Dismal property transactions and limited availability of finance have resulted in project contours being redrawn in the capital.
Some, however, have bucked the trend and one of these is moving full steam ahead, launching new phases in its flagship mixed-use project.
Baniyas Investment and Development Company (BID) recently announced the launch of 500 new apartments as part of Phase 2 in its Bawabat Al Sharq project, a luxury mixed-use development in Baniyas City. Phase 1 of the development, which is 60 per cent complete, consists of 164 apartments and 56 villas and is scheduled for handover in December. Phase 2, meanwhile, will be handed over in the third quarter of 2011.
Open for sale to UAE nationals and on a 99-year lease to GCC nationals, the project has Abu Dhabi Commercial Bank offering up to 80 per cent financing in various payment plans. In addition, the Abu Dhabi Islamic Bank is also on board to provide mortgages.
Attractive payment options
Investors in Phase 2 of the project will have the advantage of paying one installment every three months until unit delivery, and no administration fees for the first three years after project completion, says Wael Tawil, CEO, BID.
In a move to lure investors, the developer has introduced home automation in five-bedroom villas free of charge. The units are pitched at luxury buyers with the average sales price of apartments and villas falling in the range of Dh800-Dh850 per square foot.
While a villa in Bawabat Al Sharq will cost somewhere between Dh2.2 million and Dh4.8 million, prices for a one-bedroom apartment and penthouse range between Dh650,000 and Dh1.8 million. The developer has been mindful of the reduction in building material prices, and this is reflected in unit pricing and payment schedules in Phase 2.
"We did reduce prices of units in Phase 1, but not for all. Some people wanted to pay off their installments. We transferred the benefit to customers by decreasing their prices and crediting the decrease to their payments," says Tawil.
The Dh3 billion development will also host a destination mall and a FIFA standard stadium. The Baniyas Mall, with about 70,000 square metres of gross leasable area, is scheduled to open in December and is expected to transform the yet untapped retail environment in Baniyas City.
"The area lacks organised shopping centres. There is a population of 100,000 in the immediate catchment area," says Tawil. The developer has signed on Carrefour, Wanassa Family Entertainment and Grand Cinemas as anchor tenants. The mall will boast 2,245 parking spaces as well as 22 food outlets. Though construction is only 40 per cent complete, the developer claims 90 per cent of mall space has been pre-let.
"We are in the process of finalising the average annual rent for units at the mall. We take it on a case-by-case basis. We are interested in a sustainable tenant mix."
The 20,000-seat Bawabat Al Sharq stadium will be delivered by early 2012. The project will also have several training fields, a number of indoor multi-purpose courts, and will be managed by the municipality. The developer also recently completed the Baniyas Sports Club Stadium, which was built to FIFA-specified standards, in Al Shamkha.
While a motor dealership centre was earlier announced to be part of the integrated community, this plan has now been reconsidered.
"We announced a hospital as part of Phase 1. This would focus on sports casualties. We'd rather make the hospital bigger and cancel the motor dealership centre," says Tawil.
With no sub-developers to contend with, the master developer claims construction is being funded solely from internal resources.
Though developers in Abu Dhabi are not obliged to deposit proceeds from off-plan sales into escrow accounts, Tawil insists the company does so to prevent channelling investor monies into different projects. "We release funds as per construction milestones."
The fact that the project wasn't sold on a freehold basis has helped limit defaults to a minimal five per cent. The developer emphasises the project is very much driven by end-users, and admits that it had to adapt to buyers' payment potential in a few instances.
Making a case for how investments in Abu Dhabi can still generate robust yields, Tawil says that a Dh650,000 one-bedroom apartment in Bawabat Al Sharq can be leased for around Dh80,000 to Dh120,000, with a RoI (return on investment) of about 15 per cent.
"This is unheard of in the region," adds the CEO. "The RoI in Abu Dhabi ranks among one of the highest in the world. Investment in Abu Dhabi is still very feasible."
Baniyas Investment and Development Company (BID) has also launched a residential tower in Mohammad Bin Zayed City. The building will be a mix of leasehold and freehold and will feature one-, two- and three-bedroom apartments. "We are doing a market research to find the right product mix," says Wael Tawil, CEO, BID.
