Thursday, Feb 28, 2013
Dubai:
The floodgates have opened up on new project launches in Dubai since the start of the year with developers looking to exclusively tap high net worth investors with ample cash to spare. A good number of these transactions are financed outright through equity, which for the concerned developers represent the ideal situation to be in.
Recent launches also lay to rest concerns that the inflow of investor funds into Dubai real estate was flagging by the end of last year. “Investors have realised that Dubai is no boom and bust city and currently can offer investment options that other prime locations around the world possibly can’t,” said Mohammad Zaal, CEO at Al Barari, the upscale residential development which last week formally launched a collection of 28 bespoke villas on sprawling plots — with price tags of Dh20 million to Dh100 million — at ‘The Reserve’. Zaal has had two transactions since the launch, split between a UAE resident and an overseas investor.
“We had seen demand in market for bigger plots and where buyers wanted more direct involvement in how their homes would look and the specs to which they would be built.”
The Reserve represents the third component at the 14.2 million square feet Al Barari development. The first phase featuring 189 villas now has an 80 per cent occupancy.
The Reserve will not be the sole project vying for investor attention. Nakheel has announced sales for 170 Azure Residences on the Palm for Dh2.3 million to Dh4.2 million. The launch, just weeks after that for the sold-out Club Vista Mare offering, shows the Palm retaining its historic pull vis-à-vis the rich buyer.
New releases
In fact this has been a busy week for new property releases. Emaar added another 500 units to its portfolio of freehold serviced apartments with the The Address Residence Sky View. Earlier, Damac had the sales launch of its Dh1.2 billion residential high-rise in Dubai Marina, a project which has its own prestige boost through a tie-in with luxury label Fendi.
“Prices were in the range of Dh2,400-Dh3,100 per square foot and the products released were mainly serviced apartments which have proven to be very popular recently,” said Mohanad Alwadiya, managing director of Harbor Real Estate. “This has been fueled by the strong performance of the hospitality sector in Dubai.”
But the single unifying theme of all recent launches is the emphasis on upscale. “There is far more confidence in the higher end of the market which promotes individuals to step up with cash, if the perceived risk is low,” said Richard Paul, head of residential valuation, Cluttons UAE. “Generally the likes of Emaar have done extremely well promoting a brand and product that people can trust as well as delivering on their promises through past delivery. As a result, cash-rich investors are willing to make stage payments through the construction period.”
This approach also plays well with developers who have funds at their disposal. It also means that only the big-league developers can afford to launch and sustain projects in the present situation. “Private developers with little to no track record can neither convince lending institutions to help with development finance, nor convince the market to purchase off-plan,” said Paul. “We may see larger, cash-rich developers taking advantage of this situation and monopolising the new demand. I would hope that banks will look at this somewhat differently to how they have done in the past and offer development finance to developers who can prove that they have a feasibly economic scheme.”
While demand has been dominated by residential offerings, local developers are also trying to drum up interest for prime office space. The mixed-use Burj Daman has released 680,000 sq. feet of top-of-the-line office space set over 15 floors in DIFC. “We have been meticulous in our planning for the Burj Daman — our vision was to create an iconic address for business, living and leisure in Dubai,” said Shehab Gargash, managing director at Daman Investments, the developer.
It is the message that other developers are sounding out loud and clear for their own projects. For the high-end investor, there is no dearth of new choices in the present.
By Manoj Nair Associate Editor
Gulf News 2013. All rights reserved.
