07 October 2009
Saudi-based developer Tanmiyat plans to launch real estate investment trusts (Reits), said a top executive.
Tanmiyat has appointed McKinsey & Company in the UAE to carry out a study of the proposal.
"Reits are a long-term plan for us to securitise our project. It can be set up anywhere including the bourses of Dubai," said Wan Hasni, Advisor-in-Charge, Tanmiyat.
The developer said the Living Legends development will not be a part of its Reits portfolio.
Meanwhile, Tanmiyat is offering a price reduction for investors who bought at higher prices during the peak of the real estate boom in Dubai, said the developer.
"We are adjusting prices for investors who purchased high since we do not want them to be very far away from secondary market prices. There are many customers whose prices are not the same since they bought at different times. We like to call it a price rationalisation rather than a price reduction and there are conditions attached to this," said Hasni.
According to Hasni, the "rational" price for villas and apartments in Living Legends is around Dh1,200 per square foot for villas and around Dh700-Dh800 per sq ft for apartments.
"If any customer has paid above this and up to 30 per cent of the down payment, and the investor will abide by our new payment plan, we will reduce prices. It will be a wholesome approach," said Hasni.
"We will sit with the investor and discussing all issues relating to how many units he has and how much he has paid," he said. "The customer will have to be ready to commit to our new payment plan. Many customers have paid only 10 per cent down payment. If they pay up to 30 per cent then they will be able to make use of the new offer."
"We try and work with our customers to offer them alternative solutions to defaulting. This is a time when we want to maintain our relationships with our customers and deliver to their needs. It is a difficult time for everyone and we recognise this. Some of the solutions that we are offering include consolidation or delayed payment plans, so the customer has an option," said Hasni.
Tanmiyat has so far send 500 customers of its total 2,000 the new payment plans. The developer is currently collecting payments from only those customers who have paid less than 30 per cent. "For those who have paid up to 30 per cent we have stopped collecting payments," said Hasni.
Living Legends was initially due to be delivered by December 2008. Now the first batch of 500 villas will be delivered only in November 2010.
"There have been lots of reasons for the delay. We were asked to build the infrastructure for Living Legends by the master developer only towards the middle and third quarter of last year," said Hasni.
Tanmiyat will build and sell all unsold units that arise as a result of the consolidation efforts of the company.
The developer has incurred a loss as a result of the delay in the project, said Hani. "We have our losses but I cannot disclose the amount, but Tanmiyat has incurred a loss," said Hasni.
Hasni said Tanmiyat has no plans to acquire more land in the UAE. "First, we are determined to complete our UAE projects. Our land bank is large enough at the moment to sustain our projects for the next 10 years, hence we are not planning to acquire any more at this stage," said Hasni.
Cash flows
Tanmiyat relied mostly on internal funding, private equity investors and its contractor CSI for managing cash flows in the absence of any sales in the real estate market, said a top executive.
Wan Hasni, Advisor-in-Charge, Tanmiyat, also called for more transparency in the real estate sector of UAE.
"The hidden costs and taxes will not help the recovery of the market. The system needs to be more transparent."
Saudi-based developer Tanmiyat plans to launch real estate investment trusts (Reits), said a top executive.
Tanmiyat has appointed McKinsey & Company in the UAE to carry out a study of the proposal.
"Reits are a long-term plan for us to securitise our project. It can be set up anywhere including the bourses of Dubai," said Wan Hasni, Advisor-in-Charge, Tanmiyat.
The developer said the Living Legends development will not be a part of its Reits portfolio.
Meanwhile, Tanmiyat is offering a price reduction for investors who bought at higher prices during the peak of the real estate boom in Dubai, said the developer.
"We are adjusting prices for investors who purchased high since we do not want them to be very far away from secondary market prices. There are many customers whose prices are not the same since they bought at different times. We like to call it a price rationalisation rather than a price reduction and there are conditions attached to this," said Hasni.
According to Hasni, the "rational" price for villas and apartments in Living Legends is around Dh1,200 per square foot for villas and around Dh700-Dh800 per sq ft for apartments.
"If any customer has paid above this and up to 30 per cent of the down payment, and the investor will abide by our new payment plan, we will reduce prices. It will be a wholesome approach," said Hasni.
"We will sit with the investor and discussing all issues relating to how many units he has and how much he has paid," he said. "The customer will have to be ready to commit to our new payment plan. Many customers have paid only 10 per cent down payment. If they pay up to 30 per cent then they will be able to make use of the new offer."
"We try and work with our customers to offer them alternative solutions to defaulting. This is a time when we want to maintain our relationships with our customers and deliver to their needs. It is a difficult time for everyone and we recognise this. Some of the solutions that we are offering include consolidation or delayed payment plans, so the customer has an option," said Hasni.
Tanmiyat has so far send 500 customers of its total 2,000 the new payment plans. The developer is currently collecting payments from only those customers who have paid less than 30 per cent. "For those who have paid up to 30 per cent we have stopped collecting payments," said Hasni.
Living Legends was initially due to be delivered by December 2008. Now the first batch of 500 villas will be delivered only in November 2010.
"There have been lots of reasons for the delay. We were asked to build the infrastructure for Living Legends by the master developer only towards the middle and third quarter of last year," said Hasni.
Tanmiyat will build and sell all unsold units that arise as a result of the consolidation efforts of the company.
The developer has incurred a loss as a result of the delay in the project, said Hani. "We have our losses but I cannot disclose the amount, but Tanmiyat has incurred a loss," said Hasni.
Hasni said Tanmiyat has no plans to acquire more land in the UAE. "First, we are determined to complete our UAE projects. Our land bank is large enough at the moment to sustain our projects for the next 10 years, hence we are not planning to acquire any more at this stage," said Hasni.
Cash flows
Tanmiyat relied mostly on internal funding, private equity investors and its contractor CSI for managing cash flows in the absence of any sales in the real estate market, said a top executive.
Wan Hasni, Advisor-in-Charge, Tanmiyat, also called for more transparency in the real estate sector of UAE.
"The hidden costs and taxes will not help the recovery of the market. The system needs to be more transparent."
By Anjana Kumar
© Emirates Business 24/7 2009
