Four developers have joined forces to launch construction on a tower in Marmooka City — one of the many ‘city' developments originally planned for Ajman — and expect to do so on a second one as well.
While the two projects in themselves are not going to get the market moving again, the reasoning is that other developers would also come together to effect a similar strategy.
"Consolidation of land holding and pooling resources on select projects is the way forward for developers to get things started on the ground in the next few weeks and months," notes Peadar Malone, director of Kings Group, which has aligned with Emerald Holdings, Pride Properties and Century under The Kings of Marmooka umbrella. They each hold equity in the Kings Tower, a G+7+25-storey residential structure with 460 units, and Malone is certain that construction will start this month itself and is scheduled for completion by mid-2012.
All of this is far removed from the full-blown crisis that overtook Ajman's property space when the correction took over in late 2008. Values crashed on property that was only ever seen on paper, grandiose projects that were to reshape Ajman's skyline slipped into a terminal coma, developer sightings became scarce and investors had only themselves to blame.
Since then, the Ajman Real Estate Regulatory Agency has been working overtime to put a measure of normalcy back into the proceedings. Select developers who would go the distance with their projects, either on their own or in the company of others were identified.
"Other developer groupings with plots that are fully paid up are working on similar strategies and some have even approached and asked us to be involved with theirs," Malone says.
"And by starting on projects as soon as the plot payments are complete, we as developers are trying to restore investors' confidence, which has taken a severe hit in recent months," he adds.
By the looks of it, investors are reposing faith in what this developer grouping has to say. Around 140 buyers have so far been brought in for the Kings Tower, which includes those who had earlier acquired apartments in the developers' other projects and those with exposure to other projects in Ajman and even Dubai.
Now, why would an investor holding property in a delayed project in Dubai wish to trade it in for one in Kings Tower? "Because we could convince them that we have a project that is definitely going ahead and offered them contractual terms that are favourable to them as well as us," adds Paul Pepper, also a director in Kings of Marmooka.
"Also, their payments are made directly to escrow, which we can only use upon reaching specific milestones in the construction project.
"After all that Ajman's property market has gone through since the beginning of 2009, what we are starting to see now represents measured progress. That is exactly what the market requires now."
Given that investor payments are placed in escrow, the initial construction-related payments will be met through developer equity. Malone says that the grouping has enough cash reserves to get through the first phases of the project.
Initially, the four developers, which are part of The Kings of Marmooka had eight plots in Marmooka City, with Kings Group alone accounting for three. These have been consolidated to two plots which are fully paid for. The Ajman authorities have taken a similar tack in regard to Marmooka City as a whole, which will now be limited to 25 plots instead of the 214 initially envisaged.
Consolidation seems to be working in the Ajman context. Any lesson there for the others? We hope other developers will take a leaf from the Ajman experience.
