Adelaide may get next Australian outlet

Some of Apple's 2012 retail plans should involve New York and Florida in the US, and the city of Adelaide in Australia, according to ifoAppleStore sources. The Carousel Center mini-store in Syracuse, New York is expected to move into a larger space later this year, possibly to one currently under construction near a Clark's in the same mall. The current location is rare in not only being a mini-store, but having its partner full-sized store situated 95 miles away, in Albany. The new Carousel Center shop could be ready by mid-year.

Elsewhere in the state, the Walt Whitman outlet in Huntington Station is also expected to move to a bigger space. Where in its mall it might move isn't known, though, nor is there any kind of timeline.

In Florida the owners of the BayWalk in St. Petersburg claim to have been in "conversations" with Apple, trying to lure the company to the area. The mall was bought by new owners in September, who have promised to invest in needed renovations and upgrades. Currently there is no hint of when the BayWalk renovations will be finished, though, or when Apple might move in.

Turning to Australia, real estate industry sources say that Apple has been talking with the developer of Rundle Place in Adelaide about a possible location. The building is a four-level mall in the city center, paired with an office tower. Construction has only just begun, however, with a 2013 completion date.

by MacNN Staff

See more here:
Sources tip Apple Stores in New York, Florida, Australia

Developers who want to build a 324-unit rental housing complex with a parking garage and 10,000 square feet of retail space received preliminary approval for bonds in an amount not to exceed $60 million from the Industrial Development Board today. The proposed complex would take shape on a 14-acre tract near Federal City in Algiers.

The IDB is the public body that considers requests for tax breaks and bond financing for development projects in New Orleans. Preliminary approval allows the developers to begin shopping the bonds to investors. But the project would need final approval from the Industrial Development Board and the approval of the State Bond Commission before it would move forward to the construction phase.

U/K/I Development LLC of Washington, D.C. and J.S. Karlton Inc. of Aventura, Fla., together doing business as Algiers Crossing, would like to build the housing site at the corner of Brookline Avenue and Slidell Street. The apartments would be mixed-income units, a majority of which would be rented at market rate.

The $66 million development would employ 535 people during construction and 26 people permanently. Provided it can be financed, the project would be completed in the first quarter of 2014.

Although board members gave unanimous approval to the preliminary bond issuance, many expressed reservations about the project because they said it didn't provide sufficient detail regarding how much money the developers themselves were investing in their proposal.

Steve Abdo, one of three developers who appeared before the board on behalf of the project, said they expect that there will be 25 percent equity in the project, 80 percent of which will have come from the developers. 

More here:
Algiers housing project wins preliminary bond approval

DUBLIN--(BUSINESS WIRE)--

Research and Markets (http://www.researchandmarkets.com/research/335a23/uae_building_const) has announced the addition of the "UAE Building Construction - Changing Landscapes" report to their offering.

The UAE Building Construction Industry witnessed contract awards worth an estimated US$ 8,698 million in 2011 and the industry is expected to witness building contract awards worth US$ 10,834 million in 2012.

Ventures Middle East with its vast experience on the pulse of the construction market and up to date tracking of projects across industries, analyses the changes and growth path of the tumultuous UAE Building Construction industry, its growth drivers and restraints and the factors - political, social, economic, technological, legal and regulatory and environmental that shape its growth path. The UAE Building Construction 2011-Changing Landscapes report explores the changes that have been witnessed by this industry and explores the effects of the same on the UAE building construction industry in 2011.

The report also provides in depth vital statistics on the state of the economy, contractor awards for the building construction industry and its main segments, namely, residential, commercial, retail, tourism and leisure and others (including airports, educational institutions, hospitals and miscellaneous projects) for the period 2010 to 2013 while also providing forecasts of real estate demand across the key segments of commercial, residential and retail for the years 2011 to 2015. This study would provide a complete overview and insight into the workings of the UAE building construction industry and its future outlook enabling players to identify and explore opportunities and challenges in this changing market space.

Key Topics Covered:

The UAE Building Construction Industry 2011 UAE Building Construction Market Overview -Contractor Awards and Real Estate Demand Top Clients, Consultants and Contractors and TOP Projects across the UAE building construction industry Future Outlook for the UAE Building Construction Industry

Companies Mentioned:

KEO International Consultants Architectural & Engineering Consultants, Abu Dhabi (AEC) Khatib & Alami Consolidated Engineering Company National Engineering Bureau (NEB) Sun Jin Engineering (South Korea) Mott MacDonald Dar Al Handasah Adnan Saffarini Surbana International Consultants Arcadis Gulf Ewan Architectural Engineering Consultancy W. S. Atkins Aedas, Dubai Arif & Bintoak Consulting AECOM Dimensions Engineering Consultants Brewer Smith & Brewer Gulf RMJM Woods Bagot Hellmuth Obata Kassabaum (HOK) Dewan Architects and Engineers Al Suweidi Engineering Consulting Palm & Turner Architects Al Habtoor Leighton Arabian Construction Company (ACC) And more...

