x Abu Dhabi, UAESunday 24 September 2017

All eyes on Lebanon Island at The World

Success of Lebanon Island could determine the future of other developments on The World archipelago.

A maintenance technician at Royal Island Beach Club checks the diesel tank that holds fuel for the resort's generators.
A maintenance technician at Royal Island Beach Club checks the diesel tank that holds fuel for the resort's generators.

DUBAI // The future of The World archipelago may hinge on the success of the development's sole operational resort - a beach club four kilometres from the mainland with no mains power or water supply.

The Royal Island Beach Club on Lebanon Island opened three months ago and is attracting up to 250 visitors a day.

They pay Dh175 each for a return boat trip from the Palm Jumeirah and a day pass to the island, plus whatever they spend in the resort's licensed bar, restaurant and other facilities.

So far, the club is breaking even.

"But we aren't doing any more than that," says Uzma Ahmed, 22, manager of the resort, which is owned by her father Wakil Ahmed.

Work on the The World, an artificial archipelago covering 54 square kilometres, began in 2003.

The protective breakwater was completed in January 2008, with a total development cost estimated at more than Dh50 billion.

The master developer, Nakheel, does not supply utilities. Owner-developers are expected to make their own arrangements.

"It was a big task at first, even in the building stage," Ms Ahmed says. "There was no precedent. There was no example for us to draw on. So we had to make our own way."

The resort ships in 10,000 gallons of diesel a month to power its three generators, along with 30,000 gallons of water for toilets, taps and air conditioning. A chartered boat arrives twice a week to bring supplies and take the sewage tank back to the mainland for disposal. Each round trip costs Dh9,500.

Other developments on The World are at various stages of construction, and Ms Ahmed hopes they will have a mutually supportive relationship.

"We might get support from them," she said. "If there are two or three islands, Nakheel might put in pipelines."

Nakheel has a contract with the resort to operate transport for visitors.

"As master developer, Nakheel will provide assistance and support to subdevelopers on The World, in the same way that we have done with Lebanon Island," a spokeswoman said.

Ian Albert, regional director of the commercial brokerage company Colliers International, said being the only island open posed a unique challenge for the owners of the Lebanon development.

"The difficulty with being the first is that you've got to carry a lot of the cost up front," Mr Albert said.

"I suspect that until you get a greater mass of developments it's still going to be difficult to make the numbers work.

"If you have enough developers working on the islands at the same time, it will drive solutions."

Ms Ahmed said there were plans to approach other developers on The World, and a possibility of setting up a shared desalination plant.

Nicholas Maclean, managing director of the property advisory CB Richard Ellis Middle East, said owners should in principle pool resources.

"People have got to be fairly imaginative in how they deploy utilities there, to make it feasible," Mr Maclean said.

"The owners of some of the sites could pool together to develop infrastructure that provides facilities for more than one island.

"They gain the benefit of economies of scale from that investment."

He said many owners might be content to watch and wait.

"All the owners of sites that have been sold on The World will be looking very closely at what happens, both in terms of the process of the development as well as the success of the venture in the future," Mr Maclean said.

"It will be a very good indicator of whether the schemes that they have put in place will themselves be successful."

mcroucher@thenational.ae