, executives said. Capitala's first and only project is Arzanah, a development that will cover 1.4 million square metres in Zayed Sports City. The first phase, called Rihan Heights, comprises 854 apartments and 14 villas in a cluster of buildings with views of Zayed Stadium and the Sheikh Zayed Grand Mosque. A Mubadala spokesman confirmed it had bought the units, but would not disclose when the transaction had taken place.
"Rihan Heights is a luxurious new residential development in Abu Dhabi and is a key part of Mubadala Real Estate & Hospitality's portfolio," a Mubadala spokesman said yesterday. "Mubadala has purchased three buildings and 14 villas within Rihan Heights. We are confident of the demand for this quality residential development, which is evident in the strong interest within Mubadala and its various partners to occupy the units."
Mubadala and CapitaLand agreed to invest about $300 million in the Arzanah project at the outset but Mubadala's acquisition of most of the units is a sign of the increased financial commitment the company has had to make to the project after the demise of the off-plan sales market in Abu Dhabi. Wong Heang Fine, the newly appointed chief executive of Capitala and the head of CapitaLand, said Rihan Heights was on track for delivery by the middle or third quarter of next year, and would need no additional financing.
"We already have 75 per cent of the materials needed on site," Mr Wong said. "Completion should be second or third quarter of next year." Capitala has opened showrooms in the building to begin promoting the project to potential buyers of the remaining 15 per cent. Because the project is on Abu Dhabi Island, only Emiratis are legally able to own units in Arzanah. In investment zones, expatriates can acquire properties with a 99-year lease.
"We want people to be able to come and see the units before we start sales again," Mr Wong said. "Our target lifestyle is people who want a different lifestyle to what is already available." He said one strategy under consideration for Mubadala's units would be to rent out entire buildings to a corporate client looking for high-quality housing for its employees. One potential client had recently expressed interest in such an arrangement, Mr Wong said.
Capitala has sought to install fittings and features that bring the apartments to a standard not offered in many places across Abu Dhabi. The flats feature high ceilings and marble floors. The buildings have a shared podium that will provide parking and a rooftop terrace with landscaping, playgrounds, amenities and pools. The rest of the Arzanah project would proceed with market conditions, Mr Wong said.
Mubadala was separately developing a school, healthcare facilities and what would be the largest shopping centre in Abu Dhabi. "Rihan Heights is still part and parcel of a master-planned community," Mr Wong said. "We are trying to establish a foothold first." bhope@thenational.ae