For more information visit http://www.researchandmarkets.com/research/335a23/uae_building_const

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Research and Markets: UAE Building Construction - Changing Landscapes: a Comprehensive Report

Kolkata, Feb 15: 

Berger paints India Ltd on Wednesday announced its entry into construction chemicals with five products.

It has set up two separate facilities at its paints units at Rishra, near here, and at Pondicherry at a cost of around Rs 10 crore.

Soft launch

The company has begun marketing the new products in Kerala, West Bengal, Tamil Nadu, and Karnataka.

After a soft launch and stabilisation of distribution through its paints dealer network, it would go in for a nation-wide campaign.

Turnover

Berger expected to record Rs 35 crore construction chemicals retail turnover in financial year 2013, Mr Subir Bose, Managing Director of the company, said.

“We should be happy if we can register a turnover of Rs 100 crore in the first three years”, he added.

The market size of construction chemicals in the country is around Rs 2,000 crore, largely served by small and tiny units.

Four top existing players have a combined market share of 10 per cent, said Mr Avijit Roy, Chief Executive Officer of the company.

Retail segment

“But they operate mainly in the industrial project space. We would not immediately enter this area, but stick to retail segment.

The five Berger construction products include ready mixed polymer modified cement-based adhesive for tiles and a paste/powder for filling the cracks.

jayanta_mallick@thehindu.co.in

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Berger Paints to make construction chemicals

by Joe Smith

Bio | Email | Follow: @JoeSmithKGW

kgw.com

Posted on February 15, 2012 at 7:29 AM

Updated today at 7:29 AM

PORTLAND -- The Woodburn Company Stores has announced that it will expand one last time, the addition of 16 stores using up all the available construction space.

Since the popular outlet mall opened in 1999, every three to four years more stores have been added, bringing the current total to 98.

Officials said 90 percent of the 39,000 square feet of new retail space has already sold out.

Construction on the $10 million project started February 6th and should be finished by fall, creating 30 to 50 jobs during that time.

"We're 100-percent occupied in the existing phase and there are others (retailers)  who would like to be here and some great brands are heading our way. The customers demand it, so it's time to build," said Teri Sunderland, General Manger for Woodburn Company Stores.

The expansion will be a mix of many new companies to the area, including Spritz, a brand name fragrance outlet. More names of the retailers slated to take up space will be released in about a month.

Last year more than four million people visited the outlets. The mall expansion should create about 150 new retail jobs.

 

 

View post:
Woodburn Company Stores adding 16 stores

Location was Old Salt's home before 1999 fire

February 14, 2012 2:00 AM

HAMPTON — The vacant lots on Ocean Boulevard, where the Old Salt restaurant and several other businesses used to stand, might finally become the location of a four-story, 36-unit residential condominium building with ground-floor retail space.

Property owner Ted Sanderson will go before the town's Zoning Board on Thursday, Feb. 16, to seek reapproval of more than a half dozen variances for 83, 89 and 81 Ocean Blvd. and 5 J St.

While the project was approved in 2004, the approval expired. Zoning Board member Tom McGuirk said approval is only good for two years, with a third year available if the applicant requests an extension. McGuirk, who will step down from the hearing because his restaurant and bar is an abutting property, is hopeful the long-awaited project may finally come to fruition.

"The property has been vacant for 13 summers," McGuirk said. "I'm just excited that there will once again be foot traffic down at the end of the beach."

The property became vacant after a 1999 fire destroyed the Old Salt Eating and Drinking Place and the Beachwalk Enterprises.

What is believed to have started as a trash fire at 2:40 p.m. June 16, 1999, quickly spread to engulf the restaurant and the other buildings that housed Cecile's Gift Shop, Lexie's Pizzeria, Haven's Cafe and six apartment units.

Aided by a strong westerly wind, the fire then spread to Springfield Motor Lodge.

More than 200 firefighters from 23 communities responded to the blaze, and it took more than four hours to get it under control.

The property has been used as a parking lot for the last 12 years, while the redevelopment project was put on hold because of litigation.

Abutters, led by Michael Scanlan, fought against the project, which was first to be known as the Majestic, then the Breckenridge. The case reached the state Supreme Court.

