'There is still an influx of businesses into Dubai'

Al Fara'a Properties has launched an in-house facilities management (FM) division. But in the future your residents may not want to have the developer doing the FM. Isn't that a risk?

We looked at several FM companies. During the design stage of the Le Grand Chateau, our architects had suggested easier ways to maintain the building's façade.

They have now moved to the FM department as they are good at providing design reviews. What generally happens at the design stage is that people are so busy making the building efficient that they overlook small issues such as how to clean ducts, corners, and so on. Third parties have also approached our FM team.

Have you had to revise your service charges in line with the downward pressure on property sales prices?

Service charges are only an indication given to the client and never mentioned in the sales and purchase agreements. It ranges from security and pest control, to pool maintenance and insurance, and more.

You cannot predict this two years in advance as prices are bound to fluctuate. In any market, you can lock in your contract with suppliers a month or two in advance and then come up with a price.

Our service charges are well within the budget of what we had envisaged. The market is flexible and we are seeing good payment terms from our suppliers.

There has been a significant correction in the prices of building materials. With construction being your Group's core activity, have you managed to pass the lower prices on to your clients?

It depends on where the client's unit was at the stage of construction. For example, the Le Grand Chateau was almost ready to be complete when the correction emerged. Contracts had already been signed. Those are areas that we cannot work on.

Even for Manhattan and the Mulberry Mansions, we signed contracts very early on. We couldn't go back and do a lot of streamlining. As we come from the construction field, whenever we signed the contract, we were meticulous about the prices.

Our contracts were signed at a very good rate and that reflected in our prices as well. When we launched our project, our prices were competitive and that's solely because our rates were locked in.

In a changing market, we didn't have to go back and do a lot of price review. But where we see an opportunity, we will pass it onto our client for sure.

How would you rate prospects for the construction industry in 2010?

A lot of projects in Dubai that were put on hold merely existed on paper. Over time, if market conditions improve, it's a natural recourse for people to seek this business opportunity again.

Have clients approached you seeking consolidation?

Depending on requests from clients, we will consolidate apartments on a case-to-case basis. If they want to move with a good reason, we will consider.

The Le Grand Chateau is located in Jumeirah Village. Is infrastructure in place for this community?

We've got sufficient infrastructure as Nakheel has been very supportive. There are no retail spaces. It's up to other developers to come and develop.

However, Jumeirah Village South is well positioned and connected to three main roads for access to groceries, retail and such.

As with developers, will mergers and tie-ups among local contractors help ease fortunes of the construction industry?

It depends on the portfolio of the company. Certain contractors may feel the need to consolidate owing to their business model. The coming together of two strengths will always produce better results. It is a good way to go if that's what's needed to strive in such a market condition.

We have a lot of joint ventures with people who provide value-added services in the construction field. For instance, Unibetton, our ready-mix arm, has a joint venture with Icrete, which enhances green technology.

We are openly looking at partnerships with those who complement our business.

You also offer corporate consultancy. How viable is this, given that very few businesses are setting up shop in Dubai now?

The volume may have reduced from before. But, there is still an influx of businesses into Dubai. The nature of the opportunity has changed.

A lot of law firms are moving to Dubai as there has been a lot of on-going arbitration.

There has been internal movement too. Some tenants are moving out from old commercial towers into new ones in prominent locations and at competitive rents.

There is still demand, but not at the levels we've seen before.

Are you looking to expand your operations in Abu Dhabi, considering its sound market fundamentals?

As a group, we already have very strong operations in place in Abu Dhabi. We have a project there that we haven't launched as yet. We shall [begin construction] in better market conditions. It will always be open to us for real estate activity.

As a group, we have been exploring the GCC as well.