Dubai Holding, the investment vehicle of the emirate’s ruler, will need$6.8 billion to build an entertainment district that will include the world’s largest shopping mall, its chief executive said.
Sheikh Mohammed bin Rashid Al Maktoum announced plans to build the “Mall of the World”, connected to a theme park, 100 hotels and serviced apartment buildings with 20,000 rooms.
The plans, and other new building projects, have led some analysts to warn that Dubai risks overbuilding again as it did a decade ago, culminating in its 2009 debt crisis.
Chief Executive Ahmad bin Byat, however, told Reuters that he believed there was demand for such projects.
The “Mall of the World” entertainment district will including air-conditioned streets, according to the press release. The whole project will be built over 10 years and the funds will be raised gradually over that period, Byat said.
“That ( $6.8bn or 25 billion dirhams) is how much it will cost when it’s ready. That is in about 10 years so we are talking about a requirement of about 2.5 billion dirhams every year for the next 10 years,” he said.
“This is a long-term project and we are betting strongly on Dubai,” he said, adding that the size of the entire project would be in the range of 48 to 50 million square feet.
At least half of the funds will come from internal resources, Byat said, and the rest will be accumulated through the debt market, sales of some parts of the project, revenue from leasing, and partnerships.
However, he did not specify whether talks have begun with banks on financing the project.
The first phase of the project will focus on the retail aspect, including the mall, and is expected to be ready in three years. Tenders for the project will go out in about six months.