Dubai's $2.2b Water Gardens project builds ahead of 2028

Construction is actively under way at Dubai’s Water Gardens, where four buildings of hotels, residences and premium office space are rising in the emirate’s financial district, with completion targeted before the end of 2028.

The US$1.4 billion (about AUD$2.15 billion) project is being delivered by developer H&H Development, and its operational model is as notable as its scale. Chairman Shahab Lutfi told The Economic Times that most of the development would be leased and operated rather than sold, a structure designed to generate ongoing income while capitalising on Dubai’s position as an international business destination.

That delivery strategy is unfolding against a difficult operating environment. Dubai’s property market has seen weaker demand from foreign investors following Iranian attacks on the United Arab Emirates at the start of the conflict in West Asia. Transaction volumes have declined and construction costs have increased, although prices and rents have remained relatively resilient, with only marginal falls reported.

The Water Gardens itself comprises four buildings featuring two hotels, residential properties and premium Grade A office space. According to a Bloomberg report cited by The Economic Times, construction is actively under way, putting the project among the developments continuing to progress while the broader market slows.

Execution on the ground, however, is showing signs of holding up. About 85 per cent of the development’s branded residences have been sold despite the broader slowdown, and recent transactions suggest demand for premium property remains intact. Two Four Seasons-branded residences in the new district sold for 35 million dirhams (about AUD$14.4 million) and 45 million dirhams (about AUD$18.5 million), respectively, according to the report.

Mr Lutfi said property sales were continuing despite the softer market. “There are cycles in every industry and Dubai always comes out of these cycles much stronger,” he said. He added that the company had managed its finances carefully and was taking a long-term view of the market.

The leasing-led model also reflects a deliberate choice about how the asset will perform once delivered. Rather than relying on sales to recoup the investment, H&H Development is positioning much of the project as a long-term income-producing portfolio, an approach that depends on sustained occupancy across the hotels, residences and office space over years rather than on the timing of individual transactions.

Meanwhile, the investment builds on the expansion of the Dubai International Financial Centre (DIFC), which is seeking to strengthen its role as a hub connecting businesses and investors across the Middle East, Africa and South Asia. That positioning places the delivery of new Grade A office space and hospitality stock at the centre of the district’s growth plans, since the hub’s appeal rests on having the commercial and accommodation infrastructure to serve the businesses it attracts.

For those watching whether the project actually gets built and performs, the timeline is the key measure. Completion is targeted before the end of 2028, meaning the development must navigate several years of construction in a market where building costs are rising and transaction activity has cooled. The resilience of prices and rents so far, alongside the strong pre-sales of branded residences, offers some evidence that the underlying demand the project depends on has not evaporated.

The project highlights the difference between short-term market conditions and developers’ longer-term investment strategies. While geopolitical uncertainty is weighing on transactions and construction costs, Dubai continues to invest in the commercial, residential and hospitality infrastructure underpinning its international business appeal. Whether the Water Gardens delivers on that bet will become clear as construction progresses toward its 2028 target, and as the leasing and operations phase that Mr Lutfi describes begins to generate the ongoing income the model is built around.