Fighting back

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In 2002, Damac Properties was established to exploit new laws in Dubai allowing foreigners to own freehold property.

The legislation brought a slew of developers to the market, all eager to cash in on what was the start of a six year building boom in the emirate. Damac’s property arm grew rapidly, expanding regionally into Jordan, Lebanon, North Africa and even the Far East. In 2008, Damac delivered 2,300 units and has pledged to hand over another 7,100 by the end of 2010, as the developer concentrates on the delivery of existing projects in response to the downturn.

Sajwani is candid about the events in Dubai over the last few months, admitting that the scale and speed of the downturn took him by surprise.

“We were not expecting such a harsh landing. Prices have dropped, and the confidence in the market has been shaken. Buyers have been scared,” he concedes.

If any more confirmation was needed that Dubai’s housing market has been ‘shaken’, Swiss investment bank UBS last week warned prices could drop 70 percent from their peak last summer.

Some analysts say that values are already some 40 or 50 percent down and that, coupled with a shortage of liquidity hitting mortgage provision and corporate lending, means investors are running scared.

On falling house prices, Sajwani is conservative, but welcomes the overall correction in the market that has made homes in Dubai more affordable.

“The market has gone down between 20 percent and 30 percent, depending on the location and area. I’m talking about the overall market, I’m not talking about one desperate seller who is willing to sell his apartment [at a cheap price],” he says.

“This is healthy and good and gives an opportunity for newcomers to buy,” he continues, predicting that Dubai’s real estate market is “close to the bottom”.

Sajwani goes on to argue that if the world economy shows signs of recovery this year, then Dubai will follow suit, with prices “stablising” in the final quarter of 2009 and early 2010 and rising again in 2011.

Real estate valuations aside, Sajwani defends Dubai as fiercely as you’d expect from someone born and raised in the emirate. Other than its prime geographical location in the Middle East and outstanding infrastructure, Sajwani says the emirate is particularly well placed to deal with the challenges thrown up by the global crisis because the government’s money is at stake.

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READERS' COMMENTS

Damac Parkside Project at DTJA
Posted by Hisham Elrufaie, abu Dhabi, UAE on Monday 27 July 2009 at 14:16 UAE time


Is this project going to start soon or is it cancelled?

told you so
Posted by paul, Dubai, UAE on Friday 22 May 2009 at 15:27 UAE time


I went to a DAMAC product launch a couple of years ago (for the buffet, which I have to say was ok but not great). The chairman spent the first 15 minutes of the event giving a speech dedicated to explaining why Dubai property was cheap and good value by international standards and why Dubai would absolutely and definitely NOT CRASH.

I think this sums up Dubai's problem - there was no humility to acknowledge a great deal of luck for the windfall, and no appreciation that there was a huge speculative bubble element in the market that simply could not be sustained. Instead the property companies convinced themselves that it could all last forever, and poured money into bigger and more absurd white elephant projects.

They say that pride comes before a fall. Look back to 2007 and 2008 and there was a lot more that pride on display. It was bordering on pure arrogance.

Damac Plse Add TANMIYAT
Posted by Mohamed Djirdeh, Dubai, UAE on Thursday 7 May 2009 at 23:30 UAE time


Thanks Mr. G. Dickinson, same with me with Tanmiyat Group. I bought a THREE B/R apartment on Dec 06, completion Dec 08. Paid 20%. No construction has been done, only a fence was put up few months ago. Feb 09 received first ever communication, letter of waiver of payment till end of April. On 02 March 09, second letter claiming FORCE MAJEURE. Can you believe 3 months after completion!!! Visited RERA no registration of contract!!! Now last resort the courts which want AED 30,000 as fees and a similar amount for lawyers!!! I suggest let us start a DEFENSE FUND? I suggest DUBAI CARES/GOVERNMENT should set up a defense fund.
Where else can we go MR. SAJWANI????? THE MEDIA. Yes THE MEDIA

Damac
Posted by Geoff Dickinson, Dubai, UAE on Thursday 7 May 2009 at 16:31 UAE time


I am a DAMAC customer and it has been a personal disaster for me. I bought in to HAZ Tower in June 2007 nearly 2 years ago. For the first year the property was on hold due to a dispute with Helal Al Zarooni. They finally issued contracts for the development renamed as Commercial Square in September 2008. Since then a fence and a portcabin has gone up. Nearly 2 years on I have paid 40% the project is not listed anywhere, I can not sell it. DAMAC refuse to give my money back. I have instructed lawyers who over a 5 week period have written 4 hand delivered letters to DAMAC and they have not replied to any of them. I understand delays, I understand the crisis. But developers can not take peoples money, keep it for 2 years, do nothing, refuse to give it back and refuse to reply.

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