Development in Dubai froze or stalled in many cases following the 2008 crash. But gradually, Dubai’s property market has started to recover and stalled or partially shelved projects are returning. Dubai’s property market has climbed steeply this year – while it did not make gains comparable to the pre 2008/9 boom years, but still represented among the sharpest gains in the property sector globally this year.
This week three of Dubai’s stalled projects were restarted: two in Jumeirah Lakes Towers and one in Business Bay. They have been revived under the Dubai Land Department’s (DLD) Tanmia initiative.
The Director-General of the DLD, Sultan Butti bin Mijrin, told Emirates 24/7 that “we have approved two projects Wind Tower I and II under Tanmia.” He went on to explain, “we are working with more investors on a number of projects.”
The project in Business Bay has been taken over under the Tanmia initiative by Pacific Ventures and has been renamed Burj Pacific. Pacific Ventures has confirmed that the project will be relaunched this month. “We recently took over one project in Business Bay,” Parvez Khan, the Chairman of Pacific Ventures confirmed to news website Emirates24/7. “The majority of the original investors have agreed to continue with our project. We have new contractors on site and work has commenced.’ Burj Pacific is a 21-storey residential tower, comprising 150 apartments and penthouses. The project is due to be completed by 2015.
Mr. Khan’s company told Emirates24/7 in June that his company was planning to spend Dh50m over a two-year period to take over projects listed under the Tanmia scheme. Tanmia – Arabic for “development’ – is the DLD’s scheme, launched in September of 2011. It’s aimed at getting semi-government and private investors on board to get stalled or endangered projects completed. Currently, the development is auditing over 100 projects.
Majida Ali Rashed, Senior Counsel Strategy, DLD, has said that the Tanmia initiative will continue to operate for three to four years, but warned that the process would not be easy. “The scheme targets the government and private sector and will help them benefit from these projects, but it is not an easy task.’ Part of Tanmia’s remit to settle all pending issues and revitalize stalled real estate projects will be to audit the accounts of projects. Property developers and investors can approach the DLD to seek inclusion of their project under Tanmia, but, as Mr. Rashed points out, “We have to look at all the legal, technical and financial aspects before allowing another investor/developer to take over the project.”
Pacific Ventures, Mr. Khan’s company, has already taken over two projects in Jumeirah Village Triangle. These projects have also been renamed, as Pacific Residencia and Pacific Edmonton Elm. The company is also on track to take over a project in Dubai Sports City. Mr. Khan says that the majority of the “old’ investors in the Edmonton Elm project have decided to continue investing in the project, though ’15 per cent are defaulters… we will seek cancellation of their contracts through proper legal channels.’ The Pacific Residencia project’s building is over 40% complete and the project’s original investors have overwhelmingly decided to stay with it.
Despite the good news from Dubai’s housing market and the organizational aid from Tanmia, the future may not be entirely rosy for the Dubai property market. A boom in building luxury apartments has meant that the residential market in Dubai is unduly weighted towards a cohort of high earners who aren’t there – there’s approximately a 15% oversupply in this area. However, this may to some extent be made up for by the increase in value of midrange properties – up 20% in the last year, according to economist Farouk Sousa – and a “misfortune dividend’ as the chaos of the Arab Spring makes Dubai’s stability desirable.