Saudi Prince Alwaleed bin Talal speaks during an interview with Reuters at his offices in Kingdom Tower in Riyadh, May 6, 2013. Faisal Al Nasser / Reuters

Saudi billionaire Prince Alwaleed bin Talal says he is looking at the world’s largest cities, including Shanghai, Moscow, London and New York, as possible locations to build a mile-high skyscraper that would be the world’s tallest building by far.

The prince is inviting Dubai’s biggest real estate developer Emaar Properties, chaired by Mohammed Alabbar, to team up with his investment firm Kingdom Holding on the project.

“Right now we are discussing and evaluating the possibility of building a one-mile (1.6-kilometre) tower,” Alwaleed told Reuters by telephone late on Monday.

“We also need good partners. I invite Emaar and Mr. Alabbar to join forces with us and see how we can build the ultimate one-mile tower somewhere in the world.”

Alwaleed did not say how the project would be financed if it went ahead, or when it might be completed. He said the cost had yet to be decided.

But his ambition reflects the growing confidence of many Gulf companies as they expand overseas, aided by booming economies and rising asset prices in their home countries.

“I am now inviting the major cities of the world like Shanghai, Moscow, New York, London and regional cities in the Middle East to come and give their offers,” Alwaleed said.

He said countries interested in hosting the world’s tallest tower would have to offer attractive financing terms, tax breaks and other government support.

Alabbar could not immediately be reached for comment. Over the past year, Emaar has committed itself to several other huge projects in Dubai and nearby countries.

Industry experts have said building a one-mile skyscraper would involve technical and design challenges, such as how to supply water economically at that height, but would not be impossible.

If it is built, the mile-high tower would surpass the world’s current tallest skyscraper, the 828-metre (2,717-foot) Burj Khalifa in Dubai, as well as the one-kilometre-high Kingdom Tower now being built by Kingdom Holding in the Saudi Arabian city of Jeddah.

The Kingdom Tower is expected to cost around 4.6 billion Saudi riyals ($1.2 billion) and will form part of a hotel, retail and luxury residential project.

The structure is expected to reach ground level by the end of this year and to be completed in 2017, said Talal Al Maiman, executive director at Kingdom Holding.

About 30 percent of useable land in the overall project, which will have an area of about 5.3 million square meters (57 million square feet), will be allocated to hotels. The remainder will be divided equally between retail and premium residential space, Al Maiman added.

Kingdom Holding, which went public in 2007, has a market value of about $18.5 billion, making it one of the largest listed investment firms in the Middle East. Its assets include stakes in top Western firms such as Citigroup, News Corp and Twitter as well as luxury hotels around the world.

Copyright (2013) Thomson Reuters.

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In this Sunday, May 26, 2013 photo, several flights get ready to take off after a couple of days of bad weather disrupted flight services at Lukla airport, Nepal. Niranjan Shrestha / AP Photo

As soon as the decades-old Twin Otter landed at Lukla airport, passengers burst out in applause. They do that for nearly every safe landing at the often terrifying airport at the gateway to Mount Everest.

At an altitude of 2,843 meters (9,325 feet), the small airstrip here has earned a reputation as one of the most extreme and dangerous airports in the world. The single runway is narrow, short and sloped. Miss the runway by a few meters (or feet) and the plane would hit a mountain.

“After you cross the river there is no turning back, you have to land,” said Pramod Poudel, a Tara Air pilot who has flown hundreds of these flights to Lukla.

Carved out of the side of a mountain, the airport was built by Sir Edmund Hillary in 1965 — 12 years after he became the first man to conquer the world’s highest peak — to help the local yak herders known as Sherpas spur development in the impoverished area.

Now what once was a dirt strip is one of Nepal’s busiest airports, the Tenzing-Hillary Airport — named as well for Hillary’s climbing partner Tenzing Norgay. The thousands of mountaineers and trekkers who visit the Everest region have to fly to the airport if they want to avoid a daylong bus trip from Katmandu and five days of trekking to reach here.

The airport has handled up to 79 flights on one day — far beyond the acceptable capacity for such a facility, said Rinji, the airport’s air traffic controller, who, like most Sherpas in the Everest region, uses only one name.

