Dubai: Dubai-based developer MAG is raising the cost of construction on its latest super-luxury projects with one goal in mind - the buyers should be end-users.
What MAG and its Senior Executive Vice Chairman, Talal Moafaq Al Gaddah, doesn’t want at any cost is investors picking up these homes - which include Dh177 million Ritz-Carlton mansions on Dubai Creek - and leaving it empty.
“Dubai is opening the doors for the world’s billionaires, millionaires and others to come here and make the city their home,” said Al Gaddah. “As a developer, our role is to make sure what we build are what these buyers want.
“I don’t think building two multi-billion projects at the same time in Dubai is adding to my risk. Because we find buyers from abroad wanting to come here, live here. We have cleared most of the offplan/ready home stock - and we need to build more. Right now.
We have raised our cost of construction to Dh650-Dh800 a square foot from Dh350-Dh400, because we want to ensure a certain build. Our new strategy will remain in place - get the end-users - whatever be the market cycle.
“I don’t want to be one of those developers you see waiting until they collect 30-40 per cent of their offplan payments and then start on the construction. And if they don’t get those funds, press delete on the project or delay it.
“No, MAG will start building our new projects immediately. What’s there on the brochure will be delivered. On time. Even if we don’t find a buyer immediately for our luxury homes, we will build them.”
Al Gaddah’s confidence stems from one key factor - those offplan sales he closed last year and this has left MAG with a Dh2 billion cashflow. That, Al Gaddah says, makes it easier to make those choices of building quality, and waiting for buyers who will eventually call these their homes.
As 2022 closes, demand for luxury property in Dubai and UAE remains unabated. Sure, there are projects where price adjustments are being made to win buyer interest. But MAG doesn’t want to be in that race, says Al Gaddah.
Apart from the Dh177 million mansions by the Creek, the developer has launched the Dh3 billion ‘Keturah Reserve’ in Meydan, where top-of-the-range townhouses are priced at Dh2,500 a square foot. “This makes it the most expensive townhouses there - at Dh9 million - and double of what’s there,” said Al Gaddah. “Even at the higher prices, we’ve had the buyers. Phase 1 is nearly sold.
“We are building homes that will not need the constant upkeep issues that homeowners keep facing with some developers. Our homes are meant to give owners all that they need - and zero glitches - for 10-, 15- years. And longer.
“We have raised our cost of construction to Dh650-Dh800 a square foot from Dh350-Dh400, because we want to ensure a certain build. Our new strategy will remain in place - get the end-users - whatever be the market cycle.”
On whether he isn’t concerned about taking on higher costs if demand drops, Al Gaddah said: “It’s an open market - if we can’t sell, we will not launch until the market corrects again.
“We are a family business, we don’t carry debt and we don’t have partner. We believe in the end-user’s influence to keep this market going.”
Making those costs count
MAG’s MEP-related construction costs have ‘tripled’ to around Dh180 a square foot, and it shows up in elements such as the filtration systems - for the entire house - solar panels and elsewhere. Under the ‘Keturah’ branding, there is an emphasis on wellness. For Al Gaddah, that means going the full distance with these concepts rather than pay lip service.
“What we promise you in the brochure will be what the homeowner will get when he moves in,” the Al Gaddah added.
“Because Dubai property is increasingly looking at European buyers, and they want to see names they are familiar with,” said Talal Al Gaddah of MAG. “We changed our strategy from relying principally on Middle East architectural firms to seeking international ones. If those firms can show they’ve done projects in Paris, New York or London, that’s what overseas buyers are seeking in Dubai now. The familiarity of seeing known names.”
Land bank
In the UAE, MAG has a land bank of 30 million square feet, and the plans right now are for a beachfront project and a tower in Business Bay.
Getting into construction
MAG will not consider picking up a stake in a construction company to have one on call for its projects. “I don’t see any value for me by doing so - they know their business and I know mine,” said Al Gaddah. “There’s no need to mix these separate competencies.”