In opposing the project, Scanlan and other abutters cited the size of the complex, the impact on property values, traffic in the area and claimed the project doesn't fit the Hampton Beach master plan.

Scanlan no longer owns the abutting property.

While developers won their legal battle in 2007, construction was held up because of the struggling economy.

In the application to the Zoning Board, attorney Peter Saari, representing the developer, said the new proposed project is dramatically smaller than the old burned-down buildings and will bring in substantially more tax revenue.

Saari argued the variances are needed to make the project work. Variances being sought include relief from required lot area per dwelling, maximum stories, setbacks and parking requirements.

Saari said denying the variances could result in more years with nothing more to show at that location than a parking lot.

"We were the only abutters that didn't oppose the project the last time around," McGuirk said.

McGuirk said the developer has worked to address many of the concerns brought up by abutters in the past, including expanding the buffer between the proposed project and neighboring properties.

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Condos, retail space proposed for Hampton beach site

Randhurst Still Growing By RICHARD MAYER Assistant Managing Editor Journal & Topics Newspapers |

The main man in charge of redeveloping Randhurst Village in Mt. Prospect is beginning to separate himself from the project to focus on other projects regionally and nationally.

James Conroy, director of development for Casto Lifestyle Properties said since most construction at the new outdoor "lifestyle center" is complete, and the focus is shifting more toward signing leases, he is relocating elsewhere in the country to work on other Casto projects that are in early stages.

"I will stay 25%-30% involved once there are additional tenants," Conroy said.

According to Conroy, overall construction of new stores, buildings and parking areas at Randhurst is 85% complete. He expects remaining portions to wrap up by June.

He said leasing the remaining empty stores will be determined by the overall economy.

"If you look at Main Street from Sports Authority to Old Navy and all the way around to the center's anchor being AMC Theatre, the center is about 85% occupied, if you also consider the Hampton Inn Suites, which is expected to open mid to late March," Conroy said.

According to Conroy, main areas that are still vacant are smaller shops ranging from 2,500 sq. ft. to 5,000 sq. ft. He said there are some smaller and larger spaces that are also vacant, but very few.

Conroy said there have been some parking lot modifications completed and a more that still need plan approval such as traffic flow near Pei Wei Restaurant and Costco.

Permits, Conroy said, are close to being completed to construct a new 7,000 sq. ft. outlot building that will include a Panera restaurant with a drive-through. Panera will occupy approximately 4,000 sq. ft. of the new outlot, located just north of the existing Pei Wei restaurant with a single drive-through lane wrapping along the west side of the building parallel to Elmhurst Road. The remaining vacant space next to Panera will be retail, but is not yet announced.

With this winter so far being unseasonably warm, Conroy said the weather helped when it came to constructing PetSmart and World Market. PetSmart opened a couple weeks ago and World Market is expected to open by the last week of March or first week of April.

"Because of the good weather, we were under roof of those two stores by mid fall," Conroy said.

In recent weeks, delivery trucks clipped one of the canopies at the new Hampton Inn Suites Hotel, which is expected to open by mid March.

Conroy said the canopy is being modified and is in the process of being replaced. He added the installation of hotel furniture is starting this week.

According to Conroy, there is some interest to take over vacant office space on the second floor of Main Street in the heart of Randhurst Village.

The nearby three-floor, 550-space parking deck is being utilized more and more, Conroy said.

"I was there a few weeks ago and the entire first floor and part of the second floor was being used on a Friday night," Conroy said.

BlackFinn American Grille is expected to begin interior build out soon and should open sometime this summer. Other stores expected to open in the coming months are Menchie's Yogurt, Pigtails & Crewcuts Hair Salon for kids, and Phenix Salon Suites.

Conroy said there are four other letters of intent waiting to be finalized. He said all of those consist of retail/apparel stores.

In terms of the former Border's bookstore building at Elmhurst and Rand roads, Conroy said different concepts are being considered including tearing the existing building down and constructing restaurants in its place, or reusing the building for retail.

See the original post here:
Randhurst Still Growing

February 13, 2012, 11:42 PM EST

By Zainab Fattah

(Adds Dubai Mall expansion in second paragraph, Emaar chairman’s comment in ninth.)

Feb. 13 (Bloomberg) -- Dubai’s developers, battered by three years of falling prices for homes and offices, are seeking refuge in retail assets as shopping tourism powers the economy.