“It is really challenging, because of the geographical location of the airport and high mountains that surround it. Topography is challenging and the traffic volume is challenging,” said Rinji. “There is little space for aircraft to maneuver because of the high mountains and narrow valley.”

Poudel, the pilot, said he and his colleagues need to concentrate hard when landing on the single runway, which is less than 500 meters (yards) long, slopes some 12 degrees and is barely 20 meters (65 feet) wide.

“Because there is no way to go around again, we have to calculate many things like air speed, tail wind, fog,” he said. “If you don’t do the proper calculation or proper exercise, then it” — meaning an accident — “happens.”

The airport can only handle special short take-off and landing (STOL) aircraft like the Twin Otter or Dronier that take about 18 passengers. It has room for only four of these planes to be parked at one time.

The runway is one-way for both takeoff and landing. Aircraft have to land from the southwest and take off toward the northeast because at the end of one side of the runway is a mountain. When winds are blowing in an unfavorable direction, all takeoffs and landings have to stop.

Crashes are not uncommon.

In 2008, 18 people were killed when a Twin Otter plane belonging to the domestic Yeti Airlines smashed into the side of the runway and caught fire while trying to land in heavy fog. Investigators said the pilot should not have attempted to land in those conditions.

In August 2010, 14 people were killed when a Dronier belonging to the domestic Agni Air crashed after it was forced to turn around due to bad weather conditions at Lukla. In May 2004, another Yeti Airlines Twin Otter crashed while approaching Lukla, killing all three occupants in an accident blamed on heavy cloud buildup and pilot misjudgment.

One plane was unable to stop on the short runway and smashed into a wall. Another skidded off the runway. A third lost its front landing gear as it tried to land and skidded down the runway, forcing the airport to shut for two days. No one was killed in those crashes.

In addition to trekkers, the flights bring in food, construction materials, beer and other supplies required by the local population in this poor area.

And it has changed life here.

Once a tiny village, Lukla now has 3,000 people, many of them drawn to tourism work. Sherpas wait outside the airport hoping to be hired as porters by trekkers staying in the mountains for anywhere from a few days to a month.

But the burgeoning population attracted by the airport has also created severe drinking water shortages and sewage problems. And when a curtain of fog descends on the airport during the popular October trekking season, flights can be cancelled for days. As many as 2,500 passengers have been left stranded here with little food and no accommodation.

Even on its best days, the airport is open for only a few hours.

A man named Funru said his father once owned the land where the airport sits and helped Hillary dig the airstrip.

“When I first began working at the airport, it used to be nothing like this. It was like a river bank. Every evening we had to collect rocks and fill the potholes so flights could land the next morning,” Funru said.

Gurubacharya contributed to this story from Katmandu.

Copyright (2013) Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Saif noted that the January-March period witnessed a 10 per cent drop in the total number of visitors who came to Jordan, while the number of Arab tourists increased by 3 per cent.

But the minister did not elaborate on the exact number of tourists who came to the country in the period in question.

At a meeting with local and Saudi reporters, he said regional turmoil had affected the influx of tourists to Jordan, as well as other neighbouring countries.

But according to Central Bank of Jordan figures, the drop in tourist numbers did not affect the sector’s revenues, which went up by 1.7 per cent during the first quarter of 2013, compared to last year, standing at around $777 million (around JD550 million).

In an attempt to alleviate the impact of the current crisis in the region on the country’s tourism sector, the Jordan Tourism Board (JTB) is intensifying its promotion campaigns around world.

Part of the campaign, according to JTB Director Abed Al Razzaq Arabiyat, is inviting journalists from different countries to experience the Kingdom’s tourism products.

In remarks to the Jordan News Agency, Petra, after the meeting, Arabiyat said the number of Saudi tourists in the first four months of 2013 exceeded 189,000 visitors, a 3.1 per cent increase compared with the same period in 2012.

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Emirates Airlines flies a Boeing 777 over Castleton on the way to Manchester Airport. Ingy / Flickr

Emirates Airline president Tim Clark is in talks with US manufacturer Boeing to develop aircraft that will allow it to fly ultra long-haul flights of up to 20 hours.

The talks are part of the carrier’s aim to double its global route network to nearly 270 destinations, it has been reported.

