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Details of the development were jaw-dropping, even by Dubai standards. The project will include a park 30% bigger than Hyde Park in London, a retail complex named the "Mall of the World" that will be able to host 80 million visitors a year and include over 100 hotels, and a family entertainment centre developed by Universal Studios that will be attached to the mall.
The development will also include a district of art galleries, golf courses, and new residential areas.
No cost was stated for the project, which will be located between Emirates Road, Al Khail Road and Shaikh Zayed Road.
"The current facilities available in Dubai need to be scaled up in line with the future ambitions for the city," Sheikh Mohammed said, adding that Dubai aimed to become a business and cultural capital for 2 billion people in surrounding regions.
Attractions will be needed to spur demand
Asked about why Dubai would see the need to build such a massive project, Mathew Green, head of research & consultancy UAE, CBRE Middle East, said that one of the main factors driving this development is a desire by the Dubai government to improve its infrastructure so that it will have a better chance of winning its bid to host the World Expo in 2020.
"We are seeing a lot of projects being reviewed and re-enacted based on their desire to win this event. I think that's maybe why we have seen so many new projects being announced. All of this is linked in to that (World Expo bid)," he said.
In terms of the viability of the development, Green said a lot will depend on when the various components are delivered and whether demand drivers have been put in place.
"It is a huge undertaking but as long as it's done in a sensible way then there is definitely demand for certain asset segments in this market, but it needs to be managed in a way that we don't go back to creating another bubble that puts us back to square one in terms of recovery again," he said.
Green said it's important for Dubai Properties and Emaar to maintain a large degree of control over the project and ensure that it is phased in correctly.
"If you look at some of the projects from the heady days of 2007, like Business Bay, for example, the master developers sold maybe a couple of hundred plots to private developers, which meant they had kind of lost control in terms of phasing in the development and controlling how supply entered the market. So the delivery has to be well thought out to ensure you are providing what the end user is demanding as opposed to just building and hoping that there is demand later," he said.
Green also said it will be important for the Universal theme park to be finished ahead of time to help create demand. "At the end of the day there already is a lot of supply in this market, so before you build a huge mall and all these new hotels you need to create the demand drivers. You can't just build 100 hotels and have the drivers created afterward," he said.
Staff
