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Emaar Properties, the Dubai real estate giant, is set to launch a multi-billion dollar development in Indonesia to build a “new Bali”
April 24th, 2007

Emaar Properties, the Dubai real estate giant, is set to launch a multi-billion dollar development in Indonesia to build a “new Bali “.

Mohamed Alabbar chairman of Emaar, said the resort and homes development on Lombok would be the last new international market tapped by the Dubai-backed developer.

Mr Alabbar, a key adviser to Sheikh Mohamed bin Rashid Al Maktoum, the ruler of Dubai, said Emaar would expand in markets that it had already entered, with the US a key target.

The company will use John Laing Homes, the California company acquired last year, to expand its reach into Arizona, Florida and Washington DC, with a view to quadrupling profits to $1bn from the current $250m (EU190m, £125m), he said. “The time is right for acquisitions in the US ,” he said. “With the [real estate] market slowing we might find some value there.”

After driving Dubai ‘s real estate industry, an aggressive expansion into new markets over the past three years has seen Emaar commit to projects with a development value of more than $60bn across 15 countries, including Saudi Arabia , India , Algeria and Egypt .

“The last country I want to do is Indonesia,” said Mr Alabbar. “We need to consolidate, to concentrate on our current portfolio.”

The Lombok development, expected to be signed next month in Jakarta, is a joint venture with the Indonesian government for a development over 1,500 acres on the island east of Bali. Mr Alabbar is expected to unveil more domestic projects as Emaar receives new land from March’s land-for-shares swap deal with the government-owned Dubai Holding, another conglomerate in the emirate.

Emaar will transfer 2.4bn new shares, worth about $7.6bn, to the government through a convertible bond over five years starting in 2008, eventually placing 51 per cent of the company in government ownership, up from 32 per cent.

Mr Alabbar said the deal, an idea crafted by Emaar, would enable the company to pay back Dubai Holding in shares as it started to generate returns from the land. But he played down concerns of frantic expansion in the Dubai real estate market, which analysts say could lead to an alarming oversupply of housing units. Dubai should continue its rapid building programme, he said, especially in the low-cost housing sector, to damp prices.

Real estate agents estimate average property prices have risen by up to 35 per cent over the past year, continuing to drive up the cost of living.

Mr Alabbar said Dubai banks were not stretched on development and housing loans. “I’m not worried about a bubble. We have a global city under construction,” he said, noting that more international companies were moving in, including Halliburton.

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