Clark said Sydney to Rome was on the horizon if the US manufacturer could develop an aircraft that was comfortable enough for passengers to sustain such a single journey.

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Officials say a draft law aims to raise $100 billion in yearly revenues, bypass bureaucracy and create an industrial hub for shipping along the 192 km (120-mile) strip.

Those opposing argue it gives the president absolute powers to seize land.

Last month, protestors in Port Said stormed a conference that aimed to showcase the port development plan, forcefully removing attendees.

While demonstrations have been limited to government buildings, activists in Suez and surrounding areas say if a draft law is passed, they could aim to disrupt the flow of shipping through Suez – a vital chokepoint for global trade especially goods and oil to Europe.

“The response to the project shows the deep distrust that many Egyptians have towards (President Mohamed) Mursi’s government and increasingly of the Muslim Brotherhood,” said James Petretta of risk consultancy Maplecroft.

“While the government is desperate to increase revenue and signal to the world that Egypt is ‘open for business’, plans to put this into action are likely to be rushed and at times haphazard.”

Mursi’s cash-strapped administration is battling a slump in tourism, sliding currency reserves and failure to reach agreement with the International Monetary Fund over a $4.8 billion loan due to required austerity measures. Tolls paid by ships using the canal bring in around $5 billion annually.

A copy of the draft law seen by Reuters states the president has the right to determine the area of the Suez project and the authority’s board of directors, appointed by the president, “can own land and property, including the sequestering of ownership for public interest”.

The draft says the authority’s finances are considered “private funds”. Opponents argue such a clause will allow the state to use land as an asset against sukuk debt raisings, which if Egypt is unable to repay, can be claimed by investors.

“We are afraid that some countries who have interests with the Muslim Brotherhood, such as Qatar, will abuse the right of the lands and take advantage of this,” Islam Mosadaq, a leading Suez activist, told Reuters.

Government spokesman Alaa el-Hadidi said the draft had since been “rewritten in a very comprehensive way and will be submitted to the cabinet”.

In recent weeks opposition to the plan has spread and a group of retired generals are seeking to coax the military to block the proposals.

“If we can’t repay the sukuk, foreign firms can claim the land,” retired general Abdulrafi Darwish said.

RISING SHIPPING RISKS

Thousands of activists in Suez, Ismailia and Port Said have been coordinating opposition, threatening they could escalate their protests to disrupt the main operations control centre in Suez.

“I hope that we do not reach the point where we have to stop navigation at the canal but if they pass the law then this is … the last step to escalate,” said Mohamad Hanafy, a leading activist in Ismailia.

Cairo says such moves would be “a direct threat to national security”.

“There are certain red lines. Anyone who thinks they can disrupt navigation of the Suez canal will be considered doing an act against Egypt’s national security and will be dealt with accordingly,” government spokesman el-Hadidi said.

Shipping sources say some vessels calling at Port Said have experienced robberies in recent months. There have already been minor stoppages affecting the canal this year by other protest groups.

“Ports along the Suez Canal are at a somewhat higher risk of being affected by riots, as also demonstrated in the past,” said Jakob Larsen, maritime security officer with BIMCO, the world’s largest private ship owners’ association.

“Judging from the economic and political outlook as reported by our local contacts, things are likely to get worse before they get better.”

Using the canal is still the quickest route between Asia and Europe, saving an estimated 15 days of journey time on average. Shipowners have told Reuters that re-routing around the Cape of Good Hope might be a consideration if disruptions worsened.

Writing by Jonathan Saul; Editing by Veronica Brown and William Hardy. Copyright (2013) Thomson Reuters. Click for restrictions. 

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The Dukan tourist city project will be built in Sulaymaniyah near the border with Iran, Herish Muharam Muhamad, chairman of Kurdistan Regional Government’s investment board, said in an interview in the regional capital, Erbil. The resort at the artificial lake Dukan will include hotels, restaurants and residential areas as well as cinemas and casinos, he said.

The semi-autonomous Kurdish region has become a focal point for tourists and business visitors even as much of Iraq continues to face political and ethnic violence following the war that toppled Saddam Hussein. Emaar, which has the heaviest weighting on Dubai’s benchmark stock index, last year signed an agreement with Iraq government officials to develop housing and tourism projects in the country.

