By Shane McGinley
Dubai Marina, Downtown and the Palm Jumeirah now offer “limited” investment opportunities, says Cayan Group chairman
Prime real estate areas such as Dubai Marina, Downtown and the Palm Jumeirah have become overdeveloped and now offer limited investment potential for investors, a leading developer told Arabian Business.
Saudi developer Cayan Group, which is most famous for building the iconic twisted tower in Dubai Marina, last month unveiled a new project in Dubai, but its chairman Ahmed Alhatti said the company shunned traditionally popular prime areas of the city as he considers them now overdeveloped.
“We were studying different areas and Dubai we are known as a luxury developer and we are known to invest in prime areas. However, the prime areas including Dubai Marina, Downtown and the Palm [Jumeirah] I can say are oversupplied and the investment opportunities have become limited,” Alhatti said.
“The most important difference is the land prices. When you buy now the land prices are limited, it is difficult to get a good view. Areas like the marina became extremely congested in our opinion. Therefore, considering the land price, for us to do our creative designs, which normally cost more than the typical developers, we found that we will not be able to give the right investor opportunities to our clients. We did a different project where we can deliver high quality which our loyal clients will appreciate.”
Therefore, its new project Cayan Cantara will be located in front of Mohammed bin Rashid City, which is being developed by Emaar and Dubai Holding.
“This area has all the infrastructure completed, it is five minutes from Sheikh Zayed Road and so many projects are happening in that area and there is a mega mall going in front of us,” he added.
The project, which is the first as part of Cayan's partnership with Shuaa Capital, is a branded residence and hotel apartment project located along Dubai's Umm Suqeim Road, which will include two towers and a hanging glass-walled swimming pool.
Designed by Japanese architecture firm Nikken Sekkei and UAE-based Dewan Architects, it will also include retail shops, restaurants, luxurious spa, a fitness centre, a conference hall and will focus on environmental sustainability. While the bridge across the two towers will be connected through a specially designed bridge, which will also display the city’s highest advertising screen.
Choosing an emerging area instead of a prime location has paid off for the developer as it reported that, following a launch party in Dubai in April, it sold all 100 units in the first phase of Cayan Cantara within two weeks.
While the prime areas may be oversaturated, Alhatti said he is still a major cheerleader for the emirate: “First of all, we believe in Dubai. Last year it started good, then by mid-2014 it started to slow down, so we decided we would like to invest in Dubai. All the analysis is saying 2015, it will see the peak. For the last few weeks people are saying the real estate market is changing, it is more stable and much more comfortable. This was our plan a year ago when we secured the land. We are going with our plan and we believe the market is healthy.”
While Deloitte has forecast that residential sales prices in Dubai may continue to soften by between 1-5 percent in the first half of 2015, before stabilising in the second half of the year, new official data shows that people are still buying.
Real estate transactions in Dubai totalled AED64 billion ($17.4 billion) in the first quarter of 2015, up by AED3 billion compared to the year-earlier period, according to new figures released by Dubai Land Department (DLD). The report revealed a total of 11,603 transactions, while the total value of non-Arab investment amounted to more than AED12 billion through 5,466 investors and 102 nationalities.
“Dubai is not a new city anymore, more like London or Singapore,” said Alhatti. “In Dubai we want to position ourselves in the right place. You have your financial plans and you adjust as needed. We are not planning to sell more than 50 percent of this project. When we tested our market the demand was amazing. We sold almost more than 10 percent in one week through our own database and we had not announced the project yet. We have been in the market ten years so we have our own loyal clients.
“International clients are still very interested. The Saudi investors are very interested in Dubai and we can see some demand from the local investors here too. We are well prepared and our plan is very conservative. However, my expectation is starting in the third quarter of 2015 we will start seeing an escalating of prices,” he estimated.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.
JBR and Marina have become such, that even birds are scared to fly in those areas fearing they will crash head-on into some building no matter which direction they turn and how fast they turn.
It has become the Sharjah of Dubai.
Dubai Marina, Downtown & The Palm will remain Dubai's #1 Property Icons for decades to come