Developers dangle 'discount' bait to rope in investors amid credit crunch

The premium end of Dubai's real estate market is said to be hardest hit by the state of the world's finances as well as by a sea-change in its own internal dynamics. This could be one reason why VIP Waterfront were offering special discounts of up to 30 per cent on the launch of its Royal Bay project at the Waterfront.

In doing so, company officials took pains to emphasise their attitude of ‘Why put projects on halt when you are in a market like Dubai's?' Although the hefty discount is said to be a one-off introductory offer, we all know too well that developers are willing to take a dip in their asking prices in these troubled times, especially if they manage to wangle a sales deal in the bargain.

Royal Bay is expected to cost Dh1.8 billon, cover over 1.2 million square feet and will feature a residential and commercial tower, 12 villas, two ‘palaces' and a 400,000 square foot mall. “We decided that we have to break away from a negative mentality and be the first to act,'' states Slava Garin, CEO, adding that the on-going market talk has created a psychological hype around the current crisis.

“This is a good time to invest especially for those people who are seeking a long-term investment.''

Indeed, this perception seems to be the driving factor for the Ukrainian developer. VIP Waterfront was launched last year by the Olimp Group with the intention to develop luxury projects in the UAE. Olimp's project portfolio includes hotels, malls and industrial plants. Until now, the project has been financed in–house by its financially-sound sister company Olimp Group. This funding line was a key reason why VIP Waterfront did not have to face any issues with the banks unlike other privately owned developers.

“Dubai has advantages which you can not find anywhere else, it's tax-free, it's safe and it is a new city,'' the CEO enumerates.

“These factors make it an attractive investment, even now. It is inevitable the economy will grow and so will real estate prices. Dubai has all the chances to become the financial centre of the Middle East.''

Construction of the Royal Bay is scheduled to commence within the year itself, with the intended completion date being in 2012. “We have included six months in this timeframe incase we have any delays,'' says Garin.

The project will be extensively marketed overseas, with a special stopover in Moscow. Anecdotal evidence suggests that Russian investors are still active in the local property market.

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