UAE Property Market: Make it affordable

DanubeGlitz 3 is Danube’s latest development in Dubai Studio City l Image Credit: Courtesy of Danube

Rizwan Sajan, Founder and Chairman of Danube Group, believes it is the right time to invest in property in Dubai, taking advantage of low prices in the market. Apart from developing real estate, he invests heavily in other properties in Dubai, which gives him a broad insight into the market. Sajan says once the market takes off again, it would be difficult to buy real estate at the rates that are prevalent at present.

“Prices in Dubai are one-third [of those] in fast-growing cities such as Hong Kong, Singapore, Mumbai and London,” he tells PW in an interview after the launch of Glitz 3, the latest in Danube’s affordable luxury developments, in Dubai Studio City. The apartments are going for Dh900 per square foot, a price point that Sajan says targets “salaried expats who are fed up of rising rents”.

The project offers studios, and one-, two- and three-bedroom apartments across two eight-level buildings. The units range from 433-1,355 sq ft. A studio can be purchased from Dh475,000. The developer says the amenities, which include a tennis and basketball court, health club, rooftop swimming pool, landscaped gardens and an air-conditioned children’s area and party hall, are as good as those in the more expensive districts of Dubai. “It will be as good as living in an apartment in (Dubai) Marina, although you will be paying a smaller price,” says Sajan.

The developer expects an equally huge rush of investors for Glitz 3 as there was for his earlier developments, Dreamz, Glitz 1 and Glitz 2.

He says there have been 4,000 enquiries already, although there are only 352 units for sale. “What does the investor want?” asks Sajan. “An affordable price, housing where the infrastructure is ready, an easy payment plan and [a reliable] developer.”

He adds that people want to be sure of where they are putting their hard-earned money. “I have been in business for 25 years, so people know we are here to stay.”

Addressing needs

Danube started out as a building materials supplier and has branches across the GCC, with procurement offices in China and Canada.

The launch of its housing projects follows plans by the government to offer affordable housing to a large segment of the expat population, particularly those who have been forced to constantly change homes as rents increase.

The rising rents in Dubai have driven expats to as far away as Ajman, while most have availed of cheaper homes in Sharjah. Affordable housing is in short supply in Dubai and many residents complain that a large chunk of developments are only targeting the rich. Apart from high rent, residents also have to take into account the rising cost of living, including utility charges, school fees and food, while salaries have remained stagnant.

According to reports, many new developments are in areas that cater to the luxury market, including Dubai Marina, Palm Jumeirah and Business Bay. However, industry insiders say Dubai will not only need mid-income housing but also high-end luxury properties to cater to the rise in population ahead of an anticipated population boom leading to the World Expo 2020.

The Dubai Municipality recently announced plans to make developers build affordable housing for those earning between Dh4,000 and Dh12,000 a month.

Sajan says Glitz 3 is aimed at expats whose salary is between Dh15,000 and Dh25,000. “It is not just Indians or Pakistanis, but Arabs and Europeans who are also interested [in buying into affordable developments].”

Spread the word

Danube has gone on an advertising blitz across Dubai to promote its new development and has spent millions in promotions on billboards, radio and TV in a bid to attract the middle class. It claims its projects offer impressive returns on investment. “For a Dh1-million property, you will have initially invested Dh550,000, and you start collecting annual rent of Dh120,000,” says Sajan.

Handovers to investors will begin in the next two to three years and the flexible payment plan allows buyers to pay only 1 per cent per month after the initial down payment of 10 per cent of the total cost of a unit.

Wider horizons

When asked if he will take his affordable luxury concept to neighbouring emirates such as Abu Dhabi where there is also a need for cheaper housing, Sajan says he is looking into its potential. “We aim to go slow and first keep to our commitment [to customers] and deliver [on time].”

Property prices depend on supply and demand and conditions in which the investor feels comfortable, says Sajan. “One [investor-friendly] law and the prices will shoot up,” he says, pointing to people who flocked to Dubai earlier after they were promised a six-month residency for an investment of Dh1 million.

Sajan says prices are presently low due to the conflict in Yemen and Iraq and the drop in oil prices. “But it’s not going to be like this forever. Dubai is in a better position to face this challenge.”

He adds that construction costs are going up because of a massive shortage of labour. “One million labourers left [during the time of the recession in 2008-09] and it is taking time to get them back,” he says. “All the contractors are fully booked, so there is an increase in the cost of construction.”

Source: Mahmood Saberi, Special to Property Weekly


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