Faruk Group Holding comprises 12 companies in businesses including construction, telecommunications, cement, hospitality and retail. It is Iraq’s largest private company, with 11,000 employees, according to Faruk’s website.

Emaar is bidding for a $5 billion housing project in central Iraq, Mohammed Ameen, vice chairman of Iraq’s National Investment Commission, said in an April 1 interview in Baghdad. Iraq has allocated more than $31 billion to address a residential shortage estimated at more than 670,000 homes. Emaar didn’t immediately reply to an e-mail seeking comment on the Kurdish resort project.

Emaar climbed as much as 6.4 percent today after MSCI Inc. upgraded the United Arab Emirates to emerging market status from frontier. The shares closed up 2.8 percent as of the 2 p.m. market close.

–Editors: Ross Larsen, Andrew Blackman

To contact the reporters on this story: Khalid Al-Ansary in Baghdad at kalansary@bloomberg.net; Nayla Razzouk in Dubai at nrazzouk2@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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The hands of history are still developing the Middle East’s hospitality industry, revealing a polarised picture of the aftermath of the Arab Spring.

While the UAE and Saudi Arabia continue to break arrival and occupancy levels, countries such as Egypt and Tunisia are battling to recover to tourism levels witnessed in 2010.

It’s very much a story of perceived safe havens making the most of those travellers shunning countries that are still associated by many across the globe with images of violence and disruption.

Having said all this, the Hotelier Middle East Salary Survey 2013 reveals other trends, a few of which could be seen as positive. It would appear wages are increasing, certainly among lower paid workers, and overall sentiment also appears to be on the rise. But before we tackle the facts and get into the ‘whys and hows’, let’s take a look at our valued respondents.

Once again it was the UAE that supplied the majority of respondents (72.5%), with 7.7% working in Qatar and 6.8% in Saudi Arabia. Our Egyptian contingent made up 2.4% of total survey takers, while six hoteliers in Bahrain also took part.

Just over half of those surveyed (51.9%) work in a city hotel, with 5.3% working in a boutique property. Hotel apartment workers were represented by 24 survey takers and 83 resort workers offered their views in the survey.

Just under two thirds of respondents (65.3%) work for an international hotel company, 18.2% for a local firm and 16.5% for a regional organisation.

Not surprisingly, considering the majority of respondents are based in the UAE, 65.6% of those surveyed work in a five-star property. Seventy one work in a four-star establishment while 4.6% work in a three-star hotel. A further 4.6% work in a property with no rating.

Reflecting the transient nature of the region and the battle employers are facing to retain staff in a climate with such a robust pipeline, it is little surprise that 43.1% of respondents have been with their current employer for less than three years. Only 18.4% had been with their employer for more than 10 years.

Low on the go

Of course, one of the most popular reasons to move jobs and one of the best ways to tempt someone to stay with your company is an increase in salary.

Last year we noted that the dramatic increase in people earning less than US $3000 witnessed in the 2011 survey compared to the 2010 survey has made an about turn. The percentage had fallen from 47.5% in 2011 to 35.9% in 2012, almost returning to the 2010 level of 35.1%.

We are pleased to be able to report that the percentage of those now earning less than $3000 a month is down to 33.7%.

Of those surveyed, 36.8% said their salary had been below $3000 12 months ago, very much in keeping with the findings of last year’s survey.

While not dramatic, it is a sign that wages are on the rise for the lowest paid. Although we are unable to accurately compare this with rises in inflation, at least it is a reversal of the downward trend that immediately followed the global economic crisis.

Pay rises certainly seem to be a trend with 81.7% of respondents having received a hike in salary in the last two years, 52.3% of the total surveyed within the last 12 months.

There have also been plenty of promotions — 52.6% said they were promoted within the last 24 months and a huge 73.8% are expecting to be promoted in the next two years.

Line staff and management

We like it when our numbers add up and the apparent rise in wages is reflected in views on the remuneration of line staff.

Last year 81.4% of hoteliers didn’t believe line staff were being paid enough. This year 74.4% feel the same.

