Dubai: Al Fajer Properties on Tuesday inaugurated the first tower, Jumeirah Business Centre 2, of its Jumeirah Business Centre development in the Jumeirah Lakes Towers following the restructuring of the company.
The restructuring process which focused on the company's liabilities of Dh4 billion and Dh200-400 billion debt involved liquidating its land bank valued at Dh800 million, appointing a new management team and reducing its workforce by 30 per cent.
The total value of the mitigated risk was brought down by Dh3 billion.
Shaikh Maktoum Bin Hasher Al Maktoum, CEO of Al Fajer Properties, said the company accelerated the construction plan to a four-day cycle per floor for phase one which consists of towers one to five of its nine commercial towers.
The development, which consists of nine towers will cater to both large local and multinational companies. The freehold offices cover a leasable area of 3.6 million square feet.
The handover of units in phase one has been going on since August. Phase two — which consists of four towers — is expected to be complete 2011. So far 70 per cent of the inventory has been sold.
According to Shaikh Maktoum, the prices for units in the towers have increased from Dh800 per square foot two months ago to Dh1,200 per square foot upon inauguration.
"Overall sentiment is picking up, but only for completed projects. People are willing to invest when they see the complete tower. However, we are are seeing a lot more bargaining now," he said.
Shaikh Maktoum announced that the company is expecting a maximum 50 per cent default rate and a minimum rate of 20-30 per cent. "Default rates could be as low as 20 per cent once customers see what they're going to get for their money."
In order to counteract this problem, Al Fajer Properties has offered its investors discount packages.
"In July we managed to raise hundreds of millions of dirhams in our discount offer that turned out to be successful. We took those discount offers and were able to bring their purchase price down by up to 40 per cent."
Investors were given a number of options. If they bought during the peak of the market, a price cut of 40 per cent was offered but investors had to pay the full price upfront. Speculators who had already paid 20 per cent were asked to pay another 10 per cent and consolidate from one floor to one office.
Shaikh Maktoum believes Dubai still holds a competitive edge in commercial space.
"The Middle East has seen depressed prices due to poor visibility. But once the visibility improves, we will start seeing people wanting to benefit from the potential upturn.
"Labour, accommodation and overheads are cheap, which is to Dubai's advantage."