For the Le Grand Chateau project in Jumeirah Village, Al Fara'a Properties did off-plan sales its way and seems to be better off for it. The strategy was simple enough — units in Le Grand Chateau were placed for sale after the construction started.
"Even in a good market, we didn't see too many people flipping units in Le Grand Chateau, the reason being that we started construction very early," states Natasha Gangaramani, director, Al Fara'a Properties.
Despite projections of an immediate and acute over-supply in Dubai's residential market, the developer believes the Dh225 million Le Grand Chateau — comprising G+2 townhouses and apartments — has already tapped into a stable reservoir of demand.
"Most people have moved in, some are renting their apartments, and not many have sold their units," Natasha adds. "It gives us an indication that in any off-plan development that starts construction soon enough, clients tend to retain their units.
"A lot of developers re-evaluated themselves in terms of their positioning and what the supply-demand patterns look like in their area because of the economic crisis. But we've gone ahead with delivery of the Le Grand Chateau."
The current market value for units at Le Grand Chateau is tagged at Dh1,000 a square foot. The developer insists that the development was able to maintain these price levels even in the face of the precipitous decline right across the rest of the market.
A tie-up with Abu Dhabi Commercial Bank and other banks will ensure that owners at the Le Grand Chateau have access to flexible financing options. Natasha admits that it has had to contend with defaults, but has taken this in its stride. While a blanket loan-to-value ratio of 90 per cent no longer applies for home finance, some lenders are still keen to negotiate with the buyers and tailor packages accordingly.
"Everyone has different strategies to deal with it, the default percentage earlier this year was higher than what we are seeing now," she says.
In the absence of optimum off-plan buyer interest and limited availability of project finance, how is Al Fara'a handling its existing project pipeline, including the Jumeirah Village located Manhattan and Mulberry Mansions? Natasha counters by saying: "We are tapping a significant amount of internal resources and revenue from off-plan sales."
The Dh95 million Mulberry Mansions, a collection of Victorian-styled townhouses, are scheduled for delivery in the last quarter of 2010. The developer claims this project is 90 per cent sold.
The Dh353 million Manhattan — a mix of studio, one-, two-, and three-bedroom apartments — should also see a handover in 2010.
Of its commercial development, the Burj Al Faraa and also in Jumeirah Village, Natasha exudes a confidence that is at odds with the prevailing downbeat market sentiment.
This, she attributes to the perceived locational advantages.
"The site is surrounded by a lot of residential property — Emirates Hills, Springs, Meadows, and so on," she explains. "There isn't a lot of commercial supply in the area.
"We have received a lot of enquiries about office space there, we even plan to have our office headquarters there."
Facilities management
Al Fara'a Properties has set up an in-house facilities management company. "As members of our team were involved right from the design stage of the Le Grand Chateau, they will be better placed to sustain the investment's value long-term," rationalises Natasha Gangaramani.
