Damac Properties, one of the most established luxury developers in the Middle East, has been moving from success to another bringing innovative luxury projects to the real estate market in the region. Adding a new feather to its cap, the company has recently launched two new luxury projects in Dubai. Capital Business got talking to Niall Mc Loughlin, Senior VP- Corporate Communications & Investor Relations, DAMAC Properties who talked through their latest projects calming fears over regional real estate situation.
How would you describe the current real estate market in the Middle East and the UAE in particular?
Focusing on our home territory Dubai where we have 92% share of our 37 thousand units under development, we have seen a real maturity in the market over the last three years. We are now seeing the market stabilizing and witnessing single digit growth across key projects. This is how mature real estate markets behave.
The initiatives of the Real Estate Regulatory Authority and the Central Bank with regards to loan to value ratios have really strengthened the market. We have seen prices stabilizing across all Dubai in addition to price growth in some of the key locations as seen in every city. Dubai is coming through the second run of the cycle and we are looking at steady, sustainable performance over the coming years up to Expo 2020.
What is mainly influencing sales prices?
People believe that sales prices have decreased in Dubai, and that is not true. In fact, the main developers in Dubai have historically purchased lands in downtown, Dubai marina, JBR and other primary areas, but rents have "run out" and there is no available land. Thus, developers like Damac have been able to develop and sell in other areas for AED 2200/ sq ft. We have now bought other pieces of land on the outskirts of Dubai where we can't sell at AED 2200/ sq ft but AED 1200 / sq ft. With the introduction of a more value proposition on the outskirts, pricing has gone down. Pricing has matured across the market. We haven't reduced prices on our projects in downtown but the introduction of other products has resulted in a broader spectrum of prices from entry level projects to premium projects such as the ETTORE 971 Bugatti villas.
We have been hearing a lot lately that both buyers and investors are worried about the regional situation. Is this affecting your projects?
Historically, Dubai has always been resilient to regional conflicts and problems. The UAE is a safe haven in the Middle East. As a company, we have witnessed a $1.4 billion of sales in the first six month of 2015. This proves that with the right product, right price and right location the demand for real estate still exists. Stability, security and connectivity are three aspects that make Dubai a very unique location in the region. With a hundred million tourists passing through the UAE airports last year, the government continues to spend money to promote the connectivity of Dubai. People planning to invest in second homes want to be part of this country as it is a safe place and there are no capital restrictions, capital flows, nor inheritance taxes.
What about your projects in other countries in the Middle East?
Our projects in Saudi Arabia include a completed tower in Jeddah in addition to two other projects in Riyadh set to be delivered early next year. We also have projects in Qatar consisting of 9 buildings in The Piazza along with two other projects in an advanced stage of construction. Moreover, we have an iconic DAMAC Tower in the prime area of Solidere, Beirut with interiors by Versace home and three projects in Jordan.
All of our projects are on track in the region. We are focused on these territories. Saudi Arabia, Qatar and Dubai are growing markets for us.
Demand still exists. However, one shouldn't be passive and wait in Dubai for a customer to approach them inquiring about buying an apartment. It is about going out and promoting Dubai in foreign markets. In the first half of this year, we did over 160 roadshows in 40 cities around the world. When people learn about the advantages that Dubai offers and decide to invest here, they approach us, as they already know what we offer. We encourage other developers to do the same and promote Dubai in other markets.
How do you assess local appetite for luxury apartments?
Dubai Land Department statistics indicate that there was a total of over AED 53 billion worth of transactions in the Dubai property market in the first half of 2015. Around AED 17 billion of that came from GCC nationals, which constitute a great share of our customer segment. Many GCC nationals are looking for homes in Dubai with a high appetite for luxury apartments. They have an appetite for high quality, as they recognize brands and understand their values and what brands can add to real estate products. Thus, GCC purchasers are very interested in our Versace products, our Fendi and Paramount projects as well as the latest ETTORE 971 Bugatti.
Can you give us more details on the ETTORE 971 Bugatti?
The Bugatti is an organization founded over a hundred years ago, which is at the vanguard of the super sports cars. Recently, they stepped into the interiors world and established Bugatti design as well as a clothing line. Thus, we approached them with a suggestion to bring the world's first real estate project designed by Bugatti to the market.
ETTORE 971 Bugatti Styled Villas will take pride of place within the lush green, 55 million sq ft AKOYA Oxygen master development, overlooking the Tiger Woods designed, Trump World Golf Club, Dubai.
ETTORE 971 is named after Ettore Bugatti the founder of the renowned French Luxury super sports car brand Bugatti and '971' signifying the international code for the UAE.
The 7 bedroom villas are conceptualized by the designers of the world's fastest street-legal production car, the iconic 1,200hp Bugatti Veyron and stylishly reflect its distinctive curved front. Prices will be in the region of AED 36 million, reflecting the high-end styling and finishing in each unit.
What about Damac's recently launched Merano Tower?
Conceptualized around the famous Italian spa town of Merano, the 29-storey residential project is an Italian-inspired luxury development, which will overlook the Dubai Canal.
Set to be completed by the end of 2018 or early 2019, Merano Tower combines commercial, residential, hospitality, entertainment shopping and leisure facilities. It will serve perfectly the needs of various residents living at proximity of their work places or investors looking to invest in one of the hottest real estate areas in Dubai.
What do you expect for the real estate sector and what are your plans for the coming years?
We have reached a point where the market is behaving maturely. Damac, as an organization will continue to bring innovative products to the market, which will add value to our customer base. Our strategies are very customer led especially from an international expansion perspective as we will cater to our customers' needs. London is a good example on that. Luxury real estate developer DICO UK Property Holdings Ltd, a wholly owned subsidiary of DAMAC International Limited, has recently introduced the first of its fashion residences in London with interior designs by Versace.
We will continue to focus on our key market Dubai and will complete AKOYA and AKOYA Oxygen projects. Our hospitality sector is growing as well. We will have 1650 units completed under our management and will develop hospitality company Damac Maison, Hotels and Resorts as well as NAIA by Damac.
Moreover, we will also complete our two golf courses. In the next six months, we will deliver our first hotel apartments, NAIA Tenora, the first development in Dubai South. We are also working on a second project in the area, NAIA Celestia, set to be delivered in 2017.
Overall, we are optimistic about the real estate market in Dubai. We believe it will be sustainable and provide good mid to long-term yields for customers and investors.
About Niall Mc Loughlin
Niall Mc Loughlin is the Senior Vice President of Corporate Communications & Investor Relations at DAMAC Properties. His UAE career started with one of the largest private companies in the UAE, the Al-Futtaim Group, where he held several senior marketing positions throughout the company. He progressed to work in real estate development and banking where he held senior regional positions for Standard Charted Bank PLC. He joined DAMAC Properties in 2007.
© Capital Business 2015
