Tuesday, August 4, 2020
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Chance for Deira to reclaim property momentum

Dubai: Dubai’s traditional commercial heartland — Deira — gets an opportunity to reclaim centre-stage as Nakheel opens sales for 94 plots on two of the “Deira Islands” on Sunday. All of the plots have been marked for hotels and resorts, with easy access to water, and should take anywhere around three to four years to complete.

The plots would be between 80,000 to 67,000 square feet. Together, they comprise more than 12 million square feet of untapped land.

“What the release of so many plots simultaneously does is help set a possible new benchmark for land values on the Deira side, which had — until now — reached a certain saturation level in terms of land for development,” said Cecilia Reinaldo, who heads the UAE operations of Fine & Country, a realty services firm.

“In contrast, all of the action had been concentrated on New Dubai, where plot values could be between Dh150-500/600 a square foot [on built-up area] depending on the location. Nakheel’s plot sales give Deira the opportunity to catch some of that momentum.”

A top Nakheel official had confirmed late last week that the sales beginning today would not be on an auction basis. (The master-developer had used auctions to drum up investor interest at its Jumeirah Village community.) “In about two months, we should get a firm indication of demand for the Deira Islands plots among developers/investors of hospitality projects,” said Ali Rashid Lootah, Nakheel’s chairman.

The developer is also being flexible on the payment options, allowing up to five years. According to Reinaldo, “That should go down well with plot buyers; if a project takes two to three years, they will have the cushion of being able to generate funds from the property and pay off the plot.

“Much depends on the prices that Nakheel will set for the land — but they are sure to factor in that buyers are acquiring fairly substantial plots and will need to create something that can help them recoup costs.

“A big plus is that mainland Deira did not have too much of new hospitality stock getting created in the last decade. So, developers coming in during the initial phase of Deira Islands get to have an advantage.”

More than 500 plots could eventually be released on Deira Islands.

Freehold for all nationalities is a rarity in Deira. But late last year, one developer, Royal Star International, garnered a strong response for an office high-rise. “When we launched Centurion Star Tower, which cost Dh420 million to build, it was sold out in the first few days of the launch,” said Hamzah Abu Zannad, director of operations, Royal Star International.

“There are very limited plots available in [mainland] Deira; prices start from Dh1,600 per square foot and on an average it is Dh2,100-2,200 across Deira as per the plot size.

“With regard to New Dubai, the calculation is based on the built-up area and not as per plot size. So a plot in Dubai Marina would be Dh400-700 per square foot, Downtown Dubai will be Dh500-700, Business Bay around Dh400.”

Deira Island is a manmade island located where the Deira Palm had been planned. Nakheel announced the project last October.