Falling demand has pushed costs on $5bn Dubai mixed-use scheme down
Construction costs on Dubai’s $5bn City of Arabia scheme have fallen 30% since September owing to falling demand caused by the slowdown in building work in Dubai. At least half of Dubai’s projects are on hold as the global economic slowdown means that the loans that had been funding the building boom have dried up.
City of Arabia, which includes residential, business and leisure buildings as well as a theme park with mechanised dinosaurs, had been rumoured to be on hold. But its developer, Ilyas and Mustafa Galadari Group, told ArabianBusiness.com this week that the reduction in construction costs was a key reason behind its decision to go ahead with the first phase of the scheme.
Steel and cement prices are down in the UAE by around a third of what they were six months ago, which means steel is being sold from around 1,830 dirhams (£335) per tonne and bulk cement at between 300 dirhams to 310 dirhams per tonne.
Abu Dhabi contractor Dhabi Contracting began work this week on Wadi Walk, a mixed-use residential and retail scheme within the development.
Alex Vacha, deputy director for projects at City of Arabia, said: “Whatever we’ve put in the plans for the first phase of City of Arabia we are going ahead with. Construction prices have come down 30% since last year and have been coming down on a weekly basis so this is the best time do Wadi Walk.”
Vacha also gave an update on progress on City of Arabia to date, including:
- Construction underway on the foundations of Mall of Arabia, the first phase of which will span over 5.6m ft2 over two levels.
- The mall is to open in the first quarter of 2011.
- Piling work nearly finished on Elite Towers, a three tower commercial and residential project.
- Restless Planet, a $300m theme park and earth science museum, to open in the first quarter of 2011.
City of Arabia will form the gateway to the Dubailand entertainment complex.