Morgan Parker, former head of the Rockefeller family's real estate company Rose Rock, put a halt to the $20 billion Mall of the World mega project and presented a scaled-down plan for the world's largest shopping center along with 100 hotels, a report from Irish Examiner revealed.
Parker took Dubai Holding's Mall of the World project back to the drawing board and insisted on a less-spectacular plan that definitely does not break any records.
Political unrest, declining oil prices and downgrading property values in the region have made Gulf-based investors uneasy about making any kind of investment. Also large international funds are also wary of Dubai real estate due to the near-default in 2009 with extravagant projects such as man-made islands and other outrageous developments.
Gaurav Shivpuri a real estate broker from Jones Lang LaSalle's head of capital markets for the Middle East and North Africa said, "Most institutional investors don't like to take on development risk, especially in times like this."
The plan that was put on hold included three malls that will be constructed in a number of stages. This included a big shopping centre with the capability to grow according to demand and investment. Parker said, "We are avoiding the biggest of this and tallest of that."
"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."
A closer look at the features of this 850,000-square-meter project includes a fashion district with retail outlets, shops and traditional malls. There will be around 35 office buildings which will be constructed around the area to reduce congestion.
There will be around 8,000 homes ranging from luxury apartment units to student housing as well as homes to accommodate staff.
Dubai Holding may be backed by ruler Sheikh Mohamed bin Rashid Al Maktoum but the project also needs institutional investors. Jones Lang LaSalle's Shivpuri said regional investors are still looking into investing in Dubai as they tend to disregard risks that usually turn off other investors abroad.
Real estate investor IP Global Ltd. Richard Bradstock said that local investment is under pressure due to the oil price slump and political instability in the region.
