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GGICO Properties has been in the market for several decades, but more recently, it established its own brokerage division, and CEO Andrew Chambers says nurturing a portfolio of external clients and marketing its own developments are on top of its agenda.
“As a wholly owned subsidiary, GGICO Properties is also selling other people’s properties. The strategy was to set up a full-service real estate agency,” says Chambers. “Our forte is project sales and whole buildings, with the business of individual sales also growing. We will also add property management and leasing over time.
“We’re not the developer but the broker. GGICO’s head office doesn’t sell property anymore, we [the brokerage division] do it for them.”
Whether developing or selling property, affordability and trust are some of the major ingredients for being successful, says Chambers.
“One factor that sells GGICO’s projects is that people are used to seeing properties that are getting [close to completion],” says Chambers. He names the Grand Horizon apartment building in Dubai Sports City (DSC), which sold out within weeks, as an example.
“At the time when the market was slowing down, GGICO decided to relax the pace of construction until the deadline for completion — which was April — was only six months away and then decided to launch it,” he says. This, he says, increased the confidence of investors.
In addition, the building also fits the “affordability” bill with prices of around Dh1 million for a one-bedroom apartment, depending on its size. “It’s a very good middle-market offering, as the pricing was reasonable and it has a good location — right on the edge of the Ernie Els golf course, with the back view overlooking a school and the upcoming canal.”
The payment plan was another plus, requiring 30 per cent to be paid during construction and 70 per cent payable over three years after completion at around 2 per cent of the outstanding each month. This is ideal for taking out a small mortgage, says Chambers.
“The model is cleaner than rent-to-buy. A working couple, earning average salaries, can pay it by using small amounts of their savings, or leasing it so that the rental income would cover it.
“Most people buying are those who are already here and have accumulated a bit of money, have stable jobs and have decided to buy property and live in it.”
Aside from homeowners, investors are interested as well, although speculators aren’t, as the pricing in a flat market with tighter registration rules is too big a risk for flippers, says Chambers. “Investors buy because of the value. They can also pay using the payment programme and achieve a 6-8 per cent rental yield, which is good in most parts of the world.”
Digital marketing has also helped GGICO do well. “We generated a lot of interest from buyers in South Africa, the UK and the Commonwealth of Independent States by using this approach.”
Platinum Residences, a joint venture with Orion Holdings in Dubai Silicon Oasis, follows the same model and was sold out by the end of last year, says Chambers.
“They were one- and twobedroom apartments close to completion and available on the same payment plan. A lot of developers now use these payment plans. I’m not sure if we were the first, but we’ve certainly pushed the concept, and it has helped us enormously.
“Buildings close to completion offer the perfect scenario for selling. However, we can’t always wait until they complete. We’ll be releasing properties this year, which are under construction [20-40 per cent built], on a similar payment plan.”
The point is that developers these days should have something to show before selling to build trust, he says. Chambers adds that developers from overseas want to work with a partner, such as a developer or contractor. He says foreign developers are now more savvy and ready to take advice on how to go about building projects in the UAE.
Chambers believes Meydan represents a huge development opportunity, and so does the residential segment in Business Bay. He also points to Jumeirah Village Circle and DSC, as land prices in these areas are still reasonable, which indicates good returns.
“Everything that follows the road to Dubai World Central will have [good] value, if you can wait. The infrastructure still needs developing.”
Chambers doesn’t credit the success of his brokerage company on selling secondary property either, as unrealistic expectations come into play.
“The secondary market is flat. People are asking us to list their property for sale with an unrealistic price, and the buyers in the market also make unrealistic offers. Bringing the two together is quite hard.”
Chambers has noted a welcome change in buyers’ attitude towards the 99-year residential leasehold, previously shunned for freehold. “People are now buying on that basis. The 99-year clause is academic. Buildings usually have a shorter lifespan and assessing how many years a property still has is not needed here yet.”
Projects in the pipeline:
Andrew Chambers, CEO of GGICO Properties, talks to PW about the company’s up and coming projects.
What type of properties can we expect?
At present there seems to be some resistance from people wanting to buy topend property, [as] they’ve already got a trophy villa or apartment. However, they are still coming online and they will sell in the right locations, such as our serviced hotel apartment and residential complex close to The Dubai Mall. Most of our plots though are in Dubai Silicon Oasis (DSO), Dubai Sports City and Jumeirah Village Circle (JVC), where we’re going mid-market.
What’s coming up?
There’s Platinum Residences in DSO. They are G+8-style properties, with one- and two bedroom apartments. Dubai International Academic City (Diac) is a great area because of the demand from staff and students, and its developed infrastructure.
We’re currently designing the master plan for a 130-hectare mixed-use community called Grand Hills, next to Diac, which should be launched by the end of this year. It will be directed at the mid-income market, with apartments, a mosque, shopping areas and villas. The villas, comprising two- to four-bedroom units, will be small to mediumsized but comfortable.
There is still demand for incubator, serviced offices, and we’re studying those for our master development. We are not looking at 30-plus storey buildings but smaller six-storey ones, Emaar Business Park-style. These are easier to rent or sell.
We’ll develop another small master-planned community in the area, as we have 12 plots in DSO, and more in Dubai Sports City. We have a plot in JVC that can accommodate a G+30 project, but haven’t decided what’s going there yet.
Your upcoming projects are mainly mid-market. How do you manage to sell at reasonable prices?
Construction costs are steady, but as the Expo 2020 approaches, I think they will inflate, especially if all the large projects, infrastructure and real estate, in the region materialise. However, our inhouse project development and planning team helps to contain some consultant costs, with the exception of architects and construction. We have rolling projects so we share a good rapport with the contractors working on these.
Source: Nicole Walter, Special to PW