While the Dubai property market may have softened in the first half of this year, the developer Danube has sold through its third phase in Dubai’s Studio City of development in two months after bringing in an easy-payment programme.
Demand has been so strong that Danube said it would be announcing two more similar developments before December, without providing details.
Danube has targeted affordable housing offering studio apartments for Dh475,000 and three-bedroom apartments for Dh1.3 million with a 1 per cent per month payment deal.
“People still have money, they just don’t want to risk it,” said Rizwan Sajan, the chairman of Danube. “Our first two phases of development were town houses, which sold out very quickly, but I saw a greater demand for more affordable residences so we are building apartments at a fraction of the cost to other developers,” he said.
“I can buy land cheaper now because of the uncertainty in the market and I don’t pay any margin on 65 per cent of the building materials because of my original business. I spend Dh300 million to Dh500m developing the projects, which I can finance myself.”
The property consultant Clutton reported a 2 per cent drop in prices year-on-year for the first half of this year, with villa prices dropping 13 per cent year-on-year. Meanwhile, Sharjah Waterfront City, the Dh9.3 billion development by Sharjah Oasis adjacent to the Hamriya Freezone, is targeting GCC and Arab nationals with a family lifestyle offering.
The villas and apartments will be freehold to GCC nationals and available to western expatriates on 99-year leases. The first phase will incorporate two hotels, 400 serviced apartments, 1100 villas and a water park. Other phases of the development are planned once demand can be properly gauged.
“The timing of this launch is critical,” said Hayssam El Masri, the president of Sharjah Oasis. “We are offering something that has not been offered in Sharjah before and there is a pent-up demand for this type of development. We are only 40 kilometres from Dubai, yet have all Sharjah has to offer with all its benefits. It is affordable luxury that will not be at the levels of Dubai. We will appeal to the mid-income earners who have few options right now in Sharjah.”
The two different strategies of targeting lower earners and more culturally appropriate housing to drive property sales is a symptom of a market that has priced out many and ignored others, said industry experts.
“Affordable housing has been ignored. On average people are paying 50 per cent, or more, of their annual income in rent – that is untenable,” said Faisal Durrani, the head of research for Cluttons.
“We see 20,000 new units being added in Dubai by 2017, and 70 per cent of those are villas so we don’t see price rises there. With Sharjah Waterfront City the development is unchallenged and there is a huge demand from Syrian buyers because of cultural and economic factors. On average in Sharjah one will pay Dh500-Dh600 per square foot, whereas in Dubai one will pay Dh1,400 per sq ft.”
ascott@thenational.ae
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