Certainly, there is clearly a lot of work to be done in increasing wages, according to three quarters of those surveyed, but on the upside things appear to be heading in the right direction.

The percentage of those that said wages were fair because of the career opportunities was virtually identical to the number who said the same in 2012 (10.3% compared to 10.5% last year). However, the number who said wages were fair due to the amount of training required leapt from 8.1% in 2012 to 15.3% this year.

Comparatively, 64.9% of respondents felt management wages in the region weren’t adequate. Of the 35.1% who thought they were adequate, 16.3% believed great career opportunities in the sector were the reason while 18.8% said large workforces provided managers with plenty of support.

Competitive companies

Clearly there is still work to be done in either raising wages or convincing employees they are being fairly remunerated for other reasons.

This of course is the job of the employers, so this year Hotelier asked respondents which hotel company they felt offered the most competitive salary packages in the region.

There were a number of different answers, but by far and away the name that came up the most was Jumeirah.

Four Seasons and Ritz-Carlton also had a number of mentions along with some of the other major international brands.

The perceived least competitive salary packages also provided numerous responses although ‘local companies’ received the most nominations.

Having said that, many of the companies who were considered the best remunerators also made it onto the worst list, so opinion is clearly divided.

When it came to locations, just under half (44.7%) of respondents said the UAE offered the highest pay scales in the region, with 26% saying Saudi Arabia and 17.3% opting for Qatar.

Egypt received the biggest backing when it came to the lowest pay scale (25.5%), followed by Syria on 14.4% and Yemen on 12.5%.

Surprisingly 20 respondents felt the UAE paid the lowest in the region, 18 of whom work in the country.

Just under half of those earned less than $1,500 which may go some way in explaining their views, especially if you factor in cost of living in each country.

Focus on procurement

Is there any surprise that it is all about the money for those in procurement?

From the purchasing professionals that took part in the survey, 44.4% said they would leave their current role for more money although 33.3% said they would leave for a more prestigious position (which to be fair would probably include a pay rise!).

However, only 44% said they looked forward to the future with complete confidence and 22% said they feel less confident than they did 12 months ago. Do our friends in purchasing know something we don’t? Amongst those who took part in our survey, moreover, two thirds considered their wage to be average for the region, but on a global scale this view was shared by 44.4% of respondents.

Finally, the feedback revealed the average top end salary for our procurement respondents is $5250.

Job satisfaction

The good news keeps coming in 2013. The number of people who are completely happy in their current job is at an all-time high since we began the Salary Survey. A healthy 24% are feeling the glow of being in the right job for them.

Last year this number was 18.5%, but remember, the number of people completely happy in their job in 2010 was a shocking 6.3%

Sixty respondents said they would leave for a higher salary with 28.5% saying a more prestigious role would tempt them away.

A further 17.5% said they would leave their current employment to go to a new destination. Around half of those who expressed this sentiment were currently working in the UAE, while the others were working in Saudi Arabia, Qatar, Egypt, Bahrain, Tunisia and Oman.

It is clear from the results of this year’s survey that pockets of unrest are affecting certain markets and, while they suffer from the fall out, other destinations in the region are benefiting.

Generally though, wages appear to be on the rise and this is a welcome trend and is reflected in the job satisfaction responses. Despite this, experts warned that line staff in particular are still poorly remunerated and employers have to work extra hard to retain staff.

There is a great deal of optimism however, even in the hard hit countries such as Egypt, that a full recovery will take place within 12 months, but whether or not this will prompt an increase in pay we will just have to wait and see.

Hopefully, next year Hotelier can note even larger increases in salaries and greater job satisfaction across the board.

Stat attack

• 2.9 Percentage with less than 15 days annual leave
• 8.2 Offered unpaid leave in the past six months
• 21 Number of respondents who resigned due to impact of regional unrest
• 9 Respondents take more than 40% of their wage in commission
• 7.5% Are anxious about keeping their jobs

© 2013 ITP Business Publishing Ltd. All Rights Reserved. Provided by Syndigate.info an Albawaba.com company.

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Jumeirah Beach Park in Dubai, with Burj al Arab hotel in the background. James Forsyth / Flickr

Dubai’s gross domestic product expanded the most in five years in 2012 as the emirate, whose economy collapsed after the global credit crisis, rebounded on hotel and restaurant activities.

