Bloom Holding is hoping to finalise a deal that will allow it to develop a 2.2 million square metres plot of land near Abu Dhabi airport by the end of the year.
The chief executive Sameh Muhtadi said that Bloom expects to be able to put about 13,500 homes on the site, and that 2,000 of these would be affordable properties.
“We’re working very closely with both designers and contractors trying to get the design and construction costs to where it would make sense,” said Mr Muhtadi. “The problem, as always, is the price of land. It would be fantastic if we can reach some agreement with the authorities in Abu Dhabi to assess that – potentially even lease some plots.
“But certainly we are making some very good progress. I think before the end of the year we will have sharpened our pencils and we will have a good idea of how many, what the costs are and where they will be built.”
He anticipates that the affordable element would be the first phase to be built, but subsequent phases would be higher-value properties.
Abu Dhabi’s Urban Planning Council has issued guidelines to developers which insist that 20 per cent of the gross floor area within residential buildings or master communities are developed and managed for “middle income” earners. The units must be rented for a minimum of 10 years at below market rates.
“The numbers are very difficult to achieve unless the land is granted, or it’s free land,” said Mr Muhtadi. “It’s a difficult balance to make.”
He said that he expects the airport project to take 15 to 20 years to develop, with delivery being phased.
“I think the first phase will be close to 2,000 and then we will follow every two to three years with another 2,000.”
He anticipates that the homes will be leased on a long-term deal to a corporate occupier such as a healthcare or education company which can house all of its staff together.
“If you have a long-term lease, you have an ability to exit the development after stabilising it, and that would make sense for us. It will help to finance the rest, especially because there is going to be a lot of infrastructure spend, a lot of commercial units and social infrastructure in the form of hospitals and schools.”
The company launched Bloom Heights – a pair of high-rise towers linked by four podium levels in Dubai’s Jumeirah Village Circle at the Cityscape Global conference this week. Mr Muhtadi said that it had sold about 80 per cent of one tower within four days. The other tower is being retained by the company for rental income.
Earlier this week, the property consultancy Asteco said that cuts to government budgets on the back of lower oil prices has led to job losses in Abu Dhabi over the past six to eight months, with rents declining by 3 per cent on average, but luxury units have been subject to greater declines. It added that the sales market will remained “subdued”.
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