Dubai: Danube Properties is testing investor appetite for offplan property with a Dh400 million project at Al Warsan First, near International City. And it is backed by an aggressive pricing that sees studios being offered from Dh290,000, one-bedrooms from Dh475,000 and two-beds at Dh699,000.
About 375 units of the overall 741 apartments at “Olivz” are being put on sale from today (March 11). Completion is scheduled for the first quarter of 2022.
This is the first formal offplan launch of the year in Dubai, with most developers preferring to stay well away from what is still an exceptionally difficult sellers’ market. Emaar has been pushing The Valley, while other developers have had limited releases at locations such as District 1 in MBR (Mohammed Bin Rashid) City and elsewhere.
Also, most developers are waiting for Dubai’s Higher Committee on Real Estate to give its views on how to tackle issues such as oversupply. But, according to Atif Rahman, Director at Danube Properties, that’s not the same as saying new launches should stop. “That’s not what the Committee has been set up for – and as a developer, it is not our intention to worry about if there is demand for offplan,” he said. “Our only consideration is how to tap demand.”
Any talk about Dubai and property inevitably veers towards the supply issue – how the market could see between 40,000-50,000 new homes being readied this year. That this could be the pace of delivery for the next two to three years, and how this would keep prices under unrelenting pressure.
On whether the tight market situation is reflected in Danube’s launch prices for Olivz, Rahman said: “Look, construction costs have not come down – only property values have. No developer can risk lowering prices to an extent that the build quality suffers. Regardless of the market situation, we keep our prices to a certain range. The one thing that we do not engage in is over pricing.” (On a per square foot basis, the price would be close to about Dh800 a square foot.)
Danube has so far delivered 2,100 plus units across multiple projects, with some of them turning out to be popular rental hotspots. This is the leverage Rahman hopes will score with potential buyers of Olivz units. That and the developer’s time-tested 1 per cent payment plans.
Last year, Danube launched two projects – the “Elz” and “Wavez” – and delivered two, “Starz” and “Resortz”.
Market sources say that it’s unlikely there will be a string of new launches in the first-half of the year. The novelty of extra-long post-handover payment plans is slowly fading, and developers are turning their attention to project completions and then making a push with ready units.
For Dubai developers, going for niches are what matters
Buyer affordability will continue to be a key theme even with more homes being delivered
Dubai: Access to land and funds are no longer enough to make a mark as a developer in Dubai. For that, the developer has to come up with a niche offering.
With almost 50,000 residential units likely to be handed over this year, developers need to be reasonably sure there are gaps in the market. “A lot of developers have looked at the numbers… and they are more cautious,” said Zhann Jochinke, Chief Operating Officer at Property Monitor.
“Emaar dominated the market last year, and even this year they have been the only ones to push forward. We have not seen much movement from smaller developers.”
Where are those niches?
Affordability is a theme that continues to work well, while some developers have managed to convince that they can deliver a quality build at certain accessible price points. Even sustainability is finding some traction with buyers.
“The double effect of an increased supply and a decline in prices has led to an overall softening,” said Sean McCauley, CEO at DevMark. “Due to this shift, developers are becoming more competitive in terms of their value offerings and more aggressive in their awareness and marketing campaigns in order to maintain turnover momentum.”
He points to “payment plans that have moved away from the traditional 10×10 per cent instalments to 50 per cent during construction and 50 per cent on handover, and now mostly to post-handover.
“We’ve also seen a trend towards reducing price points rather than rate per square foot. Developers are also increasing their marketing spend and embarking on multi-million dirham international campaigns through roadshows, exhibitions and retail stands,” said McCauley.
“Down payments have also been slashed by developers, from 20 per cent to a norm of 10 per cent, with some even going as low 5 per cent. We have seen developers waiving Dubai Land Department registration fees and service charges.”
Have that ‘differentiation’
“Ultimately, it’s offering differentiated products and services,” said McCauley. “The result is a business model that is more resilient to market turbulence and delivers consistent levels of profitability by creating a product that customers want. And (thus) establishing a reputation as a developer who delivers on promises.”
