Don’t get too concerned about slowing property sales
It’s time Dubai’s developers and investors took a more relaxed approach
For anyone fretting over the slow pace in Dubai’s property market, Talal Al Gaddah has one answer — relax and take a breather.
“Anyone who’s been running for an hour will need a few hours to wind down,” said the CEO of MAG Lifestyle Development. “The Dubai property market had done some hard running for five years, now it needs time to relax. Whether that’s two years or four is not the point. the market needs to catch its breath.
“But if the last 30 years is any indication, we have had the market and economy growing five to eight years and crisis periods of not more than two to two-and-a-half years.
“The point is not whether as a real estate developer MAG should build more in commercial, logistics or retail. Five years ago, if you had a mall in Dubai, it was as if you owned the world. Today, it’s a headache with online out to kill retail.
“But there is no stopping the population growth Dubai will witness and that means there’s always room for residential. Recessions come and go, but the need for residential will stay.”
Apart from multiple towers, MAG currently has two mega projects under way on either side of Dubai. At one end is its exposure in Dubai South through a mid-market residential community. The first handovers — of 528 units in six buildings — will start in the third quarter.
“Unlike any other freehold location in Dubai, where there are multiple price points and build quality, in Dubai South, all projects from developers will just aim for one target — the mid-market,” said Al Gaddah. “Dubai’s property market is consolidating around self-contained “mini-cities”.
It’s what happened at Dubai Marina and JBR, and at the Downtown, and will happen at Dubai South, but for a mid-income resident base. We will keep adding to our land holdings at Dubai South — the city still needs more for this income group.”
And on the other side of town, MAG will soon get into full construction mode with the Dh2.2 billion wellness resort on a 900,000 square feet site at Dubai Healthcare City Phase 2.
“There is no other developer building projects related to health, where everything used will be from natural sources and an environment 99.9 per cent free of bacteria,” the CEO said. “This is a project not connected to market demand — it’s more of a destination that we are building.
“It’s becoming clear from the sales leads we generate that 80 per cent of enquiries are coming from the 25- to 45-year olds. The challenge for us as a developer is to create something that would still be valid when those 25-year old turn 35. This the generation that will enter and exit the country with just a passport and phone.
“I need to make sure my design and project teams think the same way these potential 25-year old buyers want. We need to know where demand is going.”
And where possible, MAG is willing to bring about changes beyond way properties are built. Internal studies are going on to see how it can deploy more solar panels and thus bring about energy savings. And how these cost savings could potentially be passed on to residents at its properties in terms of facilities management and service costs.
“If we can cover a whole development with solar energy, we can include lock-in periods for service charges, or reduce them from, say, from Dh11 to Dh6 a square foot.
“The future for real estate developers is about creating less headaches for property owners. We could start offering three-year warranties and the owner needn’t bother about calling in anyone for services after the first year. It will all be taken care off automatically. And that’s one less headache they have to deal with.”
Factbox: One group, many property arms
Within the MAG Group, there are three property development arms. One is the flagship MAG Lifestyle Development and with its focus set exclusively on opportunities in Dubai.
Then there is MBL, a joint venture that currently has one tower and which could “may be take it to three”.
“Apart from these, we have an alliance with some partners on a residential community in Sharjah — Shoumous Garden City along Mohammad Bin Zayed Road,” said Talal Al Ghaddah. “We have so far started work on 5 million square feet of the 25 million square feet available.
“Property development makes up 30-40 per cent of the Group’s business and that’s the way we like it. And for 15 years now, we’ve had the same percentage.”
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