By Courtney Trenwith
Developer says Dubai property market so strong it’s cut timetable for Akoya in half
Dubai developer Damac is guaranteeing 24 percent rental yield over three years for 150 luxury apartments it will launch on Tuesday, Arabian Business can reveal.
The apartments are part of the Akoya by Damac 28 million sqft master development located off Umm Suqeim Road, which also will include villas designed by Italian fashion house Fendi and condominiums styled and branded by Donald Trump’s company.
The development, announced earlier this year, is centred around a Donald Trump-branded 18-hole PGA Championship golf course and all of the nearly 1000 residences will have direct golf course views.
In a second move to prove the developer’s confidence in the Dubai real estate market, Damac managing director Ziad El Chaar told Arabian Business the entire project’s timeframe for completion had but cut in half, from 10 to five years.
El Chaar said construction was being sped up as a result of the market response to residences within Akoya that already had been released.
“And at the same time we saw that it makes sense to build the golf course that quickly because all the research is telling us that golf is a high in demand sport in Dubai, it’s one of the touristic destinations now,” he said.
“And the quicker you build the golf course and the infrastructure, the more credible the project is.”
Two holes and the driving range already have been grassed, he said.
“When you see how active the site is, when I tell you five years you would say ‘okay, I believe you’,” El Chaar said.
“We’re going to have one of the fastest built golf courses in Dubai.
“And then we had good sales in [the first section] of villas so this is a big motivation to move on with the full infrastructure works in the whole community.”
The 150 apartments to be launched on Tuesday are contained in two nine-storey blocks. Similar blocks will be built alongside at a later stage.
El Chaar said while he did not believe a rental guarantee was necessary to attract investors, it would be a nice security.
“To show how much we believe in the Dubai real estate market we are granting a 24 percent rental guarantee on these serviced apartments over three years, which is like 8 percent per year,” he said.
“A rental guarantee in an apartment is like an airbag in your car, you technically hope you won’t need it but you have the security that it’s there and, God forbid, you go into an accident, it opens up and you’re protected.”
The apartments are due to be completed within 18-24 months.
Damac, which launched in 2002, also is building two hotel and residence mixed towers in cooperation with the hotel investment arm of Hollywood legends Paramount and several other residential towers in Downtown Dubai and the Burj area.For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
so its an 8 % return not 24%
8% is not a huge return in the market so its a false headline i am getting 12% on my apartments bought 3 yrs ago
rental guarantees are interesting. Even if real returns are only say 5%, the cost to Damac of offering such a return is the delta between 5% and 8% which is nominal in the context of a selling price. for example is the selling price is 2m. The rent guarantee is 160,000 (doesnt say gross or net). Say the apartment really rents for 100,000 (which would be a 5% yield). The cost to damac of funding the guarantee over 3 years would be 180k. Might sound like a lot but the reality is that this has a low chance of happening and makes for great PR. They will be able to get the sales done - and probably decide at the time that its policy not to pay out under the guarantee in any event - in much the same way that notwithstanding the various agreements they have, its policy not for them to honour them.