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| 21 November, 2017

Dubai requires 20,000 new homes every year

Residential towers are seen in Jumeirah Beach Residence (JBR) in Dubai.  
Image used for illustrative purpose.

Residential towers are seen in Jumeirah Beach Residence (JBR) in Dubai. Image used for illustrative purpose.

REUTERS/Jumana El Heloueh

Damac chief Hussain Sajwani rules out fears of oversupply

A recent estimate put out by fam Properties claimed that Dubai will see a further 163,840 properties being built over the next five years from 387 projects. However, the chief of one of Dubai's leading developers is not perturbed about fears of an oversupply.

Says Hussain Sajwani, chairman of Damac Properties: "The Dubai economy grows at around four to five per cent per year and the city has half a million freehold units. Even if you take four per cent growth, you will need 20,000 homes to be delivered to the Dubai market every year. In the last three years, we have seen that between 8,000 to 10,000 homes were delivered and we estimate 12,000 units to be handed over this year.

"Next year, there maybe 15,000 units delivered. This is still short of the supply needed to balance demand in Dubai. Fears of oversupply are blown out of proportion."

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The developer has delivered 2,000 units across its portfolio this year, which include 1,071 units in its master development Damac Hills (formerly Akoya) and Fendi and Paramount Towers in Saudi Arabia.

Damac's major handovers next year are 2,000 keys at Damac Towers by Paramount on Al Khail Road and Damac Heights in Marina.

Sajwani also insists the group will exceed its revenue target of Dh7 billion this year.

"Our sales and revenue are up. The numbers are talking since we are a public company, with our results audited every quarter. Both Emaar and Damac are seeing better growth in comparison with last year. So, where is the sluggishness in demand? Despite geopolitical risk in the region, Dubai remains a safe haven," reckons Sajwani.

The luxury developer is also launching several units at an affordable price point now. "The good price point in this market is between Dh1.2 million to Dh1.3 million," the chairman observes.

"Being a luxury developer does not mean you cannot offer a good quality, luxury product to the lower end of the housing market. We are launching products across the price spectrum and emulating the models of Mercedes Benz and BMW. For instance, they have products starting from Dh70,000 and going all the way up to Dh700,000, but they still maintain the reliability and look of the brand," he adds.

After taking market share in Dubai, Damac is now exploring development options outside the UAE. Besides an ongoing project in London, the high-end developer has also been chosen by the Oman government for a $1 billion project to redevelop Port Sultan Qaboos in Muscat.

"We are also developing a resort in Maldives. We are exploring a lot of ideas in overseas markets. We currently have no expansion plans in the Sub-continent," he clarifies.

Damac is also on the lookout for more land plots in Dubai. "Land is oxygen for any developer. You always need more of it. Damac Hills and Akoya Oxygen are at an advanced stage of build out."

Meanwhile, the Trump International Golf Club which opened earlier this year in Damac Hills is seeing good progress, with 70 to 75 members registered so far. The Trump World Golf Club is on schedule to open next year, informs Sajwani.

"The Trump brand from a property point of view is synonymous with reliable, high-end products. That's what customers look for. We are benefitting from it from a development point of view," says the chairman.

Damac has big plans for its recurring income portfolio and is considering 750,000 sqft of leased space across its two master developments. The developer has leased out more than 400 units in Damac Hills.

"Every developer has its own strategy for cash flow. In my view, a smaller developer cannot afford to have units for rent. As you grow big, when you have proper income and cash flow, then you can retain units for leasing. This will provide sustainable income," says Sajwani.

Damac's hospitality unit aims to have 13,000 hotel keys ready by 2020/2021. It has handed over 1,800 hotel keys so far in Dubai, predominantly in Downtown. "Our revenue from selling serviced apartments accounts for around 35 per cent of our total earnings. The hospitality component enables us to add value and differentiate our product for the customer. We look upon it as not just a revenue generator but also a service addition to our real estate products," he concludes.

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