By Courtney Trenwith
Investors will face limits in bid to keep speculators away from plan to build world' tallest commercial tower
Speculators will be banned from buying into what is planned to be the world’s tallest commercial tower, the head of Dubai Multi Commodities Centre, which is developing the building, said.
Companies also will be limited in the number of floors they can purchase according to their size, in a tactic designed to prevent others from profiteering on the record-breaking project, DMCC executive chairman Ahmed Bin Sulayem said.
Investors already have shown keen interest in purchasing a significant number of floors in the tower – before the design has even been finalised, according to Bin Sulayem. But he warned each offer would be scrutinised and non-end users ruled out.
“I want to be fair to the DMCC members, to the market, so anyone that comes with a demand of 20 floors, 30 floors, or whatever, we’re going to investigate,” Bin Sulayem said.
“These [could be] shrewd people who say they want 25 floors and maybe they just want five and they sell the others and they finance it to own the other five floors. I’ve seen it happen before too many times to know better than that.
“We know how to investigate that. If he’s a start-up, for example, there’s no way he’s going to be able to buy 25 floors. We know what he’s doing, he’s going to sell them, or sell most of them ... but that’s not going to fly with us. We’re going to know the size of the company [and] who that company is.”
The rapid on-sale of off-plan properties, also known as flipping, has been common in Dubai, causing prices to artificially inflate based on speculation. It also has led to some buyers being defrauded when scammers on-sell a single property to multiple people.
With a resurgence in new developments lately, developers and banks have taken steps to crackdown on the practice, in lieu of a formal ban.
For example, Emaar Properties is believed to have included a clause in its contracts that prevents a property from being transferred into another name until a certain percentage of the total value has been paid to the developer.
Bin Sulayem said his motivation to avoid flippers was two-fold: it saved end users money and stopped others profiting from DMCC’s innovation.
“By the time the end user [moves in] it would have been flipped four or five times and it’s not fair for the end user to pay six times the rent,” he said.
“That end user ... should have first-buyer advantage, not the speculator.”
DMCC used a similar approach when it sold floors in Almas Tower, presently the tallest commercial building in the Middle East, in Jumeirah Lakes Towers.
“The way we were successful with Almas Tower [was] we only opened the door for end users, for DMCC members, and it pays off,” he said.
“The tallest office building in the Middle East sold out in record hours and that’s when we only had 400 [members]. Today we’re approaching to be 7,000 members [and] by the time the sales start we’ll probably be 8,000 or 9,000 companies.
“At the end of the day ... we [want to] make the most use of it. Why should I allow it for property speculators to keep flipping it to other property speculators? That’s what caused a lot of issues [during the 2008-09 property bust].
“We’re not going to build another expansion and another expansion and 20 other DMCCs, this is it for us so I’m going to make sure, ultimately, it’s focused on real end users; real people are going to move in there.”
DMCC announced it planned to build the world’s tallest commercial tower last week.
It will be located in the southern end of JLT, within a 107,000 square metre expansion of its business park, where its free zone is located.
It is yet to decide how tall the building will be or when construction will start.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.
â€œMy personal view is that lakes are inefficient and do not bring value. This does not mean that we will fill in all of the lakes, but it does mean we will listen to the community about what makes sense. Even if some in the media think I shouldnâ€™t listen to the JLT community then Iâ€™m afraid I will keep on disappointing them.â€