Dubai’s Sobha Realty is no longer pursuing the 25 billion United Arab Emirates dirhams ($6.8 billion) Firdaus Sobha joint venture with the Umm al Quwain government, the property developer’s chairman PNC Menon confirmed on Tuesday.

In an interview with Zawya at the Cityscape Global conference, Menon said "we have decided not to proceed" with the scheme, which was meant to be a 53 million square foot development on a natural island, with an 18-hole golf course, five hotels, up to 700 villas and apartments, a marina and a community mall. The project was first announced in 2016, and was due to be connected to the mainland by a 12km-long bridge.

In April, Menon told Zawya that he hoped the project would start on site by this month, and for the resort's first hotels to be complete by 2022.

However, during yesterday's interview, he said: “Decisions are very dynamic. You know how it is. So we decided that for the time being, Sobha should not continue with the project. It was beautiful land, but at the end of the day, decisions have to be taken purely on the reality." The Umm Al Quwain government did not respond to a request for comment. Umm Al Quwain is one of seven emirates, along with Dubai and Abu Dhabi, which make up the United Arab Emirates.

Sobha Realty president Jyotsna Hedge added that the company has decided to focus on projects closer to its Middle East home in Dubai.

"We have enough land bank for the next 10 years in Dubai," Hedge said. "And, for the moment, we would like to focus on that... and explore our full potential here."

In Dubai, the company is a joint venture partner on the 20 billion UAE dirham Mohammed Bin Rashid City District One project off Al Khail Road near Downtown Dubai, and the nearby 15 billion dirham Sobha Hartland scheme. At the Cityscape Global event two years ago, Menon also told journalists the company was planning to launch a third major Dubai project that would be bigger than District One.

Asked about the progress of this scheme on Tuesday, Hedge said: "We're not at liberty to speak of it right now. It is definitely something that we are closing shortly... almost closed, but we are not at liberty to speak of it yet."

At Sobha Hartland, which was launched in 2014, Hedge said that around 600 of a potential 6,500 homes have been sold, with two apartment buildings set for handover this month and a further 48 villas due to be handed over by the end of the year. Menon estimated that the project would take "another six years" to complete.

Menon also said the company has pushed back previously-announced plans to float its Middle East operations (a separate listed entity, Sobha Developers, responsible for its Indian projects, is listed on India's National Stock Exchange).

"We believe that we will have to do a little bit of consolidation which will happen in '19, '20, inshallah," he said.  "That (the IPO) is still at the back of the mind, but at the right time. The right time will be decided according to the situation, evolution," he added.

The company has also recently completed a rebrand, with the new Sobha Realty brand aimed at the upper end of the market.

Menon said "the perception the market attaches some kind of an elegance" to its projects.

"Towards, that, we have been working on rebranding... to bring the style and luxury," he added.

"For that particular segment or particular layer, you've got to make sure that you do a beautiful branding and creating a luxury image."

He said that he hoped to see results from the rebranding within six to nine months, in terms of sales, which he described as “OK, but nothing to get excited about".

A UAE Real Estate Q3 report published by real estate consultancy Asteco last week stated that rents for apartments in Umm Al Quwain have fallen by 5 percent year-on-year. Speaking to Zawya at Cityscape Global on Tuesday, Asteco managing director John Stevens said that declining rents in Dubai impacted property markets in the Northern Emirates.

“It does have a negative effect on Sharjah, Ajman and further out, because as rents drop in Dubai, people will move in,” he said.

(Reporting by Michael Fahy; Editing by Shane McGinley)

(michael.fahy@refinitiv.com)

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