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Dubai Holding to remain dominated by real estate activities: Moody's |
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1/12/2007 11:16:21 AM |
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ABU DHABI — Dubai Holding Commercial Operations Group LLC (DHCOG), rated A1 with a stable outlook, is a wholly owned subsidiary of Dubai Holding LLC (DH) and incorporates all the non-financial investment businesses of the group.
As far as real estate projects are concerned, the Emirates ' two additional companies with a similar strategic task are Emaar Properties PJSC and Nakheel (part of Dubai World). It is a diversified group, with five subsidiaries under DHCOG, which essentially incorporates real estate and hospitality businesses, and two under Dubai Holding Investments Group (DHIG), which holds its international investment and private equity business. Dubai Holding 's hospitality businesses operate primarily under the renowned Jumeirah brand, which owns and manages luxury properties in Dubai (including the Burj Al Arab) and manages a selection of international properties (London and New York).
Tecom Investments is the subsidiary whose primary objective is to develop and expand Dubai 's knowledge economy by owning and managing some of the Emirates' core free zone developments, including Dubai Internet City, Dubai Media City and Dubai Knowledge Village. Dubai Properties is the main real estate subsidiary, managing large-scale residential and commercial infrastructure developments in Dubai, including Jumeirah Beach Residence and the Business Bay downtown business district.
Tatweer is the group 's second domestic real estate subsidiary, focusing largely on life-improving industries such as Dubai Healthcare City and Dubailand, while Sama Dubai, which is the fifth subsidiary under DHCOG, is primarily involved with international expansion of the group 's development expertise, with construction projects currently envisaged in Qatar, Oman, Bahrain, Morocco and Turkey, as well as the ambitious 'The Lagoons ' complex in Dubai. Dubai Holding's primary aim is to develop existing and identify future projects to grow and diversify Dubai's economy, and subsequently apply its expertise internationally
Dubai Holding aims to create a strong foothold across a diverse range of industries to execute the vision to create a diversified, knowledge-based economy, and export this knowledge for the benefit of the region.
Accordingly, the group 's strategy focuses on three core objectives: (1) Value creation for its shareholder,(2) diversification of the group's portfolio, and (3) the creation of a solid foundation for the development of Dubai in terms of people and economic growth. While some of the group 's activities carry an element of social and infrastructural significance, all activities are expected to be economically viable and are carried out on the principle of commercial justification. Accordingly, rather than creating a government monopoly, the strategic task of developing Dubai 's large-scale real estate projects has been given to three companies, thus facilitating competition and adherence to best practices.
While today, Dubai Holding is primarily a real estate developer, the group plans to gradually diversify internationally and into other businesses.
In 2006,the group acquired a 35 per cent stake in Tunisie Telecom, the incumbent telecom provider in Tunisia, for $2.25 billion, and a 60 per cent stake in MaltaCom for $280 million, through Tecom and Dubai Investment Group,thus staking its claim to potential further telecom investments in the wider region.
The group was also instrumental is establishing Dubai 's newly established second mobile operator under the 'du ' brand,, in which it still holds a 20 per cent stake. Further investments in energy businesses through EMPOWER (also located under the Tecom subsidiary) are also likely.
While the potential for expansion — particularly if debt-financed — adds some uncertainty to the group 's credit profile, this risk is mitigated by Moody 's view of the close alignment between any such expansion and the policy vision for Dubai and the region of the government in general,and His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai,in particular.
Moody 's anticipates that Dubai Holding will first and foremost be focused on developing the large-scale projects for the development of Dubai and will hence remain dominated by real estate activities. This view is supported by the still substantial land that the group has available for development in Dubai,which includes an array of both commercial and residential developments. Moody 's also takes comfort from the group 's stated intention to further increase stable cash flows from rentals over time,which are prevalent in its free zone developments. Dubai Holding also intends to maintain a degree of ownership in most of its core developments in order to add a greater overall share of such rental income to its portfolio. DHCOG 's A1 rating reflects the group 's intrinsic financial strength and the credit enhancement that can be derived from the financial strength of the Emirate and the group 's ultimate owner, His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President, Prime Minister and Ruler of Dubai.
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