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Azizi Developments has been pursuing a policy of out with the old and in with the new, as the company now takes a more measured approach to developing projects. This has helped Azizi focus on good-value projects, including five residential buildings at Al Furjan to be completed by the end of the year. PW caught up with Ali Omer, CEO, to find out how the company is progressing.
• You have had quite a few projects in Port Rashid, Dubai World Central (DWC), Palm Jebel Ali and Al Furjan, but only started selling some in the latter two in 2008. You were able to self-finance construction back then, yet decided to take a break. Why?
Yes, we had several projects in these locations. When you develop, you want to make sure you follow the nature of economic cycles: when [cycles] go down you know buyers are not going to pay up, so you might as well stop the project and wait until the economy goes up. [It’s] a win-win situation for all of us. To help many of our then clients who were facing financial difficulties, we decided to stop construction and gave our investors their money back.
• Sounds simple. Was the cancellation that easy?
Once the money is in the escrow account, getting it back is a long process. So after we cancelled the projects, we used the account of Azizi Investments, which is part of Azizi Group, to transfer the money to the buyers. Then we took the paperwork to the Real Estate Regulatory Agency, which cancelled the project officially.
• How have you restructured your portfolio since? You were also planning for a hotel in Ajman.
Yes, in Emirates City. We still own the plot, but are waiting to see how that area plays out. Our plan is still to build in the area once we have carried out due diligence. Our priority now is to concentrate on Dubai. We still own land on the Palm Jebel Ali and believe a new plan would not be too far off.
Similarly, we still have a plot in Port Rashid, now Maritime City, but need to see how we fit into the master plan, and of course DWC as well. Our priority is to focus on the plots we have in Al Furjan and on the Palm Jumeirah right now.
• Since last May you have restarted work on some projects such as Azizi Iris, Liatris, Orchid, Ferouz and Yasmine. Did the original buyers stick with you?
Yes. Al Masa II, for example, was a commercial project but had been relaunched into this residential series. About 45 per cent of investors decided to keep the money with us and transferred into these projects. We have sold Azizi Iris to a bulk buyer and about 70 per cent of the other four projects. We are now focusing on completing construction by year end and handing over [the units] during the first quarter next year.
• You recently went to a property show in India. Who bought your projects and at what price?
We recently met interested new investors and old clients in Mumbai, but we also have a lot of GCC investors as well as, those from outside [the region], including Africans, Russians and Europeans. The make-up of our buyers is about half end users and half buy-to-let [investors]. Our payment plan doesn’t suit flipping, as [buyers] would have to pay a 30 per cent down payment and 70 per cent on completion.
But we’re intriguing investors with it. They have a good reason to buy: excellent quality at a good price from around Dh900 [per square foot] during the launch to around Dh950 today. Al Furjan is a central location in new Dubai, close to the beach and DWC.
• The design of the various buildings is similar. What kind of living space are you trying to create?
In terms of height, mid-rise was a guideline set by Nakheel. As Al Furjan is rather suburban than down town, high-rises wouldn’t fit in well.
Equally, as our plots are all close together, we wanted to create cohesiveness between the buildings and give our investors an identity.
All Azizi units are similar, but the apartments stand out in as much as we try to create a unique lifestyle with European finishes and offer an eclectic look. Customers these days want a modern design. The rooms are pretty big for the price, but we stuck with one- to three-bedroom apartments; studios didn’t make any sense, as our study showed that this area is more of an expat family community, as opposed to the fast-paced Dubai Marina and Business Bay.
• What’s the status of projects such as Aster, Acacia, Freesia, Daisy and Tulip?
Three projects are in phase two and the rest are in phase three. We’re planning to start construction within a month or so. We’re still awaiting the final approvals from Nakheel and Trakhees because of some dewatering issues there. These buildings will follow a similar, innovative stream of design to fit in with the others in the series.
• Tell us about your Palm Jumeirah projects?
We bought the last three plots available on the Palm Jumeirah on the Crescent next to the Anantara hotel. Our projects will be high-end serviced residential apartments, as we believe there isn’t much of that available on The Palm Crescent. Owning a one-, two- or three-bedroom unit on the Crescent is an enticing proposition. We are still in the final design stage, but won’t build higher than G+12. The architecture is an interesting zigzag design, so you have sea views from each apartment. In about two months, we should start construction.
• Your development portfolio is reportedly worth Dh4.5 billion. Does this include all of the aforementioned projects?
It comprises all projects under construction and those to be launched this year, as well as our extensive land bank. We still have some commercial plots in Al Furjan for future development, but we’ll see if it makes sense to build offices, as for now there are still too many of them in Dubai. They could become hospitality projects as well. Indeed, we would like to get into hospitality. As occupancy rates remain high, the future is bright for five-star as well as mid-market hotels. We would like to brand ourselves differently in terms of services geared towards the GCC and expat market, and maybe create our own brand or work with a new operator. We’re doing a study for a five-star [hotel] in Dubai Healthcare City’s phase two in Al Jaddaf.
• Are you still using the same formula of self-financing construction?
Very much so. [The initial] 30 per cent [goes] into the escrow account as down payment, and [buyers] only give us the remaining 70 per cent on completion.
The authorities are stricter now, as they want to make sure the consumers get what they pay for. So you have to put the money into the account, and give the construction schedule and completion date and [appoint a] contractor at the same time.
[The authorities] will periodically check if you are meeting the schedule [before] they release the money to the contractor. With escrow funds in place you can start selling, but we first want to break ground so we have something to show. It’s a lot easier that way.
• Would you consider buying more land? Where is the market heading?
We’re still doing feasibility studies on the best areas to develop. Probably more hospitality and maybe some high-end residential. The market has become more mature and in my view will gain more momentum this year and the next. A lot of investors are watching the market and there’s a lot of construction to continue. Although labour cost is going up, it is being offset by low oil prices equalling lower transport cost for materials, so construction costs remain the same.
Once we finalise selling our units we’ll think about developing our existing plots. We’re optimistic. We started selling last year and things are looking good. After much planning and designing, we’re implementing our development strategy for this year until 2017.
• Are you looking at reducing running costs and future sustainability?
We do adhere to government sustainability codes and regulation to be energy efficient during construction. We source companies that have green initiatives for finishes, use recycled materials where possible, etc. All these things add up.
We also look at efficient electric circuits, high-quality cabling, LED lighting, etc. We try to use as many products that are made in the UAE as possible.
All our projects are Leed-certified and our goal is to continue to support efforts to improve the environmental footprint.
Source: Nicole Walter, Special to Property Weekly