Sheikh Mohammed bin Rashid al-Maktoum looks at the mock-up of the "Mall of the World" project during its presentation in Dubai.
Reuters/Dubai
Dubai Holding, the investment vehicle of the emirate's ruler, will need 25bn dirhams ($6.8bn) to build an entertainment district that will include the world's largest shopping mall, its chief executive said on Tuesday.
Sheikh Mohammed bin Rashid al-Maktoum announced plans on Saturday to build the "Mall of the World", encompassing an 8mn square foot mall connected to a theme park, 100 hotels and serviced apartment buildings with 20,000 rooms.
The plans, and other new building projects, have led some analysts to warn that Dubai risks overbuilding again as it did a decade ago, culminating in its 2009 debt crisis.
Chief executive Ahmad bin Byat, however, told Reuters that he believed there was demand for such projects.
"The way things are growing I think we are barely coping with the demand ... tourism is growing in Dubai," Byat said in an interview at the group's headquarters.
The "Mall of the World" entertainment district will include air-conditioned streets, according to the press release. The whole project will be built over 10 years and the funds will be raised gradually over that period, Byat said.
"That (25bn dirhams) is how much it will cost when it's ready. That is in about 10 years so we are talking about a requirement of about 2.5bn dirhams every year for the next 10 years," he said.
"This is a long-term project and we are betting strongly on Dubai," he said, adding that the size of the entire project would be in the range of 48 to 50mn square feet.
At least half of the funds will come from internal resources, Byat said, and the rest will be accumulated through the debt market, sales of some parts of the project, revenue from leasing, and partnerships.
However, he did not specify whether talks have begun with banks on financing the project.
The first phase of the project will focus on the retail aspect, including the mall, and is expected to be ready in three years. Tenders for the project will go out in about six months.
Dubai is still recovering from its 2009 debt crisis.
Dubai Holding was one of the state-linked entities that borrowed heavily from banks to fund growth and acquisitions during the boom years from 2006-08 and was hit when a property bubble burst. Its Dubai Group unit reached a final deal with creditors in January to restructure its $10bn debt, the last major hangover from the emirate's financial crisis.
A strong rebound in tourism and trade in Dubai has prompted property firms to announce a raft of new housing, retail and hospitality projects.
However, the International Monetary Fund has repeatedly warned Dubai of another possible boom-bust cycle and called for tighter measures to counter property speculation.