Emaar Properties PJSC said today it’s expanding the Dubai Mall, the world’s biggest, by 1 million square feet (92,903 square meters) as retail accounts for a growing share of the company’s income. Nakheel PJSC, the government-owned company that restructured $16.1 billion of debt last year, is adding to its Dragon Mart shopping center and trying to raise funds to build a cluster of restaurants and stores at the tip of its Palm Jumeirah artificial island.

“Most developers are looking to build recurring revenues because there are so few property sales happening right now,” said Patrick Gaffney, an analyst at HSBC Bank Middle East Ltd. “The sectors that are doing best are retail and hotels because of strong tourist arrivals.”

Dubai’s malls and shops have become more attractive after home values fell by more than 65 percent from their 2008 peak while retail sales have been rising since 2009. Developers that don’t already generate significant revenue from shopping assets will struggle to get a foothold in the market because little is being built or sold and banks are reluctant to finance any type of development in the emirate, including retail, Gaffney said.

Retail revenue in the United Arab Emirates probably increased 5.3 percent last year to 113 billion dirhams ($31 billion) Business Monitor International estimated. That will probably rise to 120 billion dirhams this year and 157 billion dirhams by 2015, it said.

Biggest Mall Owner

Majid Al Futtaim Holding LLC, the operator of Carrefour SA stores in the Middle East, is the largest owner of shopping malls in Dubai. The closely held developer this month raised $400 million selling Islamic bonds for the first time as part of a $1 billion program. Last month the company reported an 18 percent increase in revenue in its home market and said 2011 was its most successful year since being founded in 1992.

Majid Al Futtaim priced its $400 million, five-year Islamic bond, or sukuk, at a rate of 5.85 percent on Jan. 31. The yield rose 4 basis points since it started trading this month to 5.66 percent today. That compares with a yield of 7.4 percent for Emaar’s 8.5 percent Islamic notes maturing in 2016. Emaar, Dubai’s second-biggest retail operator, also builds housing and offices.

Share of Income

Emaar reported that 41 percent of revenue and 68 percent of pretax profit came from hospitality properties and leased space including shopping malls in the first nine months of last year. That compares with 24 percent of revenue and 27 percent of profit a year earlier.

“The Dubai Mall is a powerful demonstration of the competencies that Emaar has developed in retail, regarded as one of the core sectors of Dubai’s economy,” Emaar Chairman Mohamed Alabbar said in today’s statement.

Owning the Dubai Mall, with rentable space equivalent to 50 football fields, also helped the company when it used the asset as collateral to refinance 3.6 billion dirhams of debt at a lower price. The expansion announced today will lift the total size of the development to more than 13 million square feet.

Retailers including American Eagle Outfitters Inc., Limited Brands Inc. and luxury watch seller Rivoli Group are opening shops in Dubai as consumer confidence rises. Macy’s Inc., the second-biggest U.S. department-store company, in January 2010 chose the Dubai Mall to open its first Bloomingdale’s store outside its home market.

Left Out

Prospects aren’t as bright for developers that haven’t built up retail assets. Union Properties PJSC, which is mainly focused on homes and offices, this month reported a full-year loss of 1.57 billion dirhams. The company in January handed over ownership of properties including some in Limestone and The Index to settle 1.1 billion dirhams of debt.

Deyaar Development PJSC, partly owned by Dubai Islamic Bank PJSC, has 234 million dirhams of debt coming due this year, compared with about 37.7 million dirhams of profit in 2011. The company had a loss of 2.9 billion dirhams the previous year.

“Even though retail is generally strong, especially at the large malls, we don’t expect many developers to build new ones because funding is tough and there is already a good amount of supply in the market,” Gaffney said. “The areas that will do best are smaller strip malls or supermarkets near housing developments.”

Boost to Economy

Shopping accounted for about 30 percent of Dubai’s gross domestic product last year, Standard Chartered Bank Plc economist Philippe Dauba-Pantanacce estimated. The Dubai Statistics Center said retail and wholesale trade rose by 9.3 percent and hotels and restaurants increased by 4.4 percent in 2010. It hasn’t yet released figures for last year.

Nakheel is in talks with banks to raise at least 300 million dirhams for its first new project since the debt-ridden company received a government bailout in 2009. The Pointe at Palm Jumeirah, across the water from the Atlantis hotel, will include 120 restaurants, 75 shops and landscaped areas for visitors with a view of an offshore fountain.

“The retail sector is strategic for Nakheel,” Chairman Ali Rashed Lootah said at a press conference in January. He added that 60 percent of an extension to Nakheel’s Dragon Mart mall was booked by retailers within a week of its announcement. The company plans to add 1.7 million square feet of retail space and 5,000 parking spaces to the mall.

