On 7 February 2007, residents in the Dubai Marina heard what was described as a loud cracking sound. One of the boundary walls in the man-made development had been breached and sand and water quickly began to surge through the hole, flooding a nearby construction site.
Developer Cayan Group would be later forced to spend nearly $30m clearing the submerged site, pushing back its headline-grabbing project, which was set to play host to the world’s tallest twisted tower.
Cayan Tower, or Infinity Tower as it was previously known, certainly had a difficult birth. It was not only dogged by flooding issues in the early stages of construction, but also the onset of the economic tsunami that was the global financial crisis and was swamped by higher than expected costs to make the ground-breaking design a reality.
“Cayan Tower went through many challenges; one was the cost of construction. One of them was the financial crisis because lots of our clients bought already and… didn’t want to continue and banks they didn’t want to give any facility,” recalls Ahmed Alhatti, chairman of Cayan Group.
The tower, which was already a popular tourist attraction and essential spot for those looking for a trendy Dubai selfie backdrop, was, like many projects, delayed for a number of years. It was finally completed and unveiled amidst a spectacular fireworks display in 2013. Today, despite Dubai’s hundreds of towers of various shapes and sizes, it ranks alongside the Burj Al Arab and Burj Khalifa as one of the most recognisable and most popular buildings in the city.
“We have been through so many difficulties but in the end we are proud with what we delivered. It is one of the most iconic in the world,” Alhatti says proudly of the 75-storey tower with its unique 90-degree twist.
With the tower last year named by the prestigious Emporis Skyscraper Awards as one the top five best skyscrapers launched in the previous 12 months, it is no surprise that Alhatti reports that there is interest in replicating the design in other cities around the world.
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“I would love to see it everywhere, but we are studying more than one city and we still have not finalised but we are studying and evaluating. It is difficult to do it in Europe considering the height [of buildings] is restricted.
“We are focusing on more than one project in our pipeline, this project is only subject to the proper location as we can’t just do it anywhere. Once we have the right opportunity with the right people we will evaluate it. We have several opportunities in the pipeline… We will do it ourselves, we will not license [the design],” he says.
During the boom days of global real estate, approaches were made to build a scale replica of the Burj Al Arab along the famous Las Vegas strip, but plans were shelved with the onset of the downturn. However, even if plans were revived, Alhatti says it is unlikely Cayan Tower would feature. “In Las Vegas? We never thought of that,” he says with a surprised tone. “We have restrictions on doing any projects in Las Vegas because we can’t do gambling, we don’t go for that.”
While a question mark hangs over the exact details of Cayan’s next twisted tower, the Saudi-based developer is not resting on its laurels and in recent weeks launched three new projects worth a total of AED3.1bn ($844m).
In March, Cayan Group signed an agreement with Dubai investment firm Shuaa Capital to set up a $272m real estate fund. The first project that will be built as part of the deal with Shuaa is Cayan Cantara, a branded residence and hotel apartment project located along Dubai’s Umm Suqeim Road, which will include two towers and a hanging glass-walled swimming pool.
Designed by Japanese architecture firm Nikken Sekkei and UAE-based Dewan Architects, it will also include retail, restaurants, a luxury spa, a fitness centre and a conference hall and will focus on environmental sustainability. While the two towers will be connected through a specially designed bridge — a signature touch enabling residents to enjoy magnificent views, Alhatti says it will contain a number of other eye-catching elements.
“It is two towers, one of them is hotel apartments, 38 storeys. The other one is residential, 42 storeys. The quality will be very high, similar to all our projects. The bridge between the two towers has an extra cost… we decided to add some more features to make this project unique.”
With Cayan Tower officially declared by the Guinness World Records as the world’s tallest twisted tower, it seems Alhatti is determined that Cayan Cantara will also win its own plaques for its one-off designs.
“On the bridge will be a screen, like an advertising screen, so, in terms of height, it will be the highest… Our analysis has advised us that it will be the highest screen in the UAE… We will also have the first ever glass pool [which will be] positioned outside… so it will be something interesting. With all these features we want to maintain the idea that our investors and clients love about us: that we always care about the design.”
While the twisted tower and several of Cayan’s other Dubai towers are located in prime areas such as Dubai Marina, Alhatti says he believes these neighbourhoods have now become oversaturated and newer emerging areas offer better returns.
“We were studying different areas and in Dubai we are known as a luxury developer and we are known to invest in prime areas. However, the prime areas, including Dubai Marina, Downtown and the Palm, I can say are oversupplied and the investment opportunities have become limited. We know that we only develop unique designs and costly designs. We want to be more creative and more pioneering. The most important difference is the land prices. When you buy now the land prices are limited, it is difficult to get a good view.