The emirate’s economy grew 4.4 percent last year, compared with 3.6 percent in 2011 and 3.5 percent in 2010, according to Dubai Statistics Center data. The sub-index for restaurants and hotels grew 17 percent in 2012, while manufacturing expanded 13 percent. Wholesale, retail trade and repairing services, which account for 30 percent of Dubai’s GDP, climbed 2.3 percent, the data show. The emirate’s economy expanded 18 percent in 2007.

Dubai’s economy is rebounding as confidence in the emirate’s ability to repay its debt is restored. Three state- linked companies paid or refinanced $3.75 billion of debt in 2012, in addition to a 3.3 billion dirham ($898 million) liability that matured in April. Sheikh Ahmed bin Saeed Al Maktoum, head of the emirate’s Supreme Fiscal Committee, said the emirate is committed to repaying its debts, and will do “whatever we have to do.”

Dubai almost defaulted in 2009, when its economy shrank 2.7 percent, after it borrowed more than $100 billion to transform itself into a tourism and commercial hub. While the emirate still has $25.6 billion of debt outstanding, the cost of ensuring its debt has declined 125 basis points in 12 months to 250 basis points, according to data compiled by Bloomberg.

Dubai’s borrowing costs have also declined, with the yield on its 7.75 percent notes due October 2020 falling 170 basis points in 12 months to 4.6 percent today.

The emirate’s GDP may expand 4 percent this year as the construction and logistics industries revive, Masood Ahmed, the head of the International Monetary Fund’s Middle East and Central Asia department, said in May.

Editors: Glen Carey and Karl Maier.

To contact the reporters on this story: Alaa Shahine in Dubai at asalha@bloomberg.net; Dana El Baltaji in Dubai at delbaltaji@bloomberg.net. To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.

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Rendering of Damac Towers by Paramount in Dubai. Damac / Paramount Hotels

Dubai is back with the big plans. What it doesn’t have are the biggest property investors.

Surging home prices in parts of Dubai and rebounding shopping and tourism markets are prompting developers to announce projects on a scale not seen since the emirate’s property market collapsed in 2008. So far, sovereign wealth, pension and insurance funds are staying away even as they splurge on real estate elsewhere.

“It’s a thin market and it has a reputation of being something of a casino,” said Richard Price, chief executive for Asia at CBRE Global Investors, which manages $93 billion of property assets. “I struggle to think of any real client appetite for exposure.”

Dubai’s developers, government officials and leader Sheikh Mohammed bin Rashid Al Maktoum have unveiled projects with a value of at least $40 billion in the past six months while providing few details on how they would be financed. With local and foreign banks unable or unwilling to lend for development, the absence of institutional investors calls into question just how many of the plans will come to fruition.

New projects like the world’s biggest Ferris wheel and a district with 100 hotels haven’t captured the attention of institutional investors as fallout from the crash, persistently high office vacancies and a population made up mainly of foreign transient workers cause them to look elsewhere.

Brookfield tries

Brookfield Asset Management Inc., based in Toronto, was one of the few large funds to target the sheikdom when it announced a $1 billion fund with the government’s Investment Corporation of Dubai in 2011 to focus on distressed assets. The size of the fund has since been reduced by half, Arabian Business reported May 9, citing Douglas Kirkman, chief executive officer of ICD- Brookfield Management Ltd.

“We are still fundraising and working on regulatory approvals for the fund,” Andrew Willis, a spokesman for Brookfield said by e-mail without being more specific.

Real estate topped the list of investments by sovereign wealth funds from Norway to Qatar last year, rising to 26 percent of the total from 14 percent in 2011, Institutional Investor’s Sovereign Wealth Center said in a May 16 report.

“Dubai is unlikely to attract very much interest from sovereign funds,” Victoria Barbary, director of the Sovereign Wealth Center, said by e-mail. “The boom and bust in Dubai’s property market over the past 10 years, as well as the large state-owned interests in properties and occupancy rates that still haven’t reached the levels of 2007 and 2008, would make the market too immature for non-Dubai-owned sovereign wealth funds.”