Fundraising Challenge

Even with a growing retail market, Nakheel may have difficulty raising the money after it received a government bailout and restructured debt, according to analysts including Ahmed Talhaoui, the Abu Dhabi-based head of investment and asset management at Royal Capital PJSC.

“Any issue would have to be at a very competitive yield and probably with a structure that gives some government guarantee,” Talhaoui said in a January interview.

The yield on Nakheel’s 3.8 billion-dirham, 10 percent sukuk maturing in August 2016, fell 114 basis points, or 1.14 percentage points, so far this year to 16.83 percent today, according to data compiled by Bloomberg. That compares with an average yield of 4.45 percent for U.A.E Islamic bonds on Feb. 10, the HSBC/NASDAQ Dubai UAE US Dollar Sukuk Index shows.

Emaar, which opened Burj Khalifa, the world’s tallest tower, in 2010, derived about 23 percent of its 2011 income from retail rents and is now focusing almost exclusively in Dubai on growing sales at its malls, HSBC’s Gaffney said. Tourists visiting the Burj Khalifa’s observation deck can only get there by going through the Dubai Mall.

Emaar’s Head Start

“Emaar was better positioned than others when the financial crisis hit,” said Gaffney. “They had already launched and sold so much in Dubai and didn’t have tons of unsold inventory coming on line. They also were focused on the construction of Burj Khalifa, Emaar Boulevard and Dubai Mall, rather than starting new projects.”

Malls and hotels are the main value drivers for Emaar, whose projects span the Middle East, North Africa and Asia, Ahmed Badr said in a note on Oct. 27, when he was head of Middle East property research at Credit Suisse Group AG. He now works as an equity sales specialist with the bank.

Dubai, the second-largest of seven sheikhdoms that make up the United Arab Emirates, racked up $129 billion in debt transforming itself into a tourist and trade hub. While many developments were canceled, attractions including Burj Khalifa and resort hotels like the Atlantis help bring in visitors who shop for goods that aren’t available in much of the region.

Locals and Foreigners

“The local population is wealthy enough to be able to keep buying and the tourism growth was very strong in Dubai last year,” said David Macadam, head of retail for the Middle East and North Africa at Jones Lang LaSalle Inc. He said Dubai shopping is bolstered by visitors from the Gulf region, Europe, China, the Indian subcontinent and the rest of the Arab world.

Dubai hotels reported an 11 percent increase in visitors in the nine months through September compared with a year earlier, according to the Department of Tourism and Commerce Marketing. Revolutions in Tunisia, Egypt and Libya and armed conflicts in Yemen and Syria mean that tourists in the region have fewer options for vacations.

Buyers spent $114 million in the first week of Dubai’s month-long shopping festival, a 53 percent increase over the year earlier period, according to Karim Beg, Visa Inc.’s head of marketing for the Middle East and North Africa.

“Our marketing efforts have reached new markets in east Asia such as China and Japan and even though this strategy started only three years ago, we have seen its fruit already,” said Laila Suhail, chief executive officer of festival organizer Dubai Events & Promotions.

Little New Space

Dubai has 2.58 million square meters (27.8 million square feet) of mall-based retail space, according to a report by property broker Jones Lang LaSalle. About 173,000 square meters will be completed in the next two years, mostly in small shopping centers or strip malls, it said.

Banks wary of real-estate lending may make an exception if the business case for a project is clear and if adequate protection is put into place, said Raj Madha, an analyst at Rasmala Investment Bank Ltd.

Union Properties sold a building in the Umm Suqeim neighborhood for more than 140 million dirhams to supermarket operator Spinneys, Chairman Khalid Bin Kalban said in June 2010. Such transactions are rare in Dubai, where developers tend to hold onto shopping assets.

Assets to Keep

“It doesn’t make sense for owners to relinquish well- performing assets such as malls, which were great source of cash even during the crisis,” said Matthew Green, head of United Arab Emirates research at real-estate broker CB Richard Ellis Group Inc. “Also, when you look at mall owners they are generally companies that don’t have a pressing need to sell. Even if they wanted to sell, it won’t be prime assets.”

Majid Al Futtaim’s Mall of the Emirates, which contains an indoor ski slope, has a 99.8 percent occupancy rate, while the developer’s Deira City Center and Mirdif City Centre have rates of 98.8 percent and 96.9 percent respectively, according to the company’s prospectus.

Dubai’s mall vacancy rate stands at 20 percent, mainly because of smaller malls with low visitor numbers. Most big international brand retailers won’t open stores in small malls as they look for the most prestigious and high profile locations, Gaffney said.

