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28 February 2024

Demand for luxury realty to continue

By Staff Writer



Any property developer hesitating to invest in Abu Dhabi now stands to lose substantially, as the capital’s real estate market is currently hot, said Peter Riddoch, CEO of Damac Properties, in an interview with Emirates Business.


Riddoch said the market for luxury properties in Abu Dhabi and Dubai was promising and the demand would continue to increase at least until 2015.


The UAE’s growing economy, bringing with it a corresponding rise in population as well as giant investments, would arrest any chances of recession.


Riddoch announced Damac Properties, whose investments total $30 billion (Dh110bn), is keen to increase its presence in the region, but will not shy away from local market where the company has grown by 130 per cent in three years.


Damac’s projects in Abu Dhabi are still small and are not considered big investments in a promising real estate market. What is the reason?


So far we have launched two real estate projects in Abu Dhabi at a cost of $500bn.


The first is the $200 million Oceanscape project on Al Reem Island and the second is the Marina Bay project we launched last week at a cost of $300m at Najmat Abu Dhabi.

We are looking for more land in Abu Dhabi to construct new projects.


In the last three years, we had expected the real estate market in Abu Dhabi to be quiet but our expectations were wrong as the market saw unprecedented growth.


The projects launched in the past two years have put 250,000 residential units on the market until 2015.


This will not meet the local market’s need. Besides, a projected 50 per cent increase in Abu Dhabi’s population during the next decade, at nine per cent a year, will make the emirate an ideal place for investment and to reside in.


All these positive signs will spur the launch of world-class projects. Damac seeks to be a part of this growth by launching luxury real estate projects.


Any property developer hesitating to invest in Abu Dhabi during this current period will lose a lot, as this is the best time for investment.


The current real estate boom in Abu Dhabi is similar to the one seen in Dubai many years ago.


What aspects of Abu Dhabi’s realty sector are making you increase investments?


The real estate market in Abu Dhabi is characterised by solid infrastructure and is qualified to receive major projects.


In addition, the capital is in the middle of a phase of solid economic and commercial growth.


There is an increase in demand and a shortage of supply.


I expect the demand for properties, especially offices, to keep going up in Abu Dhabi.


Increasing economic growth will bring in foreign firms and capital.


The emirate has flexible real estate laws that inspire confidence in buyers, landlords and investors.


Also, Abu Dhabi Plan 2030 has introduced investors to the government’s vision of making Abu Dhabi one of the most important global capitals.


The government has announced it will invest more than Dh800 billion by 2012 in tourism, energy and infrastructure.


Abu Dhabi Tourism Authority has set a target of attracting three million visitors by 2015, which will support the emirate’s real estate market.


In June 2006, the company announced the first project in Abu Dhabi Oceanscape. But the construction work has not begun so far. What is the reason?


There is no delay on our part.We had to wait for a long time for the developer in charge of the Al Reem Island to finish its part of the work and handover the land to us.


Laying of the foundation of the project is in its last phase and construction will begin by the middle of this year.
The project is expected to be completed by the end of 2010, or during the first quarter of 2011 at the latest.


How true is the news that British investors have lodged cases against the company due to the delay in Oceanscape? Do you plan to compensate them?


This is untrue. There are no cases against us at all. When we realised the project would be delayed, we held meetings with all our customers and explained to them the causes for the delay.
We offered them many solutions; including transferring their bookings to another Damac project or paying back their money.
Most preferred the first option, while some opted to take their money back.


Why did you announce a new project in Abu Dhabi when the first one is delayed?


This shows our confidence in the future of real estate in Abu Dhabi.


The Oceanscape project was fully sold when it was announced. Following its success, we requested new plots of land in different areas of Abu Dhabi.


We got a piece of land at the Najmat Abu Dhabi project on Al Reem Island and designed a new project called Marina Bay, which is a 24-storey tower overlooking the sea.


It contains retail stores, offices and luxurious residential apartments. I expect the foundation work to begin in six months and the project to be completed in another 30 months’ time.


We offered it for sale at the Abu Dhabi Real Estate Show and a considerable percentage was sold out.


The real estate market in Abu Dhabi is in  need of medium-priced units while Damac and other property developers offer mainly luxury projects.


Do you expect a recession in the luxury property market in Abu Dhabi, Dubai or the Northern Emirates?


There is huge demand for luxury residences in Abu Dhabi and Dubai. When we offered the Oceanscape project for sale in Abu Dhabi, we noticed UAE nationals formed a considerable percentage of buyers.


However, recently we found there were many foreigners contacting us for residences in Abu Dhabi.


A large number of our customers come from other GCC countries, Britain, the US, Canada and Australia. This reflects Abu Dhabi’s success in bringing in foreign investment into the property sector.


Damac doesn’t specialise in luxury projects only. The price of some of our residential units starts from Dh650,000, while others start from Dh55m.

The company chose an approach different from other developers, whether in selecting locations or offering distinctive finishing. I believe the real estate market in Abu Dhabi, Dubai and the Northern Emirates will remain in need for luxury units until at least 2015.


Do you expect rents in Abu Dhabi to fall in the next two years with the new projects? 


I don’t expect residential and commercial rents in Abu Dhabi to change in the next few years. The change, if any, will be a small. The reason is the demand for accommodation and investment in Abu Dhabi, which have increased greatly.


Besides, economic signs confirm Abu Dhabi’s economy is one of the strongest in the region.


Some consider the fall in sales in the UAE propelled the country to invest money in projects in Jordan, Lebanon, Saudi and Egypt. This is not true. In three years our company has grown by 130 per cent, which is an indicator of our success as well as the success of the real estate sector in the UAE.


It has pushed us to repeat this success story in other Middle Eastern countries.


The firm’s investments stand at $30bn and projects inside the country form 65 per cent of our total investments. Only 35 per cent of our money is in ventures outside. We plan for a 50-50 split in our internal and external investments.


The reason behind this is the demand for our projects outside, not a lack of demand at home.


We found the entire Arab market is  important. We have intensified our projects in Egypt because it has a strong economy, which is developing quickly.


The numbers

$30bn: Damac Properties investments total $30 billion and projects inside the country form 65 per cent of its total investments. Only 35 per cent of the company’s money is in ventures outside.


$500bn: So far the company has launched two real estate projects in Abu Dhabi at a cost of $500bn.


Dh800bn: The government has announced it will invest more than Dh800bn by 2012 in tourism, energy and infrastructure.