Dubai: Build, sell and then build some more – Dubai’s developers have stuck to this simple formula through every turn of the market cycle. Only rarely have they made a foray into creating rental properties, and mostly done by government-owned developers.
For a private developer to do so was unheard of. It’s a fact that the promoters of Ellington Properties – all of 18 months in existence – want to change. The developer, who wants to be seen as more of a boutique brand, is building a portfolio of freehold and rental projects. For the rental assets, it has acquired plots at Majan (one of the clusters in Dubailand) and Jumeirah Village Circle.
So, what’s with the need to create rental properties and with the likelihood they might end up being a distraction?
According to Robert Booth, Managing Director of Ellington Properties, “The reality is we’ve done lots of market surveys, and it shows 80 per cent of the [Dubai] market are renters. It is one of the largest rental marketplaces in the world.
“In mature markets like London, Singapore or Vancouver, you typically have 65 per cent of the population as owners. But even in places like New York, you’re seeing those numbers change with the millennial generation and their aspirations are not to own a home from Day One.
“The percentage of renters is increasing and that’s where we saw our real opportunity. And it also takes us out of the developmental cycle risk every three years, which is very varied in Dubai.”
The resident base is also weighing in when it comes to the freehold and rental debate. “Dubai’s population is currently 2.5 million and growing by 150,000 people a year,” said Booth, who was formerly with Emaar Properties. “And more than the population growth, the city is getting better and better from a lifestyle perspective every single year.”
But does the developer’s project mix force it to take on rental projects only in less pricier locations? “We would love to have rental units in Downtown Dubai or (other) mature locations,” said Booth. “For example Business Bay will undergo massive changes in the next two years as more gets built and the Dubai Canal opens. It will become a more desirable neighbourhood to live in.
“Look at the people who own rental buildings in the upper east side of New York, where they’ve held them for three generations in the family. We want to replicate that here in Dubai too.”
Ellington Properties also prefers a tight construction cycle – of 24-36 months – for its projects. “We find for a lot of people, particularly now, time is a critical element to them,” he added.
In freehold, the developer now has projects on the ground in Jumeirah Village Circle, the Palm and at Emirates Hills. It has also advised other developers such as RP Group on two of their skyscraper launches.
For its own projects, Ellington Properties need not only look at niche, low-density creations. “It could be a large urban site or a large suburban site,” Booth said. “We are in discussion with master-developers too. We have a very clear thought process of what we want to do with it. From a lifestyle perspective, we want to push the design and lifestyle side of living.”