Just over a year ago I sat next to property developer Kabir Mulchandani at a lunch organised by this magazine. I think I had the best seat – Mulchandani’s insight into the industry was both fascinating, and at times, I thought, plainly absurd.
“In a year’s time, I think off-plan sales will be back in Dubai,” he told me.
I laughed out loud. And then even louder. Being part of the property industry, it was no surprise to me that he would talk it up. But off-plan again? After everything that happened in 2009? And given the fact that thousands of people are still trying to trace the hard-earned cash they piled into off-plan projects that to this day don’t exist?
As our cover story this week shows, it turns out Mulchandani is having the last laugh. His new $1bn Viceroy Hotel and Residences project on the Palm Jumeirah has been nothing short of a staggering success.
In case you missed the massive launch party costing millions of dollars, it’s because he didn’t do one. Pretty much every unit on the project has been sold (no doubt quite a few already flipped). And there is a lot to sell: Viceroy Palm Jumeirah will have 481 rooms and suites, plus 221 ‘Signature Viceroy Residences’.
Right now, all that exists is a fancy iPad presentation and nothing else. But that, it appears, is good enough for investors.
So why is this? I’m not convinced the usual argument of “pure greed” applies here. Given the starting prices were around AED1,600 per square foot, and there are no small units, it is largely serious investors, or extremely wealthy individuals, who have piled in.
What I think this project shows is that luxury, real luxury – and that’s what any Viceroy project is all about – will sell. And sell fast. I had a look at the presentation and it is impressive stuff. The beachside property will host ten restaurants, as well as a gourmet market and bakery. In addition, the hotel will also have a spa, indoor fitness facilities and three outdoor swimming pools. Yes, everyone else has that, but few developments will be built and finished to this quality and standard.
This is also the first time in Dubai that investors can end up owning a hotel room, which is then effectively leased back to the operator. Unlike similar schemes in Europe, any investor will receive a share of the pooled income across all rooms, rather than on their unit alone. You don’t need to be very smart to work out that, based on current occupancy levels and projects, the potential yields are over 10 percent a year.
But what I admire more than anything about this project is Mulchandani himself. I first met him two years ago, after he was released from a Dubai jail, having been wrongly accused of property fraud. He was totally cleared of all charges, and was happy just to be able to enjoy lunch in a fancy restaurant again. I assumed, as did most people, that following the nightmare he had been through he would be on the next plane out of here and rebuild his life somewhere else. Anywhere else.
He replied: “This is still my home, this is still the land of great opportunity. It would be easy to leave, but I plan to work 24/7 until the day I am top of the tree again.”
That day has now come.
Anil Bhoyrul is the Editorial Director of Arabian Business.