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Aqua Properties has grown into a multifaceted company having weathered Dubai’s real estate cycles. It is engaged in brokerage, project management and real estate development and also invests into ready and distressed properties. Its sister company, HOAM, is looking after several high-rise owners associations in the emirate. Paul Christodoulou, COO of Aqua Properties, talks to PW about the company’s diversified interests.
Not many brokerage firms are developers at the same time, what got you there?
I believe becoming a developer is a natural progression from being a broker when you’re already offering additional services. The fact that we’re also a developer is probably also keeping us busier than others. It’s a massive string in our bow.
See Aqua Properties listings.
So you’re moving away from being a brokerage firm?
No, but we’re refocusing and rebranding our logo, separating the project sales team and the community (general brokerage) teams. Currently, our focus is 70 per cent projects, and the rest communities. It’s easier for a broker to sell our own project than selling someone else’s, it’s more work. That’s real estate, and I want to put more focus on the community team to be strong in six to eight communities within the next year.
We act as exclusive brokers for other buildings as well. When a developer hasn’t got a sales team we can brand the project and in effect lease to it our sales team. Having many strings is our strength.
We’ll also be looking at the international market, because there are a lot of clients based in Dubai, who are international buyers, looking at the UK, Cyprus, etc. So we’re looking at that angle as well, trying to add as many strings as we can.
What kind of projects do you have in your developer string?
We have two residential projects in Al Sufouh, the J5 with 48 units handed over in October. It is fully sold and 88 per cent occupied. Next door is a carbon copy of the J5, the J8, just taller as its name indicates the number of floors. It has 92 units and we’ll be handing it over in August. Both could be described as affordable luxury — a one-bedder for Dh1.1 million and two-bedder for Dh1.9 million, with wooden floorings, modern finishing from Spain and Italy and rooftop overflow pools with views of the Palm. The projects are close to where the Mall of the World will be. We have around 20 units left in J8 and are selling as we speak. Around 70 per cent of buyers are end users, the rest are investors.
In Jumeirah Village Triangle, we’re launching the Park Inn by Radisson with 261 serviced residences. It has studios and one- and two-bedroom apartments, and a favourable payment plan with up to three years after handover.
You’ve also bought distressed projects.
Yes, we do see some projects that have been stuck for a few years and need cleaning up, and we help out by, for example, doing a joint venture with the developer. It helps everyone. We get to finish the project and they can move in, sell or lease. It isn’t completely our project, but another string of expertise in our bow.
In Dubai Sports City we have the Limelight Twin Towers, which is up to the 16th floor right now. It’s our project but under a separate entity, not branded under Aqua.
You also do project management — taking on a project for a developer and selling it, such as Abyaar’s Acacia Avenue. How do you deal with delays?
Ideally one takes on projects that one can control. But in general it’s a very difficult position to be in if the developer delays, because you are selling something that in every sense and purpose you believe is going to happen. The primary concern is that your client doesn’t get burnt. I treat them as if I were in their shoes. If the situation does occur, we would try everything possible to assist. If we could we would try and jump into the project financially.
I wasn’t around yet when we took on the Acacia Avenue projects. Yes they are very delayed, but Hilliana Tower is now handing over and Olgana is being worked on up to the 15th floor already. The remaining one, in Dubai Marina Pier 8, let’s see.
Are you looking at any new projects right now?
Yes, we’ve recently taken on Alcove in Jumeirah Village Circle. The developer came to us for advice so we’re doing the feasibility study, pricing structure and bespoke marketing plan. We do have fingers in other pies. In terms of our own developments we’re looking at prime locations, such as the Palm Jumeirah for luxury projects. In Downtown Dubai we have earmarked a project in a joint venture with a top five brand, which is under negotiation. Business Bay also has huge potential. We have bought into the Sungwon project there as a joint venture.
You have also started buying into mature developments, such as the Skycourts Towers. Can you explain this move?
It was an opportunity. There are only few units left to sell, so they attract a premium. The developer held back 600 units since handover in 2011, as it was a good way for them to keep earning, but now wanted to sell. As a mid-range, quality project for a good price, it is in a good location, 20 minutes drive from Downtown, with a high occupancy. The majority is tenanted.
We purchased units for Dh91 billion, but have plans to purchase more stock, investing a total of Dh150 billion, because demand is there, in particular from Arab and GCC buyers. For example, we did a road show in Abu Dhabi and sparked interest for 40 to 50 viewings in one day. The demand for studios, which prices starting at Dh4,000 a month paid over 84 months, is especially high. However, you could also easily afford a one-bedder, tenanted for Dh53,000 a year, and at Dh9,100 monthly payments, you would already have nearly half of the purchase price financed. Two-bedders start at Dh13,025.
It is a very good deal with a high return on investment. Not that we got a huge discount buying these units ourselves, but we bought the best units in bulk, so now we are on average 12 per cent cheaper. The way we ensure we make some money is that we charge a non-refundable booking fee for each unit.
There is strong demand for these units so we’re doing something for the community, and while some real estate companies have their head in the clouds, we’re fully aware you have to adapt to market conditions, and affordable finished products are what Dubai wants right now. This mindset is what kept us going for 11 years.
Skycourts: Enjoy luxury living at affordable pricing
Talking about the current market condition, what’s your take on it?
Real estate usually has a seven-year cycle. Up or down people will always buy and sell, you just have to stay on top of the curve. This year will be tough, but it’s a buyer’s market, the best year to buy since 2010.
And there are good new points of a more mature market, laws and a less transient population. Expats are now looking to make Dubai their home, meaning there is appetite in all sectors of the market. Affordability will make people move back to Dubai from Sharjah, Ajman and the Ghantoot border.
We have unique places like the Palm Jumeirah, which will always sell. Actually anything will sell if the product is right, such as genuine high-end buildings, where penthouses are not mixed with studios. There are very few of those right now, but new buildings are coming up.
The volume of sales has decreased but the secondary market is still moving. We did 37 transactions in January, a mix of sales and rental. The level of quality transaction needs to increase, but the fact that we’re still doing transactions is a good sign.
There never is too much supply, as Dubai’s developers rarely keep to the schedule in terms of project delivery, which is actually good as it balances supply and demand. There is no big panic. Yes, larger companies at the Dubai International Financial Centre are reducing their big packages, and oil and other international issues affect real estate here. Rents in some areas have and will further drop, but not to an extent that it is a big deal. Plus, quality product bucks the trend.
We’re very close to the bottom, maybe another 5-10 per cent to go in some areas. So, I would recommend jumping in now, buying and negotiating that 5 per cent. If you wait too long you’re going to miss the boat.
Source: Nicole Walter, Special to Property Weekly