After the sheikhdom first opened up its real-estate market to foreigners in 2005, developers focused on selling homes as speculation-driven investment drove up prices.

“At the time, it made more sense to sell land and residential units because it was less risky,” HSBC’s Gaffney said. Back then, developers couldn’t determine whether the location would be valuable by the time a shopping center was built, he said.

--Editors: Ross Larsen, Andrew Blackman.

To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net V US <Equity> UPP UH <Equity> DEYAAR UH <Equity> 840705Z UH <Equity> EMAAR UH <Equity>

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Dubai Developers Thrown Retail Lifeline as Home Sales Sink

Enlarge image Dubai Developers Tap Retail Sweet Spot, Homes, Offices Fall

Visitors are seen in "Fashion Avenue" at the Dubai Mall retail center in Dubai.

Visitors are seen in "Fashion Avenue" at the Dubai Mall retail center in Dubai. Photographer: Gabriela Maj/Bloomberg

Enlarge image Dubai Developers Tap Retail Sweet Spot, Homes, Offices Fall

Emaar’s Dubai Mall had 54 million visitors in 2011, a 15 percent increase from the previous year, placing it ahead of Times Square and Niagra Falls, the company said in a statement last month.

Emaar’s Dubai Mall had 54 million visitors in 2011, a 15 percent increase from the previous year, placing it ahead of Times Square and Niagra Falls, the company said in a statement last month. Photographer: Gabriela Maj/Bloomberg

Enlarge image Dubai Developers Tap Retail Sweet Spot, Homes, Offices Fall

The site for Nakheel PJSC's Pointe development on the Palm Jumeirah artificial island is seen from the monorail off the coast of Dubai.

The site for Nakheel PJSC's Pointe development on the Palm Jumeirah artificial island is seen from the monorail off the coast of Dubai. Photographer: Gabriela Maj/Bloomberg

Enlarge image Dubai Developers Tap Retail Sweet Spot, Homes, Offices Fall

The Gold Souk section of the Dubai Mall, seen here, has been underperforming as shoppers don’t have to walk through it, resulting in low sales that forced Emaar to consider remedies.

The Gold Souk section of the Dubai Mall, seen here, has been underperforming as shoppers don’t have to walk through it, resulting in low sales that forced Emaar to consider remedies. Photographer: Gabriela Maj/Bloomberg

Enlarge image Dubai Developers Tap Retail Sweet Spot, Homes, Offices Fall

Shops around the large Aquarium in Dubai Mall tend to do better as tourists wander off to the nearby stores, after looking at the rare fish swimming in the giant tank, Gaffney said.

Shops around the large Aquarium in Dubai Mall tend to do better as tourists wander off to the nearby stores, after looking at the rare fish swimming in the giant tank, Gaffney said. Photographer: Gabriela Maj/Bloomberg

Dubai’s developers, battered by three years of falling prices for homes and offices, are seeking refuge in retail assets as shopping tourism powers the economy.

Nakheel PJSC, the government-owned company that restructured $16.1 billion of debt last year, is expanding its Dragon Mart shopping center and trying to raise funds for a cluster of restaurants and stores at the tip of its Palm Jumeirah artificial island. Dubai Mall owner Emaar Properties PJSC (EMAAR) is getting an increasing share of its earnings from shopping assets as home completions fall.

“Most developers are looking to build recurring revenues because there are so few property sales happening right now,” said Patrick Gaffney, an analyst at HSBC Bank Middle East Ltd. “The sectors that are doing best are retail and hotels because of strong tourist arrivals.”

Dubai’s malls and shops have become more attractive after home values fell by more than 65 percent from their 2008 peak while retail sales have been rising since 2009. Developers that don’t already generate significant revenue from shopping assets will struggle to get a foothold in the market because little is being built or sold and banks are reluctant to finance any type of development in the emirate, including retail, Gaffney said.

Retail revenue in the United Arab Emirates probably increased 5.3 percent last year to 113 billion dirhams ($31 billion) Business Monitor International estimated. That will probably rise to 120 billion dirhams this year and 157 billion dirhams by 2015, it said.

Biggest Mall Owner

Majid Al Futtaim Holding LLC (0115682D), the operator of Carrefour SA (CA) stores in the Middle East, is the largest owner of shopping malls in Dubai. The closely held developer this month raised $400 million selling Islamic bonds for the first time as part of a $1 billion program. Last month the company reported an 18 percent increase in revenue in its home market and said 2011 was its most successful year since being founded in 1992.

