Developer sells off towers it was planning to retain to fund more development in Dubai
Abu Dhabi-based developer Bloom Properties has decided to sell off units at two towers it was originally planning to hold for rental income to raise funds for further development within Dubai's Jumeirah Village Circle (JVC) district, the company's CEO has said.
In an interview with Zawya at the Cityscape Global real estate exhibition in Dubai, Sameh Muhtadi said: "Bloom Towers is three towers. Originally we thought we'd launch only one and hold on to two of them - one of our strategies is to increase our recurring revenue percentages.
"But we decided to offer the second tower here. And we're doing the same with Bloom Heights. At Bloom Heights, one of the towers was to hold but we are offering those for sale."
The company has released 260 units for sale at Bloom Towers and 180 at Bloom Heights, both of which are in JVC.
"We have acquired other plots that we are developing, and we thought we'd done very well with the initial launches so we thought why not repeat the success we've had?"
He added: "The interesting thing about JVC is that we were right in our selection, because that's the only area that saw price increases last year out of all the districts in Dubai.
"It was dormant, and then with Nakheel out of financial trouble they finished the infrastructure. And now you go there and there's nothing but tower cranes. It's an incredible area, and very, very good value - yields north of 11 percent for studios and 10 percent for one-bedrooms."
Wider UAE plans
Muhtadi said that Bloom Properties, which is part of Bloom Holding, is looking to develop more stock in JVC, and in other parts of Dubai.
"You'll notice our centre of gravity is more in Dubai than Abu Dhabi these days," he said. "We believe there is bigger demand in Dubai than in Abu Dhabi at this stage, although a lot is happening in Abu Dhabi now with the Louvre, with the airport opening soon, with quite a few hotels being added to the landscape. We are optimistic that the long term prospects look very promising."
The company is continuing to work up plans for a huge, 2.2 million square metre site close to Abu Dhabi's airport, Muhtadi said, but added that it has taken some time to transfer the land use for the site from private to commercial land.
"There is progress behind the scenes," he argued. "We’re converting the usage, which requires [Urban Planning] Council approval. We hope that soon we will get the green light.
"That, for us, is a tremendous project. It’s the next 10 years in Abu Dhabi," he said, adding that it has been in negotiations with universities, schools, hospitals and other potential occupants.
He said that its location "across the street from the airport" would also make it attractive for corporate occupiers, logistics firms and for residential schemes.
"There’s a lot that can be done."
Dubai currently has about 90,000 units in the pipeline that are due for completion by the end of 2020, according to property consultancy Cluttons, which may have caused some developers to rein in plans for new launches. A UAE Property Report published by the firm last week said that just 1,600 units had been announced in the run-up to this year's Cityscape, compared with 34,000 last year.
However, the firm's head of research, Faisal Durrani, told Zawya that there were signs that developers were regaining confidence as a result of a flattening of price declines and a likely increase in activity in the run-up to Expo 2020.
"You've got to take a step back from just looking at an individual development, or just the property sector. They [the Dubai government] have got this master plan to double the city's population, grow the tech sector and all of this is going to result in very strong population growth.
He added: "At the moment there just isn’t the housing to house all of these professionals that Dubai is trying to attract. It's part of a much longer term vision and I think you've got to buy into that."
© Zawya 2017