Dubai: Property developer Nakheel has awarded two construction contracts worth more than Dh500 million to build luxury villas at its Jumeirah Park development, the company announced yesterday.
Arabtec Construction will build 134 villas, with their contract valued at Dh159 million, according to Greg Christofides, chief executive officer of Arabtec Construction. SS Lootah Contracting will develop 247 villas.
Nakheel will self-finance the construction of the 381 units in the Legacy Villas project and has no immediate plans to raise money, Sanjay Manchanda, Nakheel chief executive, told reporters at a press conference.
“All our old projects have adequate fund arrangements and all our new projects will also have adequate funding. We dare not make the same mistakes again.” Construction will begin in February and is expected to be completed in the fourth quarter of 2014, Nakheel said.
State-owned Nakheel has capital expenditure of about Dh1 billion on existing projects, Manchanda said. The developer had roughly 8,500 to 9000 units to complete, of which about 5,000 were handed over to buyers. The remaining units will be delivered in 2013, he added.
Asked about the total value of contracts Nakheel awarded this year, Manchanda said the developer has more than a dozen sites activated and had a substantial amount of money paid to contractors on time. Nakheel earned sales of more than Dh1.2 billion on the Legacy Villas to date, which Manchanda said was “substantially sold”. Legacy Villas are the latest addition to Nakheel’s Jumeirah Park community, which spans 350 hectares and, when complete, will have 2,000 homes. So far, 545 villas have been completed.
Dubai-based contractors struggled after the global financial crisis of 2009 as developers delayed payments and put projects on hold. But a series of new and restarted project announcements has the real estate market talking of a slow and gradual recovery in the residential sector.
“The serious developers have taken their commitments seriously,” said Christofides.
“What we have seen in the last 18 months is that many of the developers, especially large developers and big players like Nakheel, have come to the table wanting to resolve the financial issues with their contractors and restart some of the projects that have been suspended and reintroduce new projects into the market,” he said. “So we do believe there’s a lot of positive sentiment in the market especially over 2012 and we’re very hopeful for the future.”
This positive sentiment about the market is “very sustainable,” according to Manchanda. An increase in tourist numbers and conferences, the bid for Expo 2020 and the emirate’s status as a “safe haven” amid the Arab Spring countries is helping the property sector, he said. But how far can Dubai bank on its so-called safe haven status? A transitory movement of residents from other emirates into Dubai and its investment in infrastructure are also contributing to the positive sentiment, Manchanda said.