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Investors holding plots in Dubai’s freehold clusters are going for joint ventures with overseas developers/contractors to launch projects and stay on the right side of master-developers. The latter puts up the funds to launch the projects and in return they get the rights to a certain number of units in the completed project.
“There’s a lot of such structured deals taking place or are about to, and represent a sort of win-win for all parties,” said Samir Munshi, Managing Director at Silver Heights, an investment firm. “There are a few such developer-contractors who are signing up for such joint ventures here, as their domestic market may be in an overbuilt situation.
“Rather than wait for their own market to improve, they are using their know-how and available funds to work on mid-sized projects in Dubai through alliances. There are Indian and Pakistani firms involved, and Turkish developer-contractors, too, are coming in via this route.”
For those holding plots here, such joint ventures offer an easy option to build up. “Master-developers such as Dubai Properties want to see projects taking shape rather than let the land remain as such,” said Munshi. “Silver Heights has launched two such projects at the Arjan cluster in Dubailand, primarily low-density, low-rise properties. Simultaneously, we have been working towards bringing like-minded parties in structured joint venture projects. The units would be priced between Dh450,000-Dh750,000.
“We are also trying to source institutional funds as bridge loans, which would also help us with being in a position to offer an extended payment plan to buyers.” (Silver Heights has firmed up ties with Xanadu Real Estate Development, Kamala Landmarc and JP Infrastructure (India) and Mughal Group (from Pakistan).
A typical one would have land costing Dh10 million to Dh50 million and the overall development would cost three times that. At these cost levels and given the relatively modest scale of such projects, construction can be completed within an optimum period.
Joint ventures as such are not relatively new in the Dubai’s realty space. Through the years, big Saudi investor groups have put up the funds in alliances with UAE-based developers. In other instances, more recently, long-delayed projects have been relaunched bringing on board specialist developers to pick up the baton.
Source: Manoj Nair, Associate Editor, gulfnews.com