Olivara Residences 1
The Olivara Residences had a trial by fire, with completion happening just ahead of the COVID-19 imposed lockdown. Image Credit: Gulf News Archive

Dubai: Completing a residential project and then try and lease it right in the middle of the COVID-19 crisis is far from ideal for any developer. But for Palma Holding, there were opportunities within this crisis situation.

“We completed Olivara Residences just ahead of the lockdown – that’s definitely the worst possible time to start leasing,” said Kareem Derbas, CEO. “But we still used the lockdown to do some [virtual] marketing and get the word out.

“And surprisingly, we managed to connect with some who were thinking of downsizing from living in a villa or a more premium location. That’s the tenant base we have been leasing to – those who may want to downsize, but not downgrade their lifestyle.”

Olivara has some distinctive credentials attached to it – the four-building cluster in Dubai Studio City was designed by Hazel Wong, the name behind Emirates Towers as well as the Serenia Residences for Palm. It features one of the costliest penthouses in in Dubai, at Dh55 million.

Delivery in phases

Handovers have started at the first building, featuring one- and two-bedroom apartments that start from Dh55,000. There are 78 units, and these will be joined shortly by 50 in the second building, with handovers starting in July. The final two buildings will be ready by December.

For the wider rental market, it’s proving an excruciatingly difficult phase. Industry sources reckon that the full extent of further drops in rents will be felt from July onwards. By then, there will be more clarity on job losses, the extent of salary cuts many have to take, and how many plan to head back to their home countries once flight services commence in full.

The first six months will likely see about 20,000 units getting delivered, which would be quite a drop from initial estimates of 30,000 new homes and even more. But even those 20,000 units, of which quite a few will be available for lease, can add to the pressure on rental values.

Derbas is not taking anything for granted – but he reckons that affordable luxury will continue to have some sort of leverage in tough times as well. Olivara has Arabian Ranches, Motor City and Damac Hills to contend with in its immediate vicinity. (A two-bedroom villa at Arabian Ranches is currently being listed at Dh86,000; Palma in contrast will start its bedrooms at Dh80,000.)

Being in Studio City, the Palma project can target the professionals working at Virgin Radio, MBC or at Tecom, the master-developer.

“By mid-July or so, we will have the central park, all of 100,000 square feet, ready,” the CEO added. “It’s a key dynamic of the Olivara project, and are hopeful we can factor that in for our rents in the next set of releases.

“On the freehold side, we believe it will take a good two years before all of that inventory with master-developers and private players get absorbed. During this time, I don’t think we will be making any freehold launches. The focus for any new project from us will be to rent and hold.” (The Serenia at the Palm was the last freehold it did.)

Olivara Residences 2
Palma will finish a further three ground plus four buildings at Dubai Studio City between July and year-end. Image Credit: Gulf News Archive

Options on the ground

For the next one, Palma could consider sticking to Studio City – “There are seven plots owned by Tecom adjoining Olivara that we could be interested in,” said Derbas. “Even with the Olivara, we do have the option of splitting the units and registering them with individual title deeds, and thus offloading them. That is if we want to.

“But the market’s tight – I think build to lease will serve us better now.”

Even when the now happens to be bang in the middle of COVID-19.

We believe it will take a good two years before all of that inventory with master-developers and private players get absorbed

- Kareem Derbas of Palma