When Will Lusail City be finished
Qatar's hosting of the 2022 World Cup and aspirations to host the 2020 Olympics have injected new life into the multibillion-dollar Lusail real estate development.
The recent invitation extended to contractors to construct an Olympic facility in the Lusail City development is the most recent indication that Doha's athletic ambitions have injected new life into the government-backed real estate initiative.
In April, the Qatar Olympic Committee solicited expressions of interest from builders interested in constructing the Al-Thumama sports hall, a projected 19,000-seat arena for Lusail City. The facility will boost Qatar's efforts to host the 2020 Summer Olympics. Lusail City will play a vital role in Doha's growth ambitions over the next decade, since the largest football stadium for the 2022 FIFA World Cup will be constructed in the same location.
In 2004, during the Gulf's real estate boom, the $20 billion Lusail City was introduced as one of the most interesting mixed-use ventures in the area. In 2006, the scheme's first infrastructure contract was awarded. However, the collapse of the region's real estate market during the 2008 global economic crisis halted the project for the next four years.
Renewed Impetus
After Qatar was awarded the privilege to host the 2022 FIFA World Cup, the idea was restarted.
"The Lusail City development has made significant strides in recent years," says Hamad Ali al-Abdulmalik, director of Lusail projects at Lusail Real Estate Development Company (LREDC).
The earthwork for the project has been completed, and development on the city's massive infrastructure, including access roads, underground parking, utility tunnels, and Lusail's marinas, is well underway.
Located 22 kilometers north of Doha, the proposal is intended to encompass a total area of 35,000 square kilometers and house 200,000 persons. In 2008, Qatari Diar, a state-owned company, established LREDC as a subsidiary to pursue the project. Hochtief has been tasked with providing planning and construction services.
Lusail City will have residential clusters, commercial areas, shopping and recreational facilities, 22 hotels, and two golf courses when it is completed in 2020. The master plan divides the waterfront development into nineteen mixed-use and interconnected areas. The Lusail development will also contain Qatar's Energy City, which is intended to become the country's administrative center for oil and gas with more than 80 energy sector offices.
Private organizations will create the majority of the Lusail project, while LREDC will provide the infrastructure.
"Lusail provides investment and development opportunities to public and private, domestic and international businesses. Al-Abdulmalik states, "We are already engaging with a number of private developers in various districts throughout the development."
Since December 2010, there has been a drive to forward the construction of infrastructure required to support the projected real estate developments.
"The newly granted big infrastructure contracts are part of the considerable measures Lusail has taken towards constructing Qatar's new progressive metropolis. Al-Abdulmalik states, "We continue to work on our meticulously planned schedule to have all of the city's major infrastructures and features operational for the World Cup."
Infrastructure progress
Samsung C&T has already been granted three infrastructure packages for the Lusail development this year. In January, the South Korean contractor was awarded a $296 million contract to develop major infrastructure, including a 10.7-kilometer road.
In April, Samsung was given two additional contracts for the construction of six bridges, highways, underground motorways, and energy distribution plants. In the same month, the German consulting firm Dorsch Gruppe was given a contract to oversee the building of eleven distinct construction packages.
Since the beginning of 2012, the developer has also tendered two further infrastructure packages. Construction package four, generally known as CP4, is among the largest contracts. It entails constructing two sections of connecting road with a total length of 5,2 kilometers and six lanes. The deadline for submitting the infrastructure package is May 21.
The second bid was for a package of utilities, commonly known as CP6B. The work entails the construction of a bridge approach ramp, communications and electrical systems. Bids have already been filed, and the client is presently evaluating them.
This year, the long-awaited Lusail Expressway project is also set to gain momentum. The 16-lane motorway will connect the Lusail City development to Doha's central business district. The design and bidding procedure for the project, which was originally scheduled to be tendered in August 2010, has been delayed.
The client for Qatar's main road projects, the Qatari Public Works Authority (Ashghal), is set to award the estimated $989 million first package by the end of June. It will require constructing a portion of the freeway between the Arch roundabout and the area surrounding the planned Ritz-Carlton hotel in Doha. It is anticipated that construction will take 36 months to complete.
The not-yet-tendered, 12-kilometer-long second package of the expressway project will pass beside Lusail City and then onto the Pearl real estate development.