According to Atif Rehman, Director and Partner at Danube Properties, coming up with a modular design and tight control over supply chain should keep a developer comfortable even in a weak market. Ad in “strong negotiations and optimum economies of scale, then you can bring down the cost.”
Danube introduced the concept of a low-burden payment plan – the 1 per cent was rolled out late 2014. “The idea was inspired by the UAE Central Bank’s cap on offplan funding, which required a 50 per cent payment towards an offplan property and only then would a bank offer a mortgage,” he added.
Land is a piece of liability. It transforms into an asset only when we complete the project
– Atif Rahman of Danube Properties
“But to expect buyers to fund large downpayments was in conflict with our affordable housing plans. So we looked at this gap and created an opportunity for the affordable housing segment. The consumer was expected to put in a down payment, followed by a monthly instalment of 1 per cent. We take it to 50 per cent, which is ensuring that construction costs are covered and the balance we recover post-handover.”
“It opened up a big market segment where people could take possession and continue paying the balance.”
Rehman is not worried about surviving in a slow market. “We have been focused on delivery – that’s the actual business we hold. More than our new projects, more than the pipeline we have, it’s about the units already launched.
“Land is a piece of liability. It transforms into an asset only when we complete the project. Moving from liability to an asset is the only way to move forward.”
Mega projects investments in Gulf hit $1 trillion
Dubai: The age of the “mega-projects” is not over in the Gulf — in fact, there are nearly $1 trillion worth of investments in such projects as of now.
And they are needed as “part of an audacious bid to transform socially and economically,” according to a new report by Strategy& M.E.
But can these economies keep pushing ahead with such capital-intensive projects, with long gestation periods? Charly Nakhoul, Principal at Strategy& Middle East, has no such doubts.
“The projects are important for the region and were not planned around short- mid- term economical fluctuations,” he said. “Some of these projects are planned to change the face of the economies aligned with the country visions; others are being pursued to respond to immediate needs (e.g., housing).
“Projects are being pursued to diversify the economies away from oil.”
UAE online sales feed demand for industrial property
Industrial real estate is becoming a hot-ticket item because of digital economy
Dubai: The surge in online sales is not hurting all types of brick-and-mortar. In fact, there’s one category – warehousing and logistics – that’s is doing quite well because of it.
“For every $1 billion added in new ecommerce sales, there’s a need for a further 1.25 million square feet of industrial real estate,” said Zachary Cefaratti, CEO, Dalma Capital Management. “That’s exactly what’s happening in the UAE/Gulf.”
According to Dalma projections, the Gulf markets could generate between $2.7 billion to $4.5 billion in ecommerce sales growth until 2022. That, in turn, would create the need for 3.5-5.7 million square feet of industrial real estate.
The UAE’s ecommerce is expected to hit the $27 billion mark in another two years from $19.7 billion now.
The digital economy is also feeding different types of industrial real estate.
The Manrre Logistics Fund, which on Tuesday went in for a private listing on Nasdaq Dubai and has raised more than $70 million, has been busy picking up commercial real estate. This includes a facility that operates a cloud kitchen in Dubai’s JLT cluster, another growth area within the wider digital economy.
“The “dark kitchen” concept and last-mile logistics is what’s driving industrial real estate,” said Manohar Lahori, Chairman of Palmon Group, and chief promoter of Manrre Logistics Fund.
Dark kitchens are off-site locations where food gets prepared for multiple restaurant operators and to serve the exponential growth in the food delivery market.
A preference for industrial
The Manrre Fund has picked up 8-10 million square feet of industrial space in the recent past, half of which is in Dubai.
The Nasdaq Dubai listing will give it access to institutional investors, and that’s how the fund promoters intend to keep it, at least for now. Minimum investments are pegged at $50,000.
“Going for retail investors is not our intention at this stage,” said Lahori. “This is a private listing on Nasdaq Dubai, and it was intentional to keep it that way.”
Real estate funds
Specialist real estate funds in the UAE have not been having a good time of it over the last two years. The steady decline in property values, in both commercial and residential, has been hurting yields.
