Dubai: End-users taking the lead in buying new homes is the best thing about the latest Dubai property market upturn – because this immediately takes care of default risks for developers. That’s according to Rizwan Sajan, Chairman of Danube Group.
“At our projects, we are seeing 80 per cent buys by end-users, and they are the ones always regular on their payments,” said Sajan, who has just launched the Dh400 million plus Skyz tower. “Today’s property market and developers will be better off with that kind of 80:20 split between end-users and investors.
“Our default percentage is less than 0.5 per cent. Even then, I would not categorise them as actual defaulters – most get back to paying after 3-4 months.”
Got an answer for defaulters
Even if there are defaults, Sajan says developers need to look to the bright side. “I can go to RERA and cancel the sales agreement with that buyer. So, I am better off because I get to keep the 10-20 per cent payments he would have made already.”
It is a bullish Sajan one sees these days, and that sentiment was much in evidence at the company’s Cityscape Global stand. Sales at the Skyz have gone past the 50 per cent mark in 10 days and should close the rest soon enough, according to the Chairman.
Go with equity
Danube intends to maintain the policy of using own funds to build rather than go for bank finance. “We launch, get the 1 per cent a month payment scheme to do its part, and by the time we get 70-80 per cent on the construction, we will get going with a new launch,” he said. “This way, we are sure of our cashflow needs.
“As such, all of the offplan funds are placed in escrow and linked to construction targets. Only developers who have issues with sales have to tap heavily from banks.”
Danube intends to compress the time between launches next year – the plan is to bring to market four offplan projects each averaging about Dh400 million. “In the earlier market peak, we did a maximum of three year,” said Sajan.
“As of now, I don’t see a need to be bothered by the rise in construction costs. They have added an extra 15-20 per cent to the cost of development. But if we factor in the selling prices, say Dh900-Dh1,000 a square foot, it is only a couple of percentage points.”
“It seems to be trending going by all the names from Bollywood who have done both in recent weeks,” said Sajan, who has just sold units at his latest Skyz to the Meet Bros, the Indian music composer duo. “Sure, Bollywood stars have bought homes in Dubai in the past – but the Golden Visas seem to have struck a chord with more.”
It certainly is the case with the Meet Bros.