Dubai: Dubai’s developers are pressing ahead with off-plan launches seeing more merit in approaching the market head on rather than wait for more favourable circumstances to show up.
Reef Real Estate, on Tuesday, launched the 38-storey Reef Residence, which it says is the first tower project at Jumeirah Village Circle. The plot is on the “periphery” of the community and adjacent to Els Golf Course at Dubai Sports City. “All approvals from Dubai Land Department/Rera (Real Estate Regulatory Agency) have been obtained to make off-plan sales and the escrow account is also established,” said Ahmad Al Mansouri, CEO. “We are confident since the pricing of the units offers value for quality and location.”
In the first phase, units will sell for Dh770 a square foot, and thereafter the “average blended price” would be Dh885 a square foot.
On whether more launches could be in the offing from the company, Al Mansouri said: “We have had positive response for the project and accordingly we perceive to have a busy launch schedule this year. We currently hold sufficient land bank to develop ... key locations will be in Jumeirah Village Circle and Downtown Jebel Ali as we hold more plots in those locations.” (The company has completed three high-rise projects to date, two of these being in Jumeirah Lakes Towers.)
Other developers will be taking their cue for their own launch plans from the level of buying activity through the first quarter. Those who have already launched projects are going in for focused marketing campaigns to strike a chord with potential buyers. Just recently, a leading developer dropped plans for a major roadshow in Moscow given what has been happening to rouble. Instead, it is focusing on generating demand from the local market and UK based investors.
Interestingly, more developers are starting to launch sales of their off-plan projects by placing a bank guarantee with the Dubai Land Department rather than wait for construction to reach the 20 per cent mark. In a way, this means a going back to what used to be the norm right up to late 2008 — have the sales launch first before starting on the building. But there is one key difference between now and then.
“There are ironclad guarantees that have to be furnished by the developer — to show that he has the means to take on a project and complete it — with the Land Department,” said Anand Lakhiani, Partner at Indigo Properties, developer of the ‘Zen’ project in Dubai Golf City. “The real estate authorities need assurance that the developer can have sufficient cash on call through a project’s development cycle.
“This limits — even does away altogether — the chances of a developer who doesn’t have the funds coming in and trying to sell off-plan. It also reduces the chances of a developer running out of funds and shelving a project.”
According to Lakhiani, “A developer could get a bank guarantee at a decent margin to start rolling out the project planning. No developer would like to wait before launching sales — delaying only adds to the variables that could come into play in the process. It’s much better to hand in the guarantee and start on the sales programme as soon as the clearances are given.” (Indigo Properties expects the main construction works to start on the Zen — which will feature upscale townhouses and villas — by late March. It started with the sales cycle in October.)
Since the second half of last year, there has been a marked increase in off-plan project announcements. Many of these projects have either started with the construction or will shortly be doing so.
These would be enough to keep the construction side of things ticking along. And if more developers like Reef decide to stick with their launch programmes, Dubai’s property market will have enough happening to make for a busy first half.