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A year can be a long time when it comes to project launches... as one developer in Dubai is finding out.
''The plan was to have the sales launch of the Elite Downtown tower — located in the Downtown area — in January 2014 ... but we could not go ahead with it at the time because there was an issue that involved the master-developer and the plot location but had nothing to do with us,'' said Juwaad Beg, CEO of Al Madina Al Raeda Real Estate. ''We were constantly pressing our case with the Dubai Land Department and to issue us with the No Objection Certificate for the sales programme.
''It was just three weeks ago that we had the final clearance from the Land Department.''
But things had changed in the interim. The developer now estimates a 15 per cent increase in their construction costs as opposed to what it would have been a year ago.
''The initial plan was to cap the cost of development at around Dh500 million, now it could be around Dh550 million to Dh560 million,'' said Beg. ''It also cost us by having our funds being blocked all through this period.''
Construction costs are not the only factor that have seen a change — property values in the Downtown neighbourhood average between Dh2,200-Dh3,050 a square foot depending on the tower and where it is located. A year ago, these were in the range of Dh1,800-Dh2,200 on average. (For the super-premium properties, the average would be in the Dh3,500 a square foot and plus category.)
''There has been some stability of late in the price levels for properties at the Downtown, but we have made changes in the unit mix that will be built at Elite Downtown,'' said Beg. ''As opposed to the original plan, there will be more studios on offer priced in the Dh1 million to Dh1.2 million range.
''At this pricing level, we believe there are still investors interested at asset purchases in this location. We are keeping in mind that purchasing power may have reduced and that investors may be taking longer over the decisions.''
According to the prestige property realtor Luxhabitat, The Downtown area achieved high numbers in sales of property above $5 million (Dh18.3 million) last year.
''Over 40 per cent of properties sold were from the Downtown area [and] remains an established one with a high rate of enquiries coming in every month despite offering a smaller sized apartment in terms of square feet,'' said Oriol Font, CEO of Luxhabitat.
''The Burj Khalifa apartments remain the top sellers followed by the Address Downtown Hotel and The Residences. These properties accounted for about 68 per cent of total transactions in the Downtown area in 2014.''
But there was a slackening in transactional activity from the third quarter. And there haven’t been too many off-plan properties available in the secondary market. But there are expectations that some of the units at the Burj Vista and Burj View — both ongoing projects — could make an appearance at some point in the near future.
''Currently, Dubai Marina properties offer twice the area [an average of 4,234 square feet] for a cheaper price of Dh2,000 per square foot in comparison to Downtown, which averages Dh3,670 per square foot for a built-up of 2,375 square feet,'' said Font.
Still ruling the roost
* According to data with Luxhabitat, apartments at the Burj Khalifa are the top sellers followed by those luxury units at the Address Downtown Hotel and The Residences. These accounted for about 53 per cent of total transactions in the Downtown area.
* The average price per square foot sold at Burj Khalifa was Dh3,568. However, the Address Downtown Hotel sold apartments at nearly twice that amount.
Find out why control is a good thing for Dubai's developers
Source: Manoj Nair, Associate Editor, gulfnews.com