|23 September, 2019

CITYSCAPE GLOBAL 2019 - Affordable housing will remain a dominant theme in Dubai: Sailesh Israni, CEO, SASD

Sun and Sand Developments (SASD) has so far completed six affordable housing projects in Dubai

Rendering of Suncity Homes in Warsan Dubai.

Rendering of Suncity Homes in Warsan Dubai.

Sun and Sand Developers / Handout via Zawya

While Dubai residential prices are projected to continue to fall further, Sailesh Israni, Managing Director of Sun and Sand Developments (SASD) feels the market has already “bottomed out.”

“What we are passing through is the end of a cycle. We are stepping into a new phase of growth for the city,” he said in an email interview, adding that one of the key factors that will impact the market is Expo 2020.

“Expo will be great showcase event that will attract 25 million people, and if backed by policies that will help these visitors consider Dubai their home, we could see an appreciable influx of new residents ready to work and stay in the city,” said Israni.

The Dubai-based developer which believes in focusing one project at a time is currently building a 65-units Suncity Homes in Warsan. The 45 million UAE dirhams project is expected to be delivered in October 2020.

Israni who would be exhibiting the Suncity Homes at this month’s Cityscape Global said like every year, the event will provide visibility into the real estate market and the trends going forward.

“Flexible payment plans are already a part of the market. New launches may be few but there will be great deals for investors. We expect more footfalls and interest at this year’s Cityscape Global,” he said.

Acknowledging that the markets all over the world are facing many domestic, regional and international challenges, Israni said that Dubai is not new to challenges.

“We are expecting exciting new policies in real estate that will help the first-time investors enter the market backed up by transparency, security and easy exit,” he said.

While there has been a concern about rising imbalance between demand and supply, Israni pointed out that there will always be cycles where supply will increase or reduce.

“As a developer, we adjust to a well-supplied market by doing smaller projects with a shorter turnaround,” he revealed.

Israni hailed the policies of the Dubai Land Department and RERA which, he said, have ensured that there is no speculation in the real estate market in Dubai.

Market shift

On asking if Dubai’s market dynamics have begun to shift from being a hub of luxury to now mid-market and affordable properties, Israni agreed that it is fair to say the property market in Dubai has matured.  

He pointed out that everywhere in the world luxury properties would always make up for a small percentage of real estate transactions as mid-segment and affordable properties will have more transactions. “It is the same for Dubai. The market is more inclusive now,” he explained.

SASD primarily caters to the affordable housing segment and has so far completed six projects in Dubai, he noted.

“Affordable housing is close to our heart. It requires skills in planning and innovation to build such projects. It offers a much steady nature of ROI because prices do not rise or fall sharply,” Israni said, adding that affordable housing will continue to be in the forefront going ahead.

Sailesh Israni, Managing Director of Sun and Sand Developments (SASD)

Success mantra

Does affordable housing make good business sense when land prices and other input costs remain high in Dubai?

Israni pointed out that contrary to popular belief, land prices are not a challenge in Dubai.

“Land prices vary from location to location. The land is still available at Master Developers’ original sale price in many areas,” he said.

However, he pointed out that a lot of investment goes into making the land suitable for use, town planning, water supply, drainage, electricity, roads and community areas.

“If you are able to find an area in proximity of the city within 15 minutes of schools, hospitals, and clinics, affordable housing will flourish. The challenge in affordable housing is only ease of funding during off-plan,” said Israni.

However, the company has developed a sustainable business model based on the creation of a land bank, development through in-house contracting, management using in-house marketing, culminating in facilities management.

“We manage a sustainable business by doing one project at a time. We retain 25 percent in every project and participate as investors. This gives the buyer confidence that the developer is still a part of the project even after completion,” he explained.

SASD also has an in-house contracting company that helps it achieve timely completion and quality control.

“We also have an in-house facility management company and property management company. Once the project is complete, we help our investors rent through our property management arm and maintain their property,” said Israni, adding that this integrated approach is appreciated by the buyers.

In testing times, he said, if a developer is trustworthy and has delivered in the past, people will still come ahead and buy.

(Reporting by Syed Ameen Kader; Editing by Anoop Menon)

(anoop.menon@refinitiv.com)

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