Wary banks

The lack of institutional investment compounds the financing difficulties for developers as foreign banks, stung by the last property crash, shun projects and local lenders are held back by regulation and their past losses. Banks that piled into Dubai during the boom, including HSBC Holdings Plc, Royal Bank of Scotland Group Plc and Standard Bank Group Ltd., have struggled to recover their investments as state companies such as Dubai World Corp. and Dubai Holding LLC renegotiated terms of loans.

“Dubai would have to rely more on equity than debt relative to the last building boom,” said Gus Chehayeb, director of Middle East and North Africa research at investment bank Exotix Ltd. “This time around, international lenders do not have the same appetite for these types of projects. The balance sheets of Dubai banks are very exposed to government- related entities and local developments.”

Megaprojects return

In February, Sheikh Mohammed announced the Bluewaters project that includes the 210-meter (688-foot) Dubai Eye Ferris wheel and a Middle Eastern market as well as a hotel, restaurants and a family entertainment center. In November, he unveiled a plan for Mohammed Bin Rashid City, the largest real estate development to be revived after the emirate’s property crash. The new district will include homes, hotels, artificial beaches and gardens larger than Hyde Park. That month, he also approved Dubai Adventures Studios, a $2.7 billion project to build five theme parks.

Bluewaters developer Meraas Holding didn’t respond to calls asking for comment on the project’s financing. State-owned Dubai Holding LLC and Emaar Properties PJSC, the main developers on the MBR City project, also didn’t answer calls for comment on how it would be funded.

Companies with the best-located projects still have fundraising options as rising property values and debt repayments lead to lower costs on bond markets. Dubai’s five- year credit default swaps, which measure the cost of insuring the emirate’s debt, have tumbled almost 50 percent in the past 12 months.

Bigger mall

Emaar this month said it began the expansion of its Dubai Mall, the world’s largest by area, and formed a partnership with Meraas to build the 11 million-square-meter Dubai Hills Estate, a mixed-use project featuring an 18-hole golf course. Tecom Investments LLC, a unit of Dubai Holding, said it will invest 4 billion dirhams ($1.1 billion) in the first phase of Dubai Design District for the fashion, design and luxury industries.

The average sale price of mid-range villas in Dubai soared 47 percent in the year to May and mid-range apartment prices advanced 32 percent, according to data compiled by Cluttons LLC.

Developers including Emaar, Dubai’s biggest by market value, and closely held Damac Properties Co. are reviving the practice of raising money by selling homes and serviced apartments before they are built. Wealthy individuals and international hotel and entertainment groups willing to form partnerships with Dubai companies are also a source of funding.

Previous boom

The last property boom was paid for largely by advance sales as well as debt from banks and the bond market. Large investment funds were mostly absent while developers and wealthy families poured into Dubai from Saudi Arabia and other Gulf countries to capitalize on the boom, according to Craig Plumb, head of Middle East research at Jones Lang LaSalle Inc.

Institutional investors considered buying Dubai assets after the slump, but were put off by owners unwilling to cut selling prices and a lack of transactions on the open market, Plumb said. The Chicago-based company’s LaSalle Investment Management unit, with $47.7 billion in assets, doesn’t invest in the Middle East, he said.

“It’s mostly money going out of the region, to London or Hong Kong, but not properties in the Middle East,” he said. “They are not attractive in terms of the pricing or the yield that you get to compensate for the risk.”

Quiet neighbor

Qatar, the natural-gas-rich nation that’s Dubai’s neighbor to the west, has focused on domestic projects and foreign investments in cities like London rather than developments on its doorstep. Qatari Diar Real Estate Investment Co., part of the country’s sovereign-wealth fund, helped build London’s Shard skyscraper and formed a partnership with Canary Wharf Group Plc to redevelop the Shell Centre near the London Eye Ferris wheel into a complex of offices and apartments.

Abu Dhabi Investment Authority, among the world’s biggest sovereign-wealth funds, has a maximum allocation of 10 percent for real estate investments, according to its website. The fund, backed by the emirate’s oil revenue, only invests outside the U.A.E.

Mubadala Development Co. PJS, another Abu Dhabi sovereign wealth fund with a large real estate portfolio, has assets mainly in its domestic market as well as investments in Los Angeles, the Maldives and Malaysia, according to its website. It doesn’t list any investments in Dubai.

