(Bloomberg) -- The second of Dubai’s iconic palm tree-shaped islands will soon be home to hundreds of luxury villas after the archipelago’s developer gave three contractors the greenlight to begin construction on the homes.
The state-owned developer Nakheel PJSC awarded three contracts worth 5 billion dirhams ($1.36 billion) to build 723 villas on Palm Jebel Ali, the largest of Dubai’s artificial islands, according to a statement. The work is set for completion by the end of 2026.
The contracts allow Ginco General Contracting, Shapoorji Pallonji Mideast and United Engineering Construction Company to begin construction on the villas. The homes will range from 8,000 to 15,000 square feet and roughly one quarter of them will offer seven bedrooms.
Palm Jebel Ali was among hundreds of projects canceled or delayed when Dubai’s property market suffered in the aftermath of the 2008 financial crisis. But work has resumed on the development as the market has rebounded after the pandemic, with real estate prices and rents soaring amid an influx of newcomers to the city.
The island is nearly twice the size of Palm Jumeirah, Dubai’s other palm-shaped island. Last year, hundreds of buyers queued in 100°F (38°C) heat to snap up Palm Jebel Ali’s luxury homes even as hundreds of the island’s original buyers remained in limbo.
The contracts are another sign of Dubai’s booming property markets. They come just months after Nakheel was absorbed by Dubai Holding, a sprawling investment conglomerate owned by the emirate’s ruler.
By bringing both Nakheel and another developer Meydan “under the umbrella” of Dubai Holding, the emirate’s ruler Sheikh Mohammed bin Rashid Al Maktoum is hoping to create a “more financially efficient entity,” he said earlier this year.
The firm is also considering setting up a real estate investment trust to capitalize on the city’s property market. Setting up a REIT would allow investors to gain exposure to a number of prime income-generating assets overseen by one of the city’s biggest developers.
In total, Palm Jebel Ali includes 16 fronds. The contracts awarded Wednesday allow developers to begin building on the island’s first six fronds, according to the statement.
The emirate’s master plan for the island now includes 80 hotels and resorts and will add more than 90 kilometers to Dubai’s coastline. Officials hope the project will house as many as 35,000 families and that roughly a third of its public facilities will be powered by renewable energy.
“It is set to contribute significantly to the emirate’s economic development, attracting investment and tourism for years to come,” Khalid Al Malik, chief executive officer of Dubai Holding Real Estate, said in the statement.
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