“Areas like the Marina became extremely congested in our opinion. Therefore, considering the land price, for us to do our creative designs, which normally cost more than the typical developers, we found that we will not be able to give the right investor opportunities to our clients. We did a different project where we can deliver high quality which our loyal clients will appreciate.”
Therefore, Cayan Cantara is located in front of Mohammed Bin Rashid City, a masterplanned mixed-used project that is being developed by Emaar and Dubai Holding. “This area has all the infrastructure completed, it is five minutes from Sheikh Zayed Road and so many projects are happening in that area and there is a mega mall going in front of us,” says Alhatti.
While the prime areas may be oversaturated, Alhatti says he is still a major cheerleader for the emirate. “First of all, we believe in Dubai. Last year it started good, then by mid-2014 it started to slow down, so we decided we would like to invest in Dubai. All the analysis is saying 2015, it will see the peak. For the last few weeks people are saying the real estate market is changing, it is more stable and much more comfortable. This was our plan a year ago when we secured the land. We are going with our plan and we believe the market is healthy.”
While Deloitte has forecast that residential sales prices in Dubai may continue to soften by between 1-5 percent in the first half of 2015, before stabilising in the second half of the year, new official data shows that people are still buying.
Real estate transactions in Dubai totalled AED64bn ($17.4bn) in the first quarter of 2015, up by AED3bn compared to the year-earlier period, according to new figures released by Dubai Land Department (DLD). The report revealed a total of 11,603 transactions, while the total value of non-Arab investment amounted to more than AED12bn through 5,466 investors and 102 nationalities.
“Dubai is not a new city any more, more like London or Singapore,” says Alhatti. “In Dubai we want to position ourselves in the right place. You have your financial plans and you adjust as needed. We are not planning to sell more than 50 percent of this project. When we tested our market the demand was amazing. We sold almost more than 10 percent in one week through our own database and we had not announced the project yet. We have been in the market [for] ten years so we have our own loyal clients.
“International clients are still very interested. The Saudi investors are very interested in Dubai and we can see some demand from the local investors here too. We are well prepared and our plan is very conservative. However, my expectation is that starting in the third quarter of 2015 we will start seeing an escalating of prices,” he says.
While Saudi investors are still interested in Dubai, Cayan is also catering to its home market in the kingdom. At the launch event in Dubai, Cayan also launched two projects in Riyadh. Samaya will be a 1 million sq m masterplan development in the north western area of the Saudi capital, while CM1 will be a commercial building along King Fahad Road, which will also include residential and retail elements.
According to the latest report by real estate agents JLL, the first quarter of 2015 saw the completion of around 5,000 housing units in Riyadh, bringing the total stock to around 976,000 units. The volume of villa and apartment transactions recorded by the Ministry of Justice decreased around 70 percent and 33 percent, respectively, since the new mortgage regulations were introduced in November 2014. These regulations limit mortgages to a maximum of 70 percent of the sale price and have resulted in a 2 percent decline in the average sale prices for villas and a shift to the rental market. As a result, rentals continue to grow at between 10 percent and 15 percent per annum, the report adds.
“They are very different [Dubai and Riyadh],” says Alhatti. “Riyadh is a market driven by local need. The Saudi market, there is a very good opportunity for quality projects. We don’t have that much competition in Riyadh, like what we do in Dubai, in terms of quality developments and developers. I believe in the Riyadh market, we are one of the lucky companies.”
While Qatar may be set to see a boom in the run-up to the FIFA World Cup in 2022 and Bahrain has announced plans for billions of dollars’ worth of new projects, Alhatti is not keen to expand Cayan into any other neighbouring Gulf states.
“Qatar? No, we believe the Saudi and UAE markets are the strongest.”
Looking further afield, Alhatti confirms rumours Cayan is set to dip its toes into Europe and is looking at projects in the UK and France.
“We are studying… We have two opportunities, one in Paris and one in London. We don’t buy unless we want to modify and refurnish it. We are a developer and enjoy being a developer. The project we are studying in Paris is a nice building in a very central area and we are studying to modify it,” he says without giving any further details.
With close to $1bn worth of projects recently announced and developments on the drawing board in Europe and elsewhere, how does Alhatti expect to finance these plans?
“Via a typical funding plan,” he says. “Part of it is our equity, some bank finance and some from off-plan sales we are achieving,” before confirming that a listing on the stock market is still in his future plans. “That is in my plan, but not now. We have our financial advisors. It is our plan to take Cayan public in three years, say, but not now.”
With its emphasis on unique designs, Alhatti is always at the forefront and likes to push the envelope, as was the case with Cayan Tower. Let’s hope the challenges that project brought have taught the firm enough lessons, and that the next twist in the developer’s story will be equally successful.