Monday, December 17, 2018 5:33 AM

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Shapoorji Pallonji starts Dh1.6bn project in Dubai


India’s Shapoorji Pallonji Group has recently launched a Dh1.6 billion project – the 45-storeyed Imperial Avenue – that will host 424 apartments near Burj Khalifa – the world’s tallest tower. This marks the entry of one of India’s largest contractors in the UAE’s real estate development market, where Shapoorji Pallonji has a large footprint.

Piling construction of the project has already started while main civil engineering works are expected to start in the first quarter of 2017 by the group’s construction arm, Shapoorji Pallonji Construction Co., officials said. The project is scheduled for completion in the fourth quarter of 2019.

Piling and shoring works are being carried out by Bauer. Company officials said that the project will be financed by sales revenues as well as the company’s own resources.

The project gives its construction arm additional works to manage its business while the real estate and construction sector shows signs of a slowdown. The move comes off the back of Shapoorji Pallonji’s 45 years of experience as a contractor in the Middle East, working on projects such as Rove Hotels and Mudon Villas.

“The construction of the project could cost us around Dh1.3 billion while the sales value could reach Dh1.6 billion at current price,” Rayomand Dastur, Director of Sales and Marketing at Shapoorji Pallonji (SP) International Property Developers – the developer of the Imperial Avenue.

That leaves Shapoorji Pallonji (SP) International Property Developers, with a margin of Dh300 million.

“We have just started the sales and marketing campaign and the initial response is quite good. We have a sales team of eight professionals who will liaise with the brokerage community to sell the apartments,” Dastur says.

“This is a luxury project with lots of additional functionalities that most projects do not have. The location of the project itself has its strong appeal – close to Burj Khalifa, facing Business Bay – the new downtown and a business centre for the region.”

The apartments are 20 per cent larger than the average size of flats in Dubai.

This is part of the group’s planned development of about 5 million square feet of property in Dubai as part of its first wave of expansion outside of India. The move has nothing to do with the recent boardroom clash between Cyrus Pallonji Mistry – member of the family that owns Shapoorji Pallonji Group and former chairman of Tata and Sons.

Cyrus Mistry is the younger son of Pallonji Mistry, owner of the Shapoorji Pallonji Group – that has 18.5 per cent stake in Tata and Sons – the corporate entity that controls one of the largest groups of businesses in India.

Shapoorji Pallonji Group, is a 150-year-old diversified family-owned conglomerate with interests in construction, real estate, textiles, engineering goods, home appliances, shipping, publications, power and biotechnology. It also has a large construction footprint in the UAE, Oman and other parts of the Middle East. It was established in 1865 as Littlewood Pallonji and Co and has come a long way in its journey over the last 150 years. The group’s 58,000 employees help it to generate an annual turnover of US$8.5 billion (Dh31.19 billion).

Jacob Joby, the company’s Development Director, says the project has been designed with the six-dimensional (6D) Building Information Management (BIM) model. “This is completely designed using 6D BIM model by our in-house designers – when the rest of the world uses the 3D BIM modelling for building design,” he says.

“The project will have 13 high-speed lifts while the roof-top solar panels will produce 300 KW power that will reduce electricity bills by a half. There are a number of green and sustainability features in the projects including the recycling of grey water for irrigation.

“Besides, every home will have LPG gas connection for cooking. So, residents will not have to use electric stove – that will further save power.”

Dastur says, the company is offering a 60:40 payment plan that includes 60 per cent payment while construction and the balance 40 per cent during handover. The project will have 729 parking space for 424 apartments and 26 space for visitors.

Prices start at Dh840 per square feet with the one-bedroom apartments priced at Dh1.47 million while the large penthouses are priced around Dh11.5 million for 6,000 square feet homes. There are also six "podium-villas" at the top of the building, a 26th-floor podium level with a rooftop infinity pool and sixth- and ninth-floor podium levels with a community pool and children’s play areas. The building also contains a private cinema, and five floors of parking.

Shapoorji Pallonji has a strong construction work load at multiple sites.

Shapoorji Pallonji has a presence in the Middle East since 1971. Its first job was in Oman building a palace for Sultan Qaboos but it has worked in Dubai since 1974 and built structures such as Damac’s Park Towers in DIFC and the new Landmark Group headquarters in Dubai Marina. It is also building tower projects in Riyadh and Dammam.
The company’s current projects at hand includes a US$525 million (KD150 million/Dh1.92 billion) contract to build, operate and maintain colleges of social science, law and Shariah and Islamic studies, prayer areas and a faculty club for Kuwait University.

Shapoorji Pallonji is already present in the Kuwaiti market, having won the design-build contract with supply, installation and maintenance of medical procurement for the US$635 million Al Sabah Hospital. Providing 617 beds, the project is currently in its design phase and is expected to last approximately 48 months in total.

In 2015, it was awarded a contract by Union Properties to develop villas at the Green Community West Phase 3 project.

In December 2015, Dur Hospitality awarded SR259 million ($69 million) contract to a Shapoorji Pallonji Engineering and Construction to build Diplomatic Quarter Riyadh Marriott Hotel and Executive Apartments.

Earlier last year, a joint venture between Shapoorji Pallonji Mideast LLC (SPML) and Oman Shapoorji Company LLC was awarded a construction contract for package 3 of Oman Convention and Exhibition Centre (OCEC) for RO85 million by Oman Tourism Development Co.

In November 2014, Dubai Properties Group (DPG) appointed Shapoorji Pallonji Mideast LLC as the main contractor for Phase 2 of Mudon   a residential community in Dubailand. The development includes 200 villas at Rahat and 120 townhouses at Naseem neighbourhoods on plots ranging from 6,700 square feet to 10,000 square feet within the gated community.

Phase 2 will house nearly 800 residential apartments, leisure and community facilities, a school and a 64,000 square feet community centre.

Lower oil prices are eroding long-standing fiscal and external surpluses, but the UAE has continued to benefit from its perceived safe haven status and large fiscal and external buffers that have helped limit negative spillovers from lower oil prices, sluggish global growth, and volatility in emerging market economies, the International Monetary Fund (IMF) said in a latest report on the UAE economy  this year.

The implementation of megaprojects and private investment in the run-up to Expo 2020 are expected to support activity over the medium term, IMF said.  

“However, lower oil prices are eroding fiscal and external surpluses, and going forward a hike in the US interest rate could lead to a tightening of financial conditions,” IMF said.

However, despite the lower regional economic outlook, the company is winning projects. Shapoorji Pallonji Qatar has initiated business with three projects worth US$400.27 million and completed successfully which includes the US$192.3 million Barwa Commercial Avenue, the US$204.67 million Barwa City Amenities and the Seaside Pavilion Restaurant at the Hilton Hotel last year.   

In Qatar, the company is also executing US$324.63 million worth of projects that are at various stages of development.

The group’s Middle East operations currently represent about $3.5 billion of the total company order book of US$10 billion. It’s bulk of business is still concentrated in India. Some of the company’s most prestigious projects in the GCC include Fairmont Bab Al Bahr hotel, Abu Dhabi; Marriott Hotel Abu Dhabi, Sultan Qaboos Palace, Muscat; Damac’s Park Towers, Dubai; Bloom Central in Abu Dhabi, the Barwa City Amenities Zone, Doha, Phase II of Mudon and Shatt Al Arab Hotel, Basra.