Last week felt a bit like Groundhog Day. Three different people called me up in the space of an hour, suggesting I do exactly what they were doing. “Just get down there with your cheque book. And do it now.”
They were, like many hundreds, if not thousands of other people, making their way down to Downtown Dubai, where Emaar had just begun selling properties on its latest development, The Address,The Boulevard.
To say it went rather well would be an understatement. Planned as a 63-storey tower, which will include a 200-room hotel and 542 serviced apartments, due for handover by the end of 2015, the punters clearly loved what they saw (which is actually nothing more than floor plans). Hundreds queued overnight outside Emaar’s sales centre (well, hundreds of investors paid hundreds of labourers to queue up for them), and within hours, everything up for sale that day had been sold.
Now, if you don’t know anything about the Dubai property market, you would rightly think that this super sale was because the prices were spectacularly low. Think again. Prices ranged from AED1.1m (US$299,500) for a studio to over AED6m (US$1.6m) for a four-bedroom unit. That equates to an incredible AED2,650 per square foot, more than double the average in the area. All the more incredible when you factor in the latest Asteco survey which suggests prices in the area already rose nine percent between Q2 and Q1 this year.
There are two ways to analyse what’s going on: one is that the property boom is back with a bang, and that nobody learned anything from the crash. We are all essentially greedy and will risk anything for the chance of a quick buck.
The reason that theory doesn’t hold water is that just 20 minutes drive from Downtown is the Nakheel-built Palm Jumeirah development. Last week, there was also a bit of a gathering there. This one was unhappy residents getting together to decide what to do next in their long-running spat with Nakheel, after the developer banned many of them from using the beach in a row over service charges. Many are now stuck in lengthy legal disputes with the developer that could drag on for years. There, is of course, no shortage of apartments for sale on the Palm Jumeirah, though with around five minutes of research, you could pick up a decent place for close to AED800 per square foot.
This leads to the obvious question: how can prices on one world-famous development be more than three times those on another world-famous (and probably more celebrated) development? Well, I can only find one difference: Downtown is built by Emaar, The Palm Jumeirah by Nakheel.
We could argue forever about the difference in quality between the two, but fundamentally, the difference is down to the Emaar brand. Over the past few years, it has established itself as the region’s premium real estate company. If you buy or live in an Emaar property, you feel sure it is well built, well serviced and most of all, if sold off plan, will be delivered on time. Emaar is a trusted brand, the type we aspire to be part of. Emaar has become the Apple of the property industry, and in many ways, this new project is its own iPhone 5.
To be fair to Nakheel, it has at least began the process of financial turnaround. The company’s net profit surged 36.5 percent to AED767m for the half-year ended 30 June 2012 from AED562m in same period last year.
But bringing the brand back to its former glory is the real challenge.
Anil Bhoyrul is the Editorial Director of Arabian Business, you can follow him on Twitter at @AnilBhoyrul