Majid Al Futtaim priced its $400 million, five-year Islamic bond, or sukuk, at a rate of 5.85 percent on Jan. 31. The yield rose 4 basis points since it started trading this month to 5.66 percent on Feb. 10. That compares with a 7.4 percent yield for Emaar’s 8.5 percent Islamic notes maturing in 2016. Emaar, Dubai’s second-biggest retail operator, also builds housing and offices.

Share of Income

Emaar reported that 41 percent of revenue and 68 percent of pretax profit came from hospitality properties and leased space including shopping malls in the first nine months of last year. That compares with 24 percent of revenue and 27 percent of profit a year earlier.S

Owning the Dubai Mall, the world’s largest with rentable space equivalent to 50 football fields, also helped the company when it used the asset as collateral to refinance 3.6 billion dirhams of debt at a lower price.

Retailers including American Eagle Outfitters Inc., Limited Brands Inc. and luxury watch seller Rivoli Group are opening shops in Dubai as consumer confidence rises. Macy’s Inc., the second-biggest U.S. department-store company, in January 2010 chose the Dubai Mall to open its first Bloomingdale’s store outside its home market.

Prospects aren’t as bright for developers that haven’t built up retail assets. Union Properties PJSC (UPP), which is mainly focused on homes and offices, this month reported a full-year loss of 1.57 billion dirhams. The company in January handed over ownership of properties including some in Limestone and The Index to settle 1.1 billion dirhams of debt.

Debt Due

Development PJSC, partly owned by Dubai Islamic Bank PJSC, has 234 million dirhams of debt coming due this year, compared with about 37.7 million dirhams of profit in 2011. The company had a loss of 2.9 billion dirhams the previous year.

“Even though retail is generally strong, especially at the large malls, we don’t expect many developers to build new ones because funding is tough and there is already a good amount of supply in the market,” Gaffney said. “The areas that will do best are smaller strip malls or supermarkets near housing developments.”

Shopping accounted for about 30 percent of Dubai’s gross domestic product last year, Standard Chartered Bank Plc economist Philippe Dauba-Pantanacce estimated. The Dubai Statistics Center said retail and wholesale trade rose by 9.3 percent and hotels and restaurants increased by 4.4 percent in 2010. It hasn’t yet released figures for last year.

New Shops, Restaurants

Nakheel is in talks with banks to raise at least 300 million dirhams for its first new project since the debt-ridden company received a government bailout in 2009. The Pointe at Palm Jumeirah, across the water from the Atlantis hotel, will include 120 restaurants, 75 shops and landscaped areas for visitors with a view of an offshore fountain.

“The retail sector is strategic for Nakheel,” Chairman Ali Rashed Lootah said at a press conference in January. He added that 60 percent of an extension to Nakheel’s Dragon Mart mall was booked by retailers within a week of its announcement. The company plans to add 1.7 million square feet of retail space and 5,000 parking spaces to the mall.

Even with a growing retail market, Nakheel may have difficulty raising the money after it received a government bailout and restructured debt, according to analysts including Ahmed Talhaoui, the Abu Dhabi-based head of investment and asset management at Royal Capital PJSC.

“Any issue would have to be at a very competitive yield and probably with a structure that gives some government guarantee,” Talhaoui said in a January interview.

Costly Debt

The yield on Nakheel’s 3.8 billion-dirham, 10 percent sukuk maturing in August 2016, fell 123 basis points, or 1.23 percentage points, so far this year to 16.86 percent on Feb. 10, according to data compiled by Bloomberg. That compares with an average yield of 4.45 percent for U.A.E Islamic bonds on Feb. 10, the HSBC/NASDAQ Dubai UAE US Dollar Sukuk Index shows.

Emaar, which opened Burj Khalifa, the world’s tallest tower, in 2010, derived about 23 percent of its 2011 income from retail rents and is now focusing almost exclusively in Dubai on growing sales at its malls, HSBC’s Gaffney said. Tourists visiting the Burj Khalifa’s observation deck can only get there by going through the Dubai Mall.

“Emaar was better positioned than others when the financial crisis hit,” said Gaffney. “They had already launched and sold so much in Dubai and didn’t have tons of unsold inventory coming on line. They also were focused on the construction of Burj Khalifa, Emaar Boulevard and Dubai Mall, rather than starting new projects.”

Malls, Hotels

Malls and hotels are the main value drivers for Emaar, whose projects span the Middle East, North Africa and Asia, Ahmed Badr said in a note on Oct. 27, when he was head of Middle East property research at Credit Suisse Group AG. He now works as an equity sales specialist with the bank.

