For UAE developers, low-cost financing from Europe opens up attractive options

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Dubai: UAE developers with new projects could look to Europe to access cheaper financing options. Khalid Bin Kalban of Dubai Investments is definitely thinking about it.

For the recently announced 1 billion dirham mixed-use project in Ras Al Khaimah, the CEO of DI said three financing options were in front of him. “On the one hand, it could be direct funding from local banks plus our own equity,” Bin Kalban said. “A second option would be to bring in contractors who will provide financing as well as their own equity.

“And a third alternative, quite promising, would be to sign European banks, because they can secure low-cost financial support from their governments. In fact, these funds are available at very cheap rates. It will certainly an option we will consider – unless someone makes other suggestions.

The project finance market in the UAE is teeming with activity, be it infrastructure, new residential or commercial projects and industrial ventures. Amidst all this, project financing options are also opening up.

With borrowing rates set to rise, the cost of financing will also rise shortly. So, if there are funding sources available that can provide longer-term disbursements, developers in the UAE will give them serious consideration.

In the past, Chinese lenders have been the largest and most aggressive sources of funding. The only condition would be that the project developers here use Chinese construction companies and building materials.

Back to full development mode

As for Dubai Investments, the company Ras Al Khaimah of one billion dirhams will see it enter into full activity. The developer, best known for its industrial parks in Dubai, has expanded its interests in some of the other emirates. The Ras Al Khiamah project is, however, its most ambitious. Located on the island of Al Marjan, the complex will have 300 hotel keys, in addition to 160 villas and up to 400 apartments. Add a full-scale wellness center and the project can compete with the bets.

“We have 1 million square feet of land which would allow between 2.5 and 2.8 million square feet of construction,” Bin Kalban said. “The plan is to bring in an international operator. We plan to start construction before the summer and finish in 24 to 30 months.

Ras Al Khaimah, by the way, is improving its hotel offering and recently announced that it will consolidate all of its resort projects under a newly created entity.

Receive invitations to build

Dubai Investments’ Fujairah project, including a new office tower, will be ready by the end of this month. “These projects help us expand our footprint beyond Dubai and create new investment opportunities,” said Bin Kalban.

On whether plans have been finalized for Dubai Investments Park-like economic zones outside of Dubai, the CEO said: “A lot of these plans were delayed by COVID-19, and there was nothing that we or the governments planning these projects could do. Now we are starting to get them back on track – we have approached the Egyptian authorities to grant us the land. Certain progress is being made in Angola.

“The Dubai Investments Park model is something that others want to create in their own countries, and we continue to receive invitations to build. If COVID-19 finally takes a back seat, I am sure we will embark on projects outside of Dubai. We are ready.”

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