Rail connection
The Lusail development will incorporate a light rail transit (LRT) system in addition to the road network. The length of the LRT will be 30 kilometers, with 25 overground stops and eight underground stations.
In February, Qatar Railways Company (QRail) contracted the local/French Qatari Diar Vinci Building (QDVC) for civil engineering works on seven subterranean stations and construction of a viaduct.
After proposals were filed for the rolling stock contract in June of last year, QRail is still analyzing bids. US-based firms Parsons International and Aecom are providing project management and consulting services for the LRT project.
Although the completion of infrastructure initiatives is a top priority for 2012, building of the Lusail marina is complete and work has begun on some real estate components.
The first phase of infrastructure work was concluded in 2010 in the city's marina sector, which has seen the highest growth. As building continues, the marina towers can be seen rising from the construction site, according to Al-Abdulmalik.
The marina at Lusail is the initial phase of the development. It will also include houses, offices, and hotels, all of which will be fronted by a beachfront boardwalk. It would have a total area of around 2 million square metres and will house approximately 80,000 people. There will be 102 towers in the marina area, ranging in height from 15 to 40 stories.
In March, the municipality of Lusail accepted the designs for the estimated QR1bn marina mall project, which were created by the HOK office in London.
The mall will have a gross leasable area (GLA) of 60,000 square meters and be constructed on three levels, including a 10,000-square-meter hypermarket on the basement level. In addition to restaurants, the mall will feature a cinema complex and spa facilities.
The project is being constructed in accordance with a 20-year build, operate, and transfer (BOT) deal between Qatar Foundation and Mazaya Qatar Real Estate Development (Mazaya).
Meanwhile, UAE-based Damac Properties is developing its Business Square office project in the marina section of the Lusail development. In April of last year, it granted Draieh Contracting the major construction contract for the project. Damac has also hired a local contractor to construct its Piazza 1 and Piazza 2 apartment structures in the Fox Hills region of Lusail, an additional sector of the real estate development that has seen increased pace over the past year.
"Access has been given in the Fox Hills district and Energy City in order to promote early infrastructure and building construction. The second phase of work in the Fox Hills district has begun, according to Al-Abdulmalik.
The Fox Hills neighborhood would have a total area of 1,600,000 square meters and will house up to 39,000 people in four- to seven-story structures scattered across more than 370 parcels. In addition, the district will include a media city, a general hospital with 200 beds, 36 schools, and 35 mosques.
Oversupply worries
Concerns have been voiced about the long-term demand for the Lusail City project, as with other significant real estate developments proposed in Qatar.
Its construction followed the construction of the Pearl Qatar, an ambitious waterfront real estate project that would eventually house up to 45,000 people. Qatar has a tiny population of roughly 1.8 million people despite its great riches, which is predicted to remain unchanged in 2012.
Qatar must be careful not to overbuild in light of the incoming additional supply and planned expansions. One regional real estate researcher explains, "We saw what occurred in Dubai when developers went carried away."
Despite the anticipated development of multiple new real estate projects in Qatar, there is little evidence of a substantial increase in property demand. CBRE, a real estate consultancy firm, reports that residential rental rates were unchanged in the first quarter of 2012, while office rental rates are anticipated to decline in the short-to-medium term owing to oversupply.
At the Pearl Qatar, residential leasing has been in great demand, indicating a desire for luxury real estate. The development's prices reflect this.
Nevertheless, LREDC is convinced that Qatar's athletic objectives would increase international attention and investment in the country's real estate industry. Al-Abdulmalik predicts that the World Cup would generate renewed interest in Qatar's real estate and property developments from around the region and the world, particularly in Lusail City.
Over the next five years, property developers anticipate a rise in demand for housing as a result of the influx of a large expatriate workforce to Qatar to construct infrastructure worth more than $60bn in preparation for the tournament.
However, many in the region's real estate industry believe that Qatar's long-term demand will be contingent on the success of the government's economic diversification plans.
"Diversification is vital for Qatar. There are several opportunities for investing in numerous industries, including education. Matthew Green, head of research and consultancy for UAE at CBRE Middle East, notes that following the World Cup, a more sustainable economic model must be in place.
True fact
Lusail City encompasses an area of 35,000 square kilometers and will house 200,000 people.