Tameer Holding is in the process of re-evaluating some of its projects in the light of the real estate slowdown, its top executive told Emirates Business in an exclusive interview.
Ghassan Sakhnini, President and CEO of Tameer, said: "Based on market dynamics, we are in the process of re-evaluating some of our projects. Once decisions have been made, we will notify our investors about the changes to their agreements and contracts.
"Alternatively, we will come up with interesting offers to allow them to reduce or balance their investment costs."
Tameer, which is 75 per cent owned by the Al Rajhi Investment Group, has currently eight on-going projects in Dubai, one in Abu Dhabi and one in Jordan. "Our projects in Dubai and Jordan are more than 90 per cent sold out. In Abu Dhabi the figure is around 50 per cent," he said.
The developer currently has projects valued around Dh10bn across Dubai and Abu Dhabi. Sakhnini said its project 'Prestige Heights', which was pre-launched in 2008, has been put on hold. "The project did not progress past the pre-launch phase and so has not been officially launched," he said.
What inventory do you have left to sell in the market? Will you look to wait before you sell this, as there seems to be some signs of a recovery?
Our inventory varies from project to project. Some are completely sold out, while others have some availability. Some others are actually being handed over to their owners.
As the global financial crisis looks to reach rock bottom, people are slowly renewing their confidence in real estate. We are confident that as the market begins to see considerable transactions, people will begin purchasing and investing in real estate again.
What are your current overhead costs? Has that lowered from last year's peak?
As construction costs such as labour and materials decline due to the economic situation, costs are bound to go down. However, this is not always immediately reflected in end prices, particularly where materials were purchased in advance, or contracts and parts of contracts were paid in advance. The sector in general can definitely expect to see its overhead costs come down from last year's peak.
Are you revising any of your payment plans in light of the slowdown in the real estate sector? Can you give us details on the new payment plans on some of your projects?
We are looking at providing incentives to our customers to make it easier for them to fulfill obligations. We are going to realign our payment plan to coincide with the actual construction of our projects. We are making price adjustments on some of our projects depending on when people bought and how much they bought it at. Our customers will hear from us in the next two weeks informing them about the progress on their project and the new payment schemes that we will have.
On which projects are you making price adjustments?
We cannot tell you that, as we would like our customers to know it first.
How much has the lack of mortgages being offered affected your business?
The lack of mortgages is partially responsible for the reduced sales activity in the market. But the fact that banks are not lending to developers, contractors and suppliers is becoming a big issue for us right now.
Any plans to increase your land bank size, as land prices have dropped significantly?
We already have a total land bank worth around Dh2 billion in Dubai, Dh1bn in Abu Dhabi and around Dh200 million in Jordan. We currently own chunks of land across some prominent areas in Dubai, such as Business Bay, Hard Rock Café, Palm Jebel Ali Crescent, International City and Jumeirah Village South.
We are not looking to increase our land bank in the near future as we are assessing the market situation and waiting to see how the market will turn around.
In your opinion, are properties in Dubai now selling at 'fair value' or have they fallen below it? Have you seen any decline in property prices in your projects?
We have seen some decline but it is difficult to get a true picture of the market because of a lack of proper statistics. However, prices have come down significantly.
How are you dealing with the inventory you hold in the market that is left to sell?
We are committed to finishing our projects that have started construction and sold to the public and we really believe that in the next few months the market will come back. Our commitment is to finish all the projects.
Do you believe there is an urgent need for the UAE to harmonise property laws so all emirates have common real estate regulations?
We welcome any regulatory effort to harmonise the regulations in the real estate market. We really would welcome such a move. It will also be good to make the registration process easier, in order to make everybody know what their rights and obligations are.
Are you facilitating residence visas for buyers?
My sincere views are that the real estate market in the UAE should depend on actual residency of people in the UAE and not depend on just those who are looking for second homes in the UAE. As for facilitating residence visas, we never had that clause in our sales and purchase agreements .
How do you assess your transparency as a developer in your sales and purchase contracts?
We think we are transparent right now and going forward we are going to be even more transparent. Our investors will be informed of their project's construction milestones on our website.
We as developers are in full compliance with the rules and regulations of the Real Estate Regulatory Agency (Rera) and our payment plan to our investors will be in accordance with the progress in the construction of our projects.
As a developer, how much do you rely on your off-plan sales to make money today?
All of our projects are off-plan. The off-plan market has been hit badly, but we also think the real estate sector in the UAE will move ahead.
What is best in the market today? To buy or to rent? What do you advice and why?
The decision would depend on the investor and it can vary from one investor to another. It is based on an investor's personal situation and what their financing options are.
Is Tameer looking to add on a considerable amount of mid-end projects?
At the moment we are not looking to add on any new projects. So it is difficult to answer whether we will add on mid-end projects.
What is the update on your Tameer Towers project at Al Reem Island?
We are reviewing the construction programmes and associated costs on the project. However, we continue to be committed to the delivery of Tameer Towers in a cost-effective manner for the ultimate benefit of our clients, investors and partners. The project is moving head with the enabling works complete. Residential sub-structure works will commence upon completion of this assessment.
What can help get the real estate market back on track?
For the market to come back to normalcy, everybody has to play their roles, including the banks. I cannot say that we are out of the main crisis. The worst, though, is behind us. With all the efforts being exerted by the various stakeholders – like the governments, the banks, the contractors, the investors, the consumers and even the media – we are on the right track to get back to some sort of a normal situation.
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