Dubai: Property buyers, especially the end users among them, need to start looking well beyond the seemingly generous prices on offer. Because more than ever before, the living spaces within them will have seen some drastic resizing.
“The developers are purely focusing on the unit price now and you see more instances of end users not realising what they are really paying for,” said Vijay Doshi, Managing Director at Vincitore Real Estate Development. “To peg themselves to a particular unit price — say, Dh475,000 — and make it more affordable, the actual liveable space would be 336 square feet or so. And that’s really small compared to what Dubai used to have earlier.
“Across many projects, the apartment prizes are shrinking.”
The shrinkage came about as Dubai’s developers tried on new strategies to revive the marketplace after the mini-crash from mid-2014 to mid-2016. Some of the bigger developers in town had by mid-2016 started offering stand-alone homes at under Dh1 million in emerging locations such as Dubai South and Al Barsha.
That was the prompt for more developers to come on board, offering the promise of “affordable” homes. And new launches even in the more established locations saw the mix change, with more studios and one-bedrooms being launched in high-rises as opposed to larger apartment formats. To a great extent, this worked and set off the off-plan buying spree that continues to this day.
But along with that focus on pricing, out went features such as bigger carpet areas or the larger balconies. That’s good as long as the buyer is an investor keen to rent it out. It becomes a problem when the buyer intends to stay along with the family.
Major benefit
Vincitore currently owns a 1.3 million square feet land bank in Dubai, all at the Arjan cluster in Dubailand. It is currently helming two residential-focused projects there, the Palacio and Boulevard, together taking up 500,000 square feet.
“I don’t believe that multi-storey structures are the only ones to be prestigious for a developer,” said Doshi. “I would place just as much emphasis on access to open skies and natural lighting.
“What I see as a major benefit from the Arjan location in Dubailand is that the FAR (floor area ratio) is very low. It allows the building’s designer and developer to give that much more of living space. In our current standard, for every one square foot we sell, we construct 1.7 times of that.
“This technically, the GFA [gross floor area] gives the end-user an additional space of 70 per cent within the project and really enjoy the facilities.” (For the record, a studio unit from Vincitore starts from 475 square feet.)
According to market watchers, Dubailand and Dubai South will see a significant spike in new residential supply over the next three to five years. There are already clusters in Dubailand that have had residents move in, while Dubai South should see the pace pick up considerably as soon as the first 800 units from sub-developers get handed over by year-end.
According to Doshi, the 800,000 square feet of undeveloped land he hold in Arjan should keep him busy for the next couple of years. There are no plans to trade any of the plots he holds Beyond Arjan, he is open to something along the Dubai Water Canal, preferably for a ground plus four or G+6-storey structure.
When it comes to funding, “Traditionally, financial institutions here have not been that involved in real estate development financing. But we are seeing some changes to that behaviour, especially if a developer is able to show some track-record.
“We had some help from non-banking sources. Plus, we retain some of the stock in our projects for leasing, especially the retail component. We maintain strict control on our cash flow requirements.”