Dubai, the second-largest of seven sheikhdoms that make up the United Arab Emirates, racked up $129 billion in debt transforming itself into a tourist and trade hub. While many developments were canceled, attractions including Burj Khalifa and resort hotels like the Atlantis help bring in visitors who shop for goods that aren’t available in much of the region.

“The local population is wealthy enough to be able to keep buying and the tourism growth was very strong in Dubai last year,” said David Macadam, head of retail for the Middle East and North Africa at Jones Lang LaSalle Inc. He said Dubai shopping is bolstered by visitors from the Gulf region, Europe, China, the Indian subcontinent and the rest of the Arab world.

Popular Destination

Dubai hotels reported an 11 percent increase in visitors in the nine months through September compared with a year earlier, according to the Department of Tourism and Commerce Marketing. Revolutions in Tunisia, Egypt and Libya and armed conflicts in Yemen and Syria mean that tourists in the region have fewer options for vacations.

Buyers spent $114 million in the first week of Dubai’s month-long shopping festival, a 53 percent increase over the year earlier period, according to Karim Beg, Visa Inc. (V)’s head of marketing for the Middle East and North Africa.

“Our marketing efforts have reached new markets in east Asia such as China and Japan and even though this strategy started only three years ago, we have seen its fruit already,” said Laila Suhail, chief executive officer of festival organizer Dubai Events & Promotions.

Dubai has 2.58 million square meters (27.8 million square feet) of mall-based retail space, according to a report by property broker Jones Lang LaSalle. About 173,000 square meters will be completed in the next two years, mostly in small shopping centers or strip malls, it said.

Reluctant Lenders

Banks wary of real-estate lending may make an exception if the business case for a project is clear and if adequate protection is put into place, said Raj Madha, an analyst at Rasmala Investment Bank Ltd.

Union Properties sold a building in the Umm Suqeim neighborhood for more than 140 million dirhams to supermarket operator Spinneys, Chairman Khalid Bin Kalban said in June 2010. Such transactions are rare in Dubai, where developers tend to hold onto shopping assets.

“It doesn’t make sense for owners to relinquish well- performing assets such as malls, which were great source of cash even during the crisis,” said Matthew Green, head of United Arab Emirates research at real-estate broker CB Richard Ellis Group Inc. “Also, when you look at mall owners they are generally companies that don’t have a pressing need to sell. Even if they wanted to sell, it won’t be prime assets.”

Skiing at the Mall

Majid Al Futtaim’s Mall of the Emirates, which contains an indoor ski slope, has a 99.8 percent occupancy rate, while the developer’s Deira City Center and Mirdif City Centre have rates of 98.8 percent and 96.9 percent respectively, according to the company’s prospectus.

Dubai’s mall vacancy rate stands at 20 percent, mainly because of smaller malls with low visitor numbers. Most big international brand retailers won’t open stores in small malls as they look for the most prestigious and high profile locations, Gaffney said.

After the sheikhdom first opened up its real-estate market to foreigners in 2005, developers focused on selling homes as speculation-driven investment drove up prices.

“At the time, it made more sense to sell land and residential units because it was less risky,” HSBC’s Gaffney said. Back then, developers couldn’t determine whether the location would be valuable by the time a shopping center was built, he said.

To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

Continued here:
Dubai’s Developers Reach for Retail Lifeline as Residential Market Suffers

The revitalization of Lansdowne Park will cost $7.6 million more than expected according to new reports released Thursday night.

The documents show the air rights to develop buildings in Lansdowne Park with condominiums and offices above retail space will cost Minto Developments — the developer that won the rights — $2.3 million less than expected.

The lower amount comes even after the city, which expected to bring in $10 million for those rights, held a bidding process.

Minto Developments won the rights to build an office building and condo buildings in the park. Minto was also the only developer to submit a bid to construct the office building.

Another Ottawa developer, Broccolini Construction, told CBC News his company wasn't interested in submitting a bid because they weren't comfortable with the city's terms of reference on the project.

Derek Howe of Broccolini Construction noted that Lansdowne is still unproven as a commercial site, so some developers weren't interested in building an office tower on speculation — without having any tenants on-board.

The other additional costs were an extra $2.5 million to move and renovate the Horticulture Building, and $2.8 million the city will have to borrow to deposit in its social-housing reserve fund, in lieu of actual affordable housing space at Lansdowne.

City staff who wrote the reports now advise officials to discuss the concerns with Minto, whose president and CEO Roger Greenberg is one of the heads of the Ottawa Sports and Entertainment Group (OSEG).

OSEG is the city's partner to redevelop Lansdowne.

The report and its recommendations will go to the city finance and economic development committee Feb. 16.

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Lansdowne Park costs $7.6M higher than expected