For some Dubai developers, off-plan sales are passe
In a market awash in launches, they wait for project completions to start on sales
For some developers in Dubai, finishing a project is as good a time as any to start selling it. This could even turn into a competitive advantage for developers with Dubai recording a steady pick up in demand for completed properties even as off-plan volumes show a decline.
More so, as Dubai’s real estate authorities are likely to make compliance on construction timelines and build quality as priorities when it comes to licensing projects. According to market talk, developers are already facing increased scrutiny from the authorities on their projects — both at the time of registering and at the time of completion. Quality of build is the buzzword these days in official circles, developers say. And with consequences for anyone failing to deliver their promises.
“With so much of off-plan being launched and sold, a stronger regulatory oversight is always good … for property buyers,” said Raju Shroff, one of the partners in Signature, which has two blue-chip projects in its portfolio. “Dubai’s property market is entering a crucial phase with a flood of new properties to be delivered between now and end of the decade.”
This is why Signature is placing so much emphasis on its first project delivery — the pricey 118 at the Downtown and about 50 metres from The Dubai Mall. The ground plus 44-storey structure features only 28 units, with prices averaging Dh3,500-Dh5,000 a square foot, making it one of the super-premium offerings currently. Each apartment takes up an entire floor and the duplexes — and there are only two of them — would cost Dh55 million to Dh65 million.
“Definitely, we are using the handover as a strategy to sell the remaining 14 units,” said Shroff. “The initial units were mostly sold through private sales during the course of the project. And we always knew that to attain sell-out, we would have to show the end product to potential buyers. “Now, with people actually staying in the tower, they will be the best advertisement and marketing we will have to sell the rest of the units. “With so much of off-plan inventory in the market, the serious buyer needs to see something concrete or in marble, not just brochures. When we launched the 118, we promised a Manhattan experience and Mayfair finishes at the building — completing it and then make a serious sales push was the right thing to do.” It’s not just at high-rises that developers in Dubai are taking the “seeing is believing” approach. At Jumeirah Golf Estates (JGE), Jupiter Holdings recently launched sales for the 34 premium villas making up Sienna Views … but after building the properties. The developer is owned by a high net worth Saudi investor. Prices start at Dh1,050 a square foot for the 22 units facing the Fire golf course while the others come with a Dh900 psf price tag. “We have sold eight of the 34 units, including six that was picked up by a private investor,” said Phil Sheridan, CEO of Fine & Country, the estate agent. “Given that it is a premium project and location, we are aware that it will take time to sell out and we are prepared for that.
“In the kind of market sentiments we have right now, high-end products can’t be sold — or leased -overnight. But there’s a buyer/tenant base out there who want to move the next level up from a mature development such as Jumeirah Islands or a Meadows to a greenfield site. Jumeirah Golf Estates provides that sort of option — there aren’t that many communities with the extent of greenness and tranquillity, or of kids on their bikes.”
According to Sheridan, JGE currently has about 850 units built and with an occupancy in the 90 per cent plus territory. “It’s true that JGE properties haven’t seen too high a capital appreciation and there’s still plenty of stock coming, both from the master-developer and private players.”
Market sources suggest that more developers — at least those with deep pockets and don’t need to live off off-plan proceeds — will hold back sales until completion or close to that milestone. There are also concerns that speculators are coming back into the off-plan space, and much more easily these days given the low upfront payment offers and post-handover plans.
It’s in the ready space that longer term investors and end users are being seen. Going forward, this could become even more apparent as market sentiments shift towards delivery dates and not on off-plan incentives. As such, there isn’t much left that developers with off-plan can give away as incentives.
Or they could follow Innovate Living’s approach — for its super-luxury Palme Couture Residences on the Palm, it’s strategy was to sell the 14 units “after completion to allow owners an opportunity to appreciate the real value of their investment”. The units range between 5,028 square feet to 10,750, while a ‘“royal penthouse” takes in 19,247 square feet and includes a separate three-bedroom guesthouse and terrace.
According to Kareem Fahmy, CEO of Innovate Living, “With investments in a range of projects valued at over $125 million across different divisions, we plan to make further forays following strong interest in our brand.”
And in doing so, possibly change the off-plan sales fixation of Dubai’s developers
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