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The fine tuning of the UAE’s real estate engine is largely dictated by what happens in Dubai and Abu Dhabi. But developers in the northern emirates are now making sure they have enough cogs in play, by way of viable projects that can appeal to end-user and investor alike.
Sharjah’s Dh2 billion Tilal City development may have garnered quite a bit of attention of late, being the first in the emirate to allow UAE residents of all nationalities to acquire units, but significant project-related activity is also happening in Ajman and Fujairah. Ras Al Khaimah has already cemented its standing as a destination for freehold investments.
“The sentiments that support real estate activity in the northern emirates is far removed from what’s happening in Dubai or Abu Dhabi,” said Fahad Satar Dero, CEO of Sweet Homes, which is behind an eight-tower residential cluster — named Paradise Lakes — in Ajman. “End-users have a lot more say what with transactions on offer at even Dh3,000 a month as instalment.
“At a macro-level, the extension of the Mohammad Bin Zayed Road has been a huge plus in the fortunes of developers in the northern emirates.”
Paradise Lakes was launched at the peak of the 2006-07 market upturn and had to bear its share of problems through the subsequent downturn. But, now, three towers are complete and snagging details are being gone through by the property owners, while another two should be ready in the first quarter. The final three high-rises are to be ready in 2016.
“Unlike in Dubai, which has mandated procedures for contract cancellations on non-payments, developers in the northern emirates are bound by federal laws,” said Dero. “We went through an extended phase of negotiating with the original buyers and convincing them to stick with the project. Payment terms were extensively redone to lower the burden on buyers where possible, and instalments were linked to progress on the construction side.”
The efforts are bearing the desired results. On average, 70 per cent of the buyer base have remained committed to the first three towers, and Dero believes it creates the foundation for take-up on projects to be delivered.
“Even six months ago there were no buyers to be found in Ajman’s freehold — it’s not the case now,” said Dero. “UAE residents who have been leasing until now are convinced by projects they see are complete or getting there — they are the ones prepared to buy. At Dh350 a square foot, prices are pushing closer to what was there in 2007.”
The rent versus buying rationale has been what developers in Dubai have been saying for some time now, even though for many of them cash-ready investors remain the dominant category. But the sharp rental upturn during the better part of two years was not confined to Dubai, Abu Dhabi and Sharjah. All of the northern emirates went through their own version of the surge. If developers can convince more tenants to make the switch to buyers, they will be on to a good thing.
But developers will need to be at the top of their game. “Potential end-users are there in the northern emirates ... but there needs to be a lot more delivered projects to win them over completely,” said Niraj Masand, Partner at Banke M.E. “Buyers are likely to remain cautious over committing given some of the bad experiences they had with undelivered projects in the past.”
Those sort of memories are what developers are trying to erase now. And the easiest way to go about it is to build and deliver on what has been promised.
Find out why buyers are likely to remain cautious
Source: Manoj Nair, Associate Editor, gulfnews.com