Sungwon to Lead $20 Bil. Dubai Redevelopment Project
By Cho Jin-seo
Staff Reporter
Dubai selected South Korea's Sungwon Construction for a leading role in the modernization of its downtown Deira area, which could be worth $20 billion.
The company Monday signed a memorandum of understanding with Dubai's Deira Investments for the redevelopment of 9 square-kilometers of the urban district, for building houses, shopping malls, a harbor and other logistics facilities. The project will consist of three phases lasting to 2012 and Sungwon will lead a consortium of four to five Korean builders in the $5 billion first stage, the company said.
The Deira project was placed by Deira Investments, which is managed by Sheikh Ahmed bin Saeed Al Maktoum, president of the Dubai Civil Aviation Department and chairman of the Emirate Group and Emirate Airlines. It is also under the direction of Sheikh Mohammed bin Rashid Al Maktoum, the respected ruler of Dubai and vice president and prime minister of the United Arab Emirates, who is on a two-day visit to South Korea at the invitation of President Roh Moo-hyun.
The detailed scope of the project is to be announced by the prime minister himself later during his stay in Seoul, a Sungwon executive said. However, ``$20 billion could be an underestimation,'' the official said, hinting that the size of the investment may snowball in its later stages.
``We hope that Sungwon will play an important part in realizing His Highness' vision of building Dubai into the world's greatest, and most beautiful country,'' Sheikh Ahmed said in a statement.
``This project will become a role model for large-size partnership businesses between Dubai and South Korea,'' said Nasser Al Dabal, chief executive of Deira Investments. ``It will progress promptly as Dubai's other development projects have shown,'' he said.
After the signing ceremony held at the Grand Hyatt Hotel in central Seoul, Sheikh Ahmed and his delegation visited Sungwon's construction site in Yongin, south of Seoul.
Jeon Yoon-soo, founder and chairman of Sungwon, said the company's bid was successful because of its customer-oriented business strategy and long-term investment in the city.
"In Dubai, most construction projects are initiated from a suppliers' point of view. But we have tried to cater to the demands of our customers, and I think that has appealed to the officials of Dubai,'' he said. ``As competition in the domestic market is getting tougher, we have to take a leader's position on overseas markets.''
Sungwon has been leading Korean construction firms' investment in Dubai real estate as part of its globalization strategy. It has already launched two other projects valued at $400 million in total in Dubai _ Business Bay and Culture Village _ and has built a reputation as a trusted developer in the gulf city, which has one of the fastest growing economies in the world.
The first phase of the Deira urban redevelopment project will be conducted on a turnkey basis, Sungwon said.
Reshaping Dubai's Waterfront
According to Deira Investments, the reshaping project is to be completed by 2012 in three stages. The locality of Deira forms the eastern section of the city of Dubai.
The area stretches from the eastern bank of Dubai Creek, and is flanked by the emirate of Sharjah in the east. Dubai International Airport is located south of Deira, while the man-made islands of Palm Deira are located to the north in the Persian Gulf.
The Deira district was the historical center of trade and a hub port of the region. But much of Dubai's real estate boom has so far been concentrated in the western part of the city called Bur Dubai. The Dubai government is planning to modernize the Deira area along with expanding the Dubai International Airport.
Reclamation of up to 4 square kilometers of costal area is under consideration as well for construction of a marine logistics center, Sungwon said.
The stock market reacted enthusiastically to the news. Sungwon shares surged their the daily limit of 15 percent to 7,110 won on Monday in the Seoul bourse, after rising 27 percent over the past two trading days.
Founded in 1978, Sungwon is an integrated real estate development and construction company. The company posted 54 billion won in operating profit on 330 billion won of sales last year.
Korean Presence in Dubai
South Korean real estate, construction and engineering companies have been eager to expand their presence abroad, especially in the Middle East. The UAE has been a popular destination but in the real estate sector Sungwon and Bando were the two firms to invest in Dubai.
Bando became the first Korean realtor to invest in Dubai when it launched the U-Bora Towers project in Business Bay last year. In 2004, Samsung Corp. was chosen as a lead contractor for the Burj Dubai tower _ set to be the tallest building in the world _ after an 11-month international bidding process.The skyscraper is currently under construction.