By Anil Bhoyrul
Nshama is preparing to tip the scales on the Dubai property market with its new mega Town Square project, offering three-bedroom townhouses priced at under a million dirhams each. If successful, thousands of middle income workers could finally step out of the renting rut and get a foot on the property ladder. The company’s CEO Fred Durie explains why and how it can be done
Fred Durie knows better than most people what it is like to build spectacular projects. As the former CEO of Emaar International, he was instrumental in the development of Downtown Dubai: the world’s tallest building, one of the world’s biggest malls, eight office buildings, five hotels, a boulevard, 15,000 apartments and a mega-fountain – all in the space of 7 years.
“You could never do that anywhere else in the world. But the secret is actually quite simple and it comes down to one word: selling. If you can sell, you can build.”
The chances are Durie has struck the winning formula again, as CEO of the newly launched private developer Nshama. Last week saw the rolling out of its first project, and even by Durie’s standards, a veteran of developments in Dubai Marina and Arabian Ranches, this one is “something special”.
Welcome to Town Square, which is expected to redefine the concept of integrated neighbourhoods in Dubai. Spread over 750 acres (that’s a fair whack bigger than Downtown Dubai), the development will feature over 3000 townhouses and 18,000 apartments in addition to substantial retail, hospitality and commercial space.
The masterplan also envisages a central and vibrant hub with shopping and dining districts, plazas, green belts, mosques, educational institutions, healthcare centres, entertainment and outdoor sports facilities. A deal has already been signed with Vida Hotels and Resorts to operate a Vida Town Square Dubai hotel, while a joint venture with Reel Cinemas will see a movie complex built. In less than a decade, Nshama forecasts that a staggering 85,000 people will be living and working in Town Square.
Natural and paved running tracks crisscross the development, which will feature outdoor gymnasiums, skateboard parks, children’s play areas, relaxing green spaces, community swimming pools and access to cycle tracks.
But no matter how cool and funky the masterplan looks, Durie has been around long enough to know that success comes down to another word: price. And here’s where Nshama is really hoping its plans will be a game changer. Its three-bedroom townhouses (including a maid’s room), measuring around 1,800 square feet, are being priced at under one million dirhams ($272,000). The bigger four-bedroom (plus maid’s room) homes will go for about AED1.5m ($409,000).
Try and find a brand new townhouse anywhere in Dubai for the equivalent of just under AED600 per square foot, and you will have a tough time.
“We are targeting middle income people earning around AED20,000-35,000 a month. These are the people who are renting right now and they can’t afford to buy; this opens up an entirely new market segment,” says Durie.
But can he really build and sell for that price? “We are looking to make money but not a huge margin. We believe for this price we can build and sell and make a reasonable profit,” he says.
“We have been very efficient in our designs so that they are very nice units, they are reasonable sizes and to meet this target we have looked at value engineering to deliver a good product at an affordable price. We have good relationships with contractors. This kind of housing is something that is required by Dubai for its 2021 vision and for Expo 2020. We also think it will be a great lifestyle development.”
It’s not a direct comparison, but Nshama’s prices come in far lower than Damac’s much-vaunted Akoya Oxygen “lush green” development, where four-bedroom villas were priced at AED2.25m and those with golf course views were selling for AED3.85m at launch last year.
The two developers may well be targeting entirely different markets, but Nshama’s low prices mean it also may end up attracting speculators. Durie admits he cannot fully prevent flipping, but he is hopeful it will not become the main focus.
“We are targeting end-users here, so there will be controls over when you can resell, but it is impossible to completely stop speculators. We want people who will buy to live there. Because of the lower prices possibly there will be less attraction for speculators,” he says.
The payment terms for Nshama are expected to be 10 percent on reservation, with another 40 percent due within 15 months, and the remainder on completion. Not that completion is that far off. The first phase (worth around $270m) will see the launch of 320 townhouses, followed by 740 more, all in the next few weeks. Earthworks on the site have started with building of the homes due to begin in June, and Durie is expecting to hand over the keys to the first inhabitants before the end of 2017.
Part of the communal area also will also be built in the first phase, and later this year some of the apartments will be launched. Nshama owns all of the land, and though it will not give figures, it is hard to see how the project is not worth at least $3bn.
The company is also working on another soon-to-be announced lifestyle development, as a joint venture with the Mohamed Bin Rashid Al Maktoum Foundation (which owns the land).
Town Square is also hoping to change the way properties are sold. Its new sales centre in Downtown Dubai looks absolutely nothing like a sales centre. It has a well-stocked (and free) café, relaxation areas and plenty of activities for kids and families, including live acts such as performing jugglers.
“It’s not going to be a high pressure sale. We don’t want big queues. We want people to come here, relax and have a good time – and hopefully buy a house! It’s a soft sell for family audiences. We don’t want to pressurise into buy now or you will never get it again. That’s not the way we want to do business,” he says.
That said, the timing of the launch may raise some eyebrows, giving concerns over the slowdown in the Dubai property market. Durie however is confident that the development is different enough not to be affected.
“The property market has softened, everyone acknowledges that. But we are introducing a new market segment for which we believe there will be huge demand,” Durie says. “Nobody has done it before at this price and we are sure it will be of good quality.
“We think we will do very well. We are not in this for six months; this is a 10-year development and things will change. Of course, there will be market fluctuations as we move along; where things would sell in a day, now it takes weeks. But the market is still good. I don’t see another property crash coming.
“We are confident we will make money. We have been careful - to sell at these prices we cannot be extravagant and we are meeting the budgets we have set. We are selling for much less than any competitors and the quality will be as good. At the end of the day, we are targeting people who rent. And buying won’t cost any more than renting.”
Durie himself has been in Dubai since 1986. A civil engineer by training, he made the “very hard” decision to leave his role in Emaar (where he had been since its inception) last year and take the reins at Nshama in September. He says the lure of this project was too strong to ignore.
“Working on Downtown Dubai was the pinnacle of my career; it was something truly unique to be a part of. I never thought I would get the chance to do anything like that again. But then I saw this, and you know what? This is also unique. This is something special, I just know that deep down,” he says.
Given his track record, only a fool would argue with him.
Reviewed the payment plan which is not construction linked at the beginning which makes it non-compliant with RERA rules and regulations (high risk) unless a special approval was given to the developer, the developer should clarify to potential investors.
Also, the disclaimer allowing the developer to change finishes, materials, designs and final look of the project at their own discretion sounds all too familiar, would be much better if they actually build a mock-up townhouse so people can see the final look of what they are getting and the developer should stick to that. Otherwise what is the point of offering very cheap property price but at the same time hold no guarantee as to the quality of the end product especially that this is a new developer not known in the market.
Please spell out the Maintenance Cost that has to be paid after delivery which every buyer is very skeptical about
Then why is the first phase SOLD OUT already?!
To Hana - Because a fool and his money are soon parted!
On my view this project is very successful, it is an amazing development! well planned and great team behind it.
People who doubt it .. Think again !