One of Dubai's biggest developers, Dubai Holding LLC, decided to bring their $20 billion plan - to build the world's largest mall surrounded by 100 hotels - to Morgan Parker. However, the former head of the Rockefeller family's Rose Rock real estate firm had to make some pretty big adjustments for those very plans.
As it turns out, Parker suggested that the company is better off with a more "scaled-down plan" for Dubai Holding's Mall of the World project. This time around, the project won't be breaking records just so they can attain some attention.
Unfortunately, the plan - even with its new changes - are still facing some problems. Bloomberg reports:
"Even the adjusted plans will face challenges in winning backers. Political turmoil, falling oil prices and declining Dubai home values have made Gulf-based financiers skittish about new investments. And big international funds have been wary of Dubai real estate since the near-default in 2009 after a spending spree on trophy projects including man-made islands."
"Most institutional investors don't like to take on development risk especially in times like this," real estate broker Jones Lang LaSalle Inc.'s Gaurav Shivpuri, head of capital markets for the Middle East and North Africa said. "The preference is usually for operating assets that provide income right away but again with the right price point some may be persuaded."
Thanks to the new plans, the Mall of the World project will be able to include three malls built in different phases, rather than one big shopping center. This allows the project to expand and grow at a much slower pace, depending on the demand and investments.
Parker claims that the new plan is focused on realistic projects that could quickly profit in cash, as opposed to building expensive building that are meant to cultivate Dubai's growing international image.
"We are avoiding the biggest of this and tallest of that," explained Parker. "Dubai is maturing as a city and investors are looking for rational projects. At the end of the day, the money is made by the tenants paying the rent and they are looking for projects that function."