Lake View Real Estate has announced it will launch projects worth Dh1.3 billion in Majan and Arjan developments in Dubailand in three months.
"Up until now, we have seen most of our growth in Ajman. But now we are launching more projects in Dubai and we have a land bank across Jebel Ali Downtown, Jumeirah Lake Towers and Dubailand," Chief Executive Aman Qureshi told Emirates Business.
In a wide-ranging interview, he spoke about the differences in doing business in the two emirates and compared Dubai's established market to the potential for quick growth and rapid sales in Ajman. The chief executive also outlined his business strategy and discussed his company's expansion plans in the future. Excerpts:
How much have you invested so far in Dubai and Ajman?
We currently have Dh2 billion worth of projects in Dubai and Ajman. These include seven ventures in Ajman and two in Dubai. None of our projects are finished so far but are under construction. In Ajman, we have launched five towers called Lake View Towers. We own these and they are our first step towards progressing as a solo firm in the UAE. In Dubai, we have a land bank across Jebel Ali Downtown, Jumeirah Lake Towers and Dubailand. In the pipeline is our second project in Dubai, which will be worth Dh650 million. It is a mixed-use single tower with office and residential spaces. We also have a presence in Saudi Arabia through our partners in Jeddah and Dammam.
From a developer's perspective, how do your returns compare between the two emirates of Dubai and Ajman?
I would prefer not to comment about any emirate over another as I am earning from both the emirates. However, we are more geared towards Ajman, as it is still a developing market. Developers are getting good prices simply due to the quicker sales you see in Ajman in comparison to Dubai. We have seen some fluctuation in prices in the past six to seven months in both the emirates. Prices, as a rule in both emirates, have gone up by an average 15 per cent to 20 per cent. Returns for developers too have escalated to about an average 20 per cent to 25 per cent in the past two to three years. It is above 60 per cent today. This is the average we are seeing across all our projects in Dubai and Ajman. The returns have gone up by 20 per cent to 25 per cent. But in Ajman, we see higher demand and a quicker pace of sales so our returns there seem like they are higher.
To what do you attribute the differences in doing business between Dubai and Ajman?
Growth of a company always depends on its entry into a market at the right time. We think our deductions in Ajman with respect to our own returns are reasonable since we were there in the early stages of the market evolution. That meant our capital investments were low and the sales cycles were quick. Plus, with escalating land prices and property prices, naturally our returns have gone up. Land cost in Ajman is a lot cheaper compared with land cost in Dubai.
The selling prices are also less in Ajman. Average selling price for residential units in Ajman is around Dh500 to Dh600 per square foot. Whereas in Dubai, selling prices start from Dh1,000 per square foot. Construction costs are also higher in Dubai. From a developer's perspective, Ajman properties need less investment so we are talking of more volumes there. With higher volumes, you tend to make more returns.
Are you happy with the infrastructure in Ajman?
Infrastructural issues exist with every emirate. For our projects, the master developer is R Holdings and they will take care of that aspect. So far we have not faced any issues. Our projects are on schedule and construction is under way in the emirates.
In terms of your forecasts and the margins that you generally allocate in a feasibility study, has there been a lot of movement? Have the numbers gone up or down?
For sure the cost of construction has increased drastically, especially in the past six months. The margins have narrowed on some of the projects. Since we are working on several projects, we are planning carefully and trying to make the best use of common resources to reduce the costs. We are taking enough precautions to cover up cost escalations.
As the property market has become more competitive in Ajman, have you resorted to offering special deals to end-users?
One key solution that we are offering is in-house financing for the buyers. It is a pre-approved finance from our side. The entire value of the property will be split into a 33-month payment period as per the building schedule. So the buyer has to come up with just 10 per cent down payment and the rest will be financed by us – Lake View Real Estate. What is more, it will be completely interest free. This finance option is on from our end only for the Ajman properties – the Lake View Towers One through Five. Needless to say property in Lake View Towers has all been grabbed up and I have nothing in my hand to sell. The units are all on the secondary market going at Dh450 per square foot, while my initial selling price last year was Dh300 per square foot. As you can see, they have appreciated Dh150 per square foot in the secondary market within the span of one year.
Have you acquired land in other emirates?
We have a presence in Abu Dhabi and Umm Al Quwain, apart from Dubai and Ajman. In Abu Dhabi, we have a land size of about 480,000 sq ft in Al Reem Island. We have plans to announce a mixed-use development there in three months time. Prices there are quite mature and we think it is the right time to be there. Also we have acquired two million square feet of land in Umm Al Quwain. We have no plans for that so far.
Aman Qureshi is the CEO of Lake View Real Estate, a Dubai-based property company that does most of its work in Ajman and Dubai. Starting in Dubai with a brokerage company, Qureshi dissolved the business and put the proceeds into real estate in 2003. From an initial turnover of Dh400,000, he has since grown the business to reach Dh2 billion. An Indian who spent his childhood in Saudi Arabia, Qureshi got his start with his family's real estate business. He has a Master's degree in economics from Miami University in the US.