Market will recover by end-2011, says developer of hotel, housing project
Dubai’s property market will recover by the end of 2011 as mortgages become easier to obtain and more people move to the city, according to the developer of a US$4 billion hotel and residential project.
‘Banks can’t stay away for long,’ Santhosh Joseph, 45, chief executive officer of Dubai Pearl, said in an interview. ‘They have to lend and, historically, most of this region’s lending goes into property.’
Dubai, the second-biggest sheikhdom in the United Arab Emirates, experienced the world’s worst property slump during the global recession, with selling prices falling by more than 50 per cent and project cancellations exceeding US$300 billion. To sustain itself, Dubai Pearl is relying on US$1.5 billion paid for apartments in advance and another US$500 million that has been committed by Al Fahim Group, Mr Joseph said.
‘We’re not expecting to sell substantially in 2010 and 2011. We are a zero-debt company but we may look into leveraging at a later date.’
Mr Joseph has a 20 per cent stake in Dubai Pearl while the rest is owned by a group of investors led by Al Fahim Group, one of Abu Dhabi’s wealthiest families.
Dubai Pearl is building four 73-storey towers connected by a single roof less than a mile from the emirate’s palm-tree shaped man-made islands. The project, which has the same name as the company, will have 20 million square foot of hotel and residential space.
MGM Grand, SkyLofts, Bellagio, and Baccarat are among the six hotels that will have 1,400 rooms. The main structure will be surrounded by an artificial beach and low-rise buildings containing malls and theatres. The project is scheduled for completion in 2013.
The property crisis prompted Dubai Pearl to review the project and add entertainment and health components to the design, Mr Joseph said. The company also renegotiated terms with buyers, such as longer payment schedules, to reduce the chance of defaults.
‘In 2010 and until the second half of 2011, I’m not expecting the international markets to be liquid or mortgages to be widely available,’ he said. ‘Real-estate cycles are usually three years peak-to-peak and the best locations tend to bounce quickly.’
Dubai Pearl is at the centre of a newly developed part of the city, surrounded by populated areas such as Palm Jumeirah, Dubai Media City and Dubai Internet City where international media and technology companies are based. The densely populated Dubai Marina is also nearby.
The project has the ‘best location with a captive clientele in a six-mile radius,’ Mr Joseph said. ‘Our area lacks communities where residents can walk from end to end.’
The company is selling residential space at 2,250 dirhams (S$854) a square foot, while furnished and serviced Baccarat-branded apartments are selling starting at US$1,000 a square foot. The prices have been slashed by about 30 per cent, he said.
Source: Business Times, 18 Mar 2010