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The developer’s project pipeline now comprises a variety of residential developments targeting different levels of affordability.
PW caught up with Talal Al Gaddah, CEO of MAG Property Development (MAG PD), to get the low-down on what’s in store and why.
* What philosophy drives your developments?
A market study is essential to get the timing and location right. In the case of MAG 222, we decided to sell the plot in Dubai Marina, and we cancelled MAG 228 A&B in International City as there is limited demand for that area. Along Shaikh Zayed Road, the L-shaped MAG 230, a freestanding residential tower, serves as an example of how we give importance to access and infrastructure when we decide to launch a project.
We believe that even one big tower should become a self-sufficient community. City of Arabia might not be a completed area yet but all the ingredients are already there. We [will] then launch with a good price and payment plan. In general, we adhere to all the legal requirements, such as the escrow account, depositing the 20 per cent finance required before selling, and we use our own cash flow to build.
* You also have the MBL Tower in Jumeirah Lakes Towers, MAG 1978 and MAG Luxury in Downtown Dubai on your development list. How did you position them?
The MBL Tower will become a mixed-use building of hotel and residential apartments and MAG 1978, our future headquarters, is undergoing redesign. MAG Luxury is positioned at the high end because of its location. Everyone wants to live in Downtown Dubai, but without traffic. There are only 62 apartments selling for about Dh2,500 per square foot to end-user buyers who expect luxury.
* In your project in Sharjah, you decided to let buyers build their homes themselves. Why?
Shoumous Residential Complex was a clear vision, as it’s [geared towards] a different clientele - UAE and GCC nationals, often government employees. They love to live in what they see as the middle of Abu Dhabi, Fujairah and Sharjah, and prefer to build their own homes. We will provide serviced plots, Sharjah Electricity and Water Authority connections, roads and fences. Once we have all the approvals, we’ll hand over the plots. [The] guideline is 30 per cent build-up after one and a half years.
* Two of your projects in Meydan - Polo Townhouses and Polo Residence - are being developed by Invest Overseas Group (IGO). Why are you not developing these projects?
MAG’s overseas group, IGO, used to develop [projects] in Syria and other places. When there were issues [in these countries], we didn’t want to shut down the company. [So we] moved the team to Dubai. At the same time IGO is developing our master-planned community, The Gate, in Frisco, Texas.
* What are the salient points of the Polo homes?
The main difference is that the Polo Residence apartment community is low-rise, which is rare in Dubai and we need more of those. Similar to our town house community, we are leaving more than the usual space for green areas, in line with master-planner Meydan’s development guidelines, which also prescribe a contemporary design for the homes.
Of course, you will have all the community facilities, live in Nad Al Sheba’s natural setting, yet very close to the centre of action [in] Downtown Dubai. Again the infrastructure in the area is ready to go. We chose the land strategically, so we wouldn’t have empty plots between us, as 70 per cent of people who invest in land don’t necessarily develop it, but want to flip. We don’t want our residents to face possible construction [work] in the neighbourhood at a later point.
* How did you price these developments?
The Polo Townhouses are already sold out. They went for an average of Dh1,250 per square foot, [and are set] for handover by mid next year latest. Of the Polo Residence, we have sold out around 7580 per cent. Half of the apartments are furnished.
For the apartment prices, if we take today’s land prices of around Dh450 a square foot and add the construction costs for the built-up area, it will come to around Dh1,000 per square foot at least. We should sell for at least Dh1,300 per square foot on average, otherwise there are no profits. We will complete Polo Residence by the first quarter of 2017.
* Many would love to buy a Polo home but can’t afford the price. Are you planning anything similar in a more affordable price bracket?
Yes, we are planning a new low-rise concept to launch within five months. I have always dreamt of doing something for the middle class - those who have been here for six years or more and want to live in a nice community. Only resident expats and UAE nationals can buy, not investors. Residents in Dubai are mostly employees, only 12 per cent are businessmen.
* How will you make it affordable, yet nice?
Our market study indicates that many have [savings of] Dh150,000-Dh300,000 and don’t know what to do with it, as they can’t afford the more expensive properties. So our concept allows them to buy a studio for Dh420,000, paying 10 per cent down payment and after three months let’s say another 10 per cent, and another 10 per cent after three months. The rest of the amount you divide into 60 months [equating to] Dh4,900 a month.
Down payment for a one-bedroom unit would be around Dh180,000 in the first eight months, then every month [a buyer will pay] Dh6,000, and around Dh9,000 for a two-bedroom unit. For a three-bedroom residence worth Dh930,000, it comes to around Dh10,000 a month. Employees could also rent a studio for Dh30,000. This is the concept we’re looking at. No matter what happens, the prices and income will stay the same.
* What will the concept look like and where will it be located?
The project is in Dubai World Central (DWC), a small community of G+4 or G+5 buildings. I would like to apply the same concept that we have in Meydan, with 25 buildings and a community centre with a green area in the middle. It’s a place where you can have fun, not just an apartment. It’s a new area for us, but in our minds we should get it done within two and a half years and we are making sure the infrastructure is completed by then.
* Is this the only project of its kind you have on the drawing board?
We’re also looking at a community of town houses in DWC. It’s still an idea, so you could buy a two-bedroom town house at Dh1,800 per square foot or Dh900,000 or less. We’re also still looking for land for the same concept, maybe in Dubailand. [It could be] something similar to Reef Villas in Abu Dhabi. The most important point for this type of development is to sell to end users who really want to live in them, and can afford the payment plan.
* Where do you see the market heading and who are buying?
The Dubai market isn’t stable from a pure investment point of view. Prices are always up and down. However, you have to look at this market as a solid company. You’re not targeting international investors who come here for two years to make money and leave, but residents who are already here. Many have come from Egypt, Libya and Syria.
* You’re also managing your buildings via MAGme Property Solutions. What is your recipe for successful building management?
People loved our four-year management of the high-end MAG 218, because we didn’t exceed the service charge of Dh10 while other developers charged Dh15-Dh20, and we’re transparent. Today, management is like a certificate - you either manage it properly and the community loves what you are doing or you’re going to fight with them the whole time.
We might manage our future properties but aren’t sure yet, as it’s a headache. We’ll need to take care of the projects for the first two years to make sure all is good, but we could outsource it to a management company.
* The Emirates Financial Towers (EFT) has the MAG Royal Solutions automated parking system. Are you applying this solution to your other new buildings, or selling it to other developers?
EFT is 70 per cent occupied. In terms of the parking system, we do sell the solution to others. Here we’ll use it for MAG 226 and maybe in other new projects, but they have to be big enough — a minimum of 1,000 parking spaces, as you need good management for the car park to give good service.
Source: Nicole Walter, Special to Property Weekly