To prove his point that “by definition, the main activity of a real-estate developer is construction,” Damac Properties MD Ziad El Chaar says it has “50 projects under development at the moment across the region.” He explains: “Our strategy is to build and deliver what we are committed to, and that has resulted in 21 buildings being completed last year. Since the start of the recession – even though I do not like to bring it up, because it was four years ago – Damac has handed over 30 buildings. Our pipeline for 2013-14 is delivery of the buildings that are currently at an advanced stage of 70% completion.”
El Chaar adds: “We have not slowed down construction; that has been the main focus.” Such was the developer’s confidence in the property market, especially in Dubai, that it announced at Cityscape Global 2011 that it foresaw “an end to the oversupply”. This is because Dubai has transformed into two distinct markets: “One where the infrastructure is complete, and one where the infrastructure is still under completion.”
In the former, “we predicted, starting October 2011, that the prices would stabilise and start increasing. We have seen reports from research companies confirming 2.7% growth in Q4 2011. This showed that the market is growing back – definitely slowly; always when you come back, you come back slow. It is growing back in the areas where infrastructure is complete, with Dubai separated into developments around Sheikh Zayed Road and developments around Emirates Road.
“All the infrastructure around Sheikh Zayed Road is complete, prices are growing there, there is no oversupply in those areas, because now the demand is picking up and people see that those masterplans are complete. Around Emirates Road, we know that the infrastructure is still under completion, frequently people are asking a discount to buy in those areas, so the growth in those areas is yet to come, but it will go hand in hand with the development of planned infrastructure in those areas,” says El Chaar.
“We technically have projects in almost all the masterplans of Dubai, and we are committed to build and finish those projects.” Latest handovers include the 84-storey, 612-unit luxury Ocean Heights in Dubai Marina and the three-tower, 1,020-unit Lago Vista development at TECOM’s International Media Production Zone (IMPZ) in New Dubai.
“On the residential front, we have finished six buildings in that area [IMPZ], and are finishing the last four, which will give us about 3,000 units. The first project we delivered, a three-building development of about 700 units [The Crescent], is around 90% occupied. You can buy, at today’s prices, a big 580 square foot studio for AED400,000. With that studio you get a gym, swimming pool, children’s swimming pool, tennis courts, jogging track, residents’ lounge, steam and sauna room and aerobics room.” An added attraction of the location is the proximity of Jumeirah Golf Estates, home to Greg Norman’s Fire and Earth golf courses, and venue of the Dubai World Cup. El Chaar adds: “Definitely we still await completion of the infrastructure in that area.”
Also in New Dubai, El Chaar points to what is perceived as “the underdog of master developments”, namely Jumeirah Village South. “We have statistics from Jumeirah Village that the rental yield on a one-bed Damac apartment is AED10,000 higher than a competitor one-bed next door. It is down to size, amenities, gardens and swimming pool.” While the infrastructure in the area is incomplete, El Chaar says Damac has come up with the novel solution of utilising the roof space offered by its buildings. “On top of every low-rise, five-storey building you have a huge rooftop garden.”
The issue of build quality and level of amenities is evident at completed Damac projects like The Waves and Marina Terrace in upmarket areas like Dubai Marina, where the occupancy level is 97% to 98%. “The reason is that, even though they are six-year-old buildings, when you walk in they look like new, so the demand is incredibly high. We have seen this with Ocean Heights as well, a relatively new development at one-and-a-half years, which is running at a 91% occupany level.”
El Chaar adds: “We even have a project at Dubai World Central, where the new Al Maktoum International Airport has just opened for logistics, freight. I think we are the only ones with a residential project in that area, which is more than 50% complete at present.” All the developer’s projects at Business Bay in Dubai are about 70% complete, with the flagship Burjside Boulevard topped out and due for handover in June 2013.
“Business Bay is a key future area for us. We see it as a clear extension of the Downtown Dubai area, with the Dubai Mall, the Burj Khalifa and all the other developments around it. Now that the roads are being completed, the two areas are actually being linked together.” However, some of the developer’s most significant projects are outside Dubai at the moment. “We started this diversification in 2006, which is a natural progression for a developer,” says El Chaar.
Article continued on next page...