Big money

Norway’s Government Pension Fund Global will be among the biggest buyers of real estate this year as it seeks to meet its target allocation of property, according to the London-based Sovereign Wealth Center. The $747 billion sovereign wealth fund, the world’s biggest, has purchased commercial property in London, Paris, Frankfurt and Berlin as part of a plan to increase real estate to 5 percent of its investments from 0.9 percent as of March. New property investment will initially focus on well-developed European markets, according to the fund’s website.

About 26 percent of sovereign-wealth investment, or $13.7 billion, went to real estate last year, beating commodities with about 23 percent, the Sovereign Wealth Center found. Much of it went to “safe haven” commercial assets in London and Paris, according to the center’s report.

China attracts

Though large funds tend to favor income-generating properties such as office towers and malls with tenants in place, they also finance development. CBRE Global Investors is frequently forming partnerships with developers in China, where the fund provides capital for construction, Price said.

“While there has been some institutional interest in some of Dubai’s debt, it hasn’t been the case for real estate,” said Rachel Ziemba, an analyst at Roubini Global Economics in London. “There are still concerns over the underlying demand and what the returns on these investments would be.”

The scale of Dubai’s new development plans means that the limits on financing can add years to the completion of projects. Work on the biggest ones will probably to stretch out over at least a decade, Jones Lang’s Plumb said.

The U.A.E.’s population of 5.5 million, 80 percent composed of foreigners who are mostly there based on temporary work permits, creates a long-term challenge. Dubai, with 2.1 million, and Abu Dhabi currently allow property buyers to secure a visa based on property ownership, a policy that has changed several times since it was first introduced.

Institutional investors tend to focus on developed markets where property prices have stabilized, Roubini’s Ziemba said. When they do invest in emerging markets, countries with large indigenous populations tend to win as investors see a better long-term outlook, she said.

“I struggle with the scale of high-end condominium development on the basis of such a small indigenous populations and much larger transient population,” CBRE Global Investors’ Price said. “The housing bubble was built on sand rather than fundamentals.”

Editors: Ross Larsen and Andrew Blackman.

To contact the reporter on this story: Zainab Fattah in Dubai at zfattah@bloomberg.net. To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.

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The massive expansion of The Dubai Mall, described as the world’s largest shopping and entertainment destination, has commenced its preparation to welcome over 100 million annual visitors to the mall. With the first phase expansion by 1 million square feet, the fashion portfolio of the mall will be further strengthened, enhancing the city’s high-end retail offerings.

Mohamed Alabbar, chairman of Emaar Properties, in a press release, said: “The Dubai Mall expansion project builds on Dubai’s new Tourism Vision 2020 announced by Sheikh Mohammed bin Rashid Al-Maktoum, UAE vice president and prime minister and ruler of Dubai, and the city’s focus on offering high-end retail and leisure attractions for residents and visitors from around the world.

“Our strategy to create compelling new retail and lifestyle experiences also supports the city’s growth outlook of further strengthening its core economic sectors, including retail, tourism and hospitality. The current expansion will redefine Dubai’s retail sector, cementing its reputation as a global hub for the latest in fashion. Having welcomed over 65 million visitors in 2012, and a record 20 million visitors in the first three months of the year, the highest so far during a three-month period, the expansion of The Dubai Mall will further underline its global standing as the world’s most visited shopping and lifestyle destination,” he added.

To be expanded further, the Fashion Avenue in The Dubai Mall will add new and personalized flagship stores of the world’s most renowned brands. The overall expansion will also bring in other high-end lifestyle and entertainment brands to The Dubai Mall.

Shoppers can experience the unparalleled ambiance of strolling along foliage-rich walkways with water features, set on a strip lined by premium stores. In addition, they can enjoy a wide new range of F&B additions being added along Burj Lake and overlooking The Dubai Fountain, the world’s tallest performing fountain.

The new spectacular additions to The Dubai Mall are being implemented with minimal impact on the ongoing mall operations. Visitors will continue to have full access to the mall’s 1,200 stores, the 200 F&B outlets and diverse array of leisure attractions, as work continues to add new features. ___

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