According to Lahori’s Manrre’s overwhelming focus on industrial real estate, including those in free zones, insulates it against the downturn.
The real estate industry in the UAE is gearing up for growth with the introduction of various government policies and the advent of the Expo. Investors are ensured a very well-regulated industry, with strategies set by the new real estate committee.
Relaxed visa rules for foreign investors, people above the age of 55, and homeowners as well as long-term residency visas for investors, UAE’s zero-tax regime, and the Central Bank’s removal of the 20 per cent cap on bank real estate lending combined with low-interest rates, boost the Emirates’ real estate market.
Private developers’ role
These policies and initiatives are part of the foundation that enable and encourage us to work toward boosting the sector by capitalising on trends that will help private developers fortify and position this city on the world real estate map.
Beyond looking at the market as a whole, it is also our role to consider other factors that could create a real difference – from technological innovations and sustainability efforts all the way to better understanding the investor and end-user, and predicting their needs before they may be aware of them themselves.
With rapid changes in the industry, most of which are driven by technological advancements, we cannot emphasise enough the need to adapt. Deep analysis, supported by big data, allows for the measuring of client requirements, buying patterns, and global trends, all of which have to be captured.
Tools like virtual and augmented reality are used to give home tours, providing buyers with a realistic experience with selecting their ideal home. As developers, much like all other stakeholders in the industry, we cannot be mere bystanders who adapt passively, but have to assume a proactive role in which we catalyse change.
For a business to thrive in today’s digital era, and for it to operate in alignment with its stakeholders’ needs, ensuring the team is digitally native is absolutely pivotal. Businesses need to not only keep up with the pace of disruption, but do their best to lead it – a pursuit that governs growth and development.
Similarly, RPA (robotic process automation) has digitised some of the tedious and repetitive processes, effectively reducing a certain portion of operational expenditure (OpEx) and minimising the possibility of human errors.
Moreover, we have deployed business intelligence and data analytics solutions that help in gathering information and creating actionable strategies for existing or new business opportunities. We are now planning to implement Artificial intelligence (AI) for analytics and predictive decision-making.
An extra mile
Developers have to instil trust into investors for the industry to excel. Although the government has implemented guidelines to ensure investor interests are protected, it is their duty to build credibility among investors by advocating transparency as well as provide security beyond formal regulations.
Customer engagement is a key source of transparency. Our strength lies in frequent communication to clients, updating them about developments, and dedicated social media teams to address queries almost instantly. Negative feedback is also responded to.
Being responsible on all fronts
The UAE has witnessed a rapid population growth and speedy construction through the past two decades. Climate change concerns and minimising energy usage in the desert have been challenging. Naturally, developers have to move towards sustainable means of construction and design environmentally conscious smart homes.
We have implemented a multitude of sustainability best practices across our communities to develop smart and sustainable residences that achieve a perfect balance between economic and social development and help preserve the environment, in alignment with UAE Vision 2021. It is our duty to ensure that our developments reflect the latest global trends in green buildings.
This entails using the right materials, construction processes, well-thought-out building and community designs, and readily-available technology to support water and energy conservation.
The small things
We need to understand that today, property seekers are looking for more than just a home; they are in search of a certain lifestyle that a property represents and enables through distinctive features and amenities, location, design and other important factors. With better legislation comes a demand for state-of-the-art mid- and high-rises, innovative features and creativity that the global property market has yearned for.
Investors not only value strategic, up-and-coming locations, vicinity to business, leisure and retail hubs, and connectivity to major highways, public transportation and airports, but also the homes’ quality standards and amenities.
The path to success has been smoothened for us by tax exemptions, favourable legislation, trusted governing bodies, and grand events like Expo 2020. It is now our responsibility to transform and introduce new concepts, adding real value not only to the UAE’s property sector as a whole, but to investors and end-users whose needs and wants constantly evolve.
By listening closely to them and researching their aspirations meticulously, UAE developers can respond creatively and put forth offerings that lead the global real estate market into a new paradigm of innovation.
Source : https://gulfnews.com
Images : https://gulfnews.com