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Sat 21 Mar 2009 04:00 AM

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Luxury endures

Zaya’s co-founder and CEO Nadia Zaal tells Selin Arkut that she is unperturbed by the potential effects of the credit crisis on luxury resort development.

Zaya’s co-founder and CEO Nadia Zaal tells Selin Arkut that she is unperturbed by the potential effects of the credit crisis on luxury resort development.

Do you think there is still a market for luxury developments in light of current conditions?

Yes. In fact, I think that when you see market cycles as we’re seeing now, there’s a lot of fear, but when savvy investors actually do their homework and study other cycles that have happened around the world, they will notice that luxury real estate and communities are less likely to lose their value.

We’re finding a number of family offices, high net worth individuals and quite a few real estate funds are most interested – basically, anyone looking for a two-year hold period rather than anything short-term.

Take Knightsbridge in London, for example. If you look at prices across the UK, they’re all dropping, whereas Knightsbridge will always maintain its value. This is definitely the right time and we’re already seeing quite a few European fund managers talking to us, as they are more comfortable with luxury real estate and feel there will always be a market for it.

Has the company been affected by the current economic climate at all?

Of course, times are tough for everybody. Nurai, mercifully, is at a stage where things are being executed and, as a company, we are evaluating our growth strategy.

We do have another Dubai project that we’re pursuing but our plans were to launch the project this May or June and we’ve now put that back. We’re continuing with the process, taking time to sit with clients, doing more research and getting into the finer details. We’re in no rush, so we will watch the market and see when the appropriate time to launch the project is.

Who do you believe is most likely to invest in Nurai?

We’re finding a number of family offices, high net worth individuals and quite a few real estate funds are most interested – basically, anyone looking for a two-year hold period rather than anything short-term.

If they can hold ‘till completion, it’s a great investment. Roughly 70% of Nurai has been sold, mainly to end-users. The few ‘speculators’ have bought two units – one for their own use and one to invest in – rather than traditional investment patterns that involve someone buying five or six units.

Given where we are with construction of Nurai – infrastructure completed and foundations coming up – a lot of the risk, in terms of execution, is not there anymore.

The electricity plant, desalination plant and infrastructure works are now finished with dredging 80% complete. We’ve found that clients want to touch, feel and see what they’ve bought, so the first two villas are six months ahead of schedule and will now be completed by May.

Although our promise to clients was December 2010, we’re pushing very hard to accelerate that. It’s not a big project – just 80 villas – and now that we’re in a position where the site is ready and the labourers are on-site too, it is not inconceivable that we actually deliver the project ahead of schedule. From a delivery and construction point of view, things are definitely looking up.

What, in our opinion, does the downturn mean for the future of the real estate market?

The one positive to come out of it is that land around the region is available for very good prices. We have a lot of opportunities that we are currently evaluating.I have a mandate from the board to still look to acquire land and make investments this year because we believe we will get it at extremely reasonable prices.

Another positive is that construction costs are falling. Generally, this market correction is great for the real estate industry; it means that companies are going back to basics, evaluating risks and making sure resources are deployed in the right areas. If the credit crunch means that people will get a better product, then that’s great.

Have the financial conditions impacted upon payment schedules?

For Nurai, we’re lucky because our clients are buy-to-live and they’re continuing with their payments. Our financing plan for Nurai is intact. We know that getting construction financing at this point is difficult, so it’s a time for developers to look at different financial instruments – Islamic bonds and Sharia compliant products are still very liquid markets. There is money available, but it’s more expensive and you have to be more creative.

How are you approaching creative finance?

Making quick sales during construction can provide extra comfort to those funding your developments. Any measure to restore confidence in the market is great right now.

For Nurai, we’re lucky because our clients are buy-to-live and they’re continuing with their payments. Our financing plan for Nurai is in tact.

You may not actually be reliant on those cash flows from clients, but they demonstrate that the product is moving and people want it. If you can’t pay for the 20% construction costs, then you really shouldn’t be in this business.

What has Zaya’s approach to ecological issues been for Nurai?

Obviously, we conducted an environmental assessment report before we got our dredging permit. We have also liaised with a planning council that has strict guidelines in terms of environmental planning permission and we will continue working very closely with them to establish the standards. How much are interiors considered by developers when working on a new project?

Not enough. Our approach has been to really get into the details before we finalise the product. So, when it comes to the interiors, we usually sit with a large number of potential buyers first and show them different mood boards, just to get an idea of what they like. As a developer that is very important to us. Developers are developers because they want to create the right product; and the right product is what the client wants.

That goes a long way towards explaining why we have now opened an office in Dubai. We’ve always wanted to expand regionally, both within the Middle East and Asia and, put simply, it’s easier for us to service out of Dubai than Abu Dhabi.

A lot of our payment schedules link to our construction but, also, we’re at a stage where our clients can come in to choose their finishes. They might, for example, want pictures of the foundation and superstructure – that’s all part of our service, as well as our regional expansion plan.

Finally, how does it feel being a woman in a traditionally male-dominated industry?

It’s great. I think that people have been very supportive and it’s more fun being a woman! I think women have this perception that construction is a dirty industry to get into but, in fact, it’s such a beautiful experience creating homes for people. It’s a perception issue more than anything else.

shenko 10 years ago

You can not compare knightsbridge in London to any where in the UAE. London is an established market that has history which is what people really pay for. Knightsbridge has always been an esquisite and exclusive area and will always continue to be so even in the current financial crisis. Which is why it will hold its value but am sure there will aways be one or two bargains as we do not know owners financial situation.