INTERVIEW- Danube sees demand for more projects: Group chairman - Zawya Projects

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INTERVIEW- Danube sees demand for more projects: Group chairman

Danube sees demand for more projects: Group chairman
Post-expo sustainability and low oil prices not a concern for the developer
By Megha Merani

17 May 2017
Whether it was the lavish launch of the Atlantis resort on Palm Jumeirah or the unveiling of the official height of Burj Khalifa, the world’s tallest building, Dubai has always had a knack for generating a buzz around headline-grabbing events.

Anticipation ahead of the start of the World Expo in 2020 has been no different, but some observers have expressed concern about how Dubai can sustain that interest once the trade fair closes its door for the last time on April 2021.

Rizwan Sajan, chairman of Dubai-based Danube Group, has no such fears and is bullish that Dubai, and the United Arab Emirates in general, can capitalise on the global focus the event will offer.

Dubai won the bid to host the World Expo 2020 on 27 November, 2013 and the event is expected to attract 25 million visitors when it runs from October 2020 to April 2021.

Sajan, who said he visited the Expo 2015 in Milan, dismissed concerns that development would stagnate after the six-month event ends.

“(Expo) 2020 is just a bigger version of Global Village, so Dubai doesn’t have to depend on (the) Expo,” he said.

“(The) Expo is a marketing tool for Dubai that will draw millions of people here.”

Interest in the emirate’s economic story is evident by the fact the Dubai Department of Economic Development recorded a 12 percent increase in business licenses issued during the first three months of 2017, compared to the same period in 2016. New business registrations also increased 126.5 percent year-on-year, from 136 to 308.

“New initiatives and innovative sectors being opened up as part of economic diversification and the Expo 2020 continue to provide vast opportunities for businesses and investors in the emirate,” Omar Bushahab, CEO of Business Registration & Licensing (BRL) in Dubai Economy, said in a statement in May.

Life after Expo

“So sustainability after Expo is not a concern. After 2020, it will sustain and in a much bigger way,” Sajan added.

His confidence is evident as Danube Properties, the group’s real estate arm, announced its eighth project in Dubai this week and is planning “at least” a couple more launches before the end of 2017.

“We plan to launch another two projects (at) minimum by the end of this year,” Sajan told Thomson Reuters Projects on Sunday.

The company plans to acquire two plots during the summer, he said during an interview following the launch of its 450 million dirham ($122.5 million) Bayz project in Business Bay.

“We haven’t acquired the land yet but we will soon. Ramadan is a good time to buy the plots, I’m sure we’ll be able to buy something at a good rate.”

Sajan believes there is sufficient demand for launching new projects, especially in the affordable housing sector.

“As per statistics of Dubai Government, we are expecting at least one million people over the next four to five years. Say 400,000 are white collar workers - (and) in an apartment say it’s an average of four people per apartment, so we require 100,000 apartments for 400,000 people,” he explained.

This figure translates to approximately 20,000 to 25,000 apartments per year, he said. “(But) the delivery happening in the last few years in Dubai is not more than 12,000 to 14,000 (units) per year.”

Competitive edge

Danube Properties claims it is offering the “lowest price” in Business Bay, a location in close proximity to upmarket Downtown Dubai and therefore not considered an ‘affordable’ area in comparison to other master communities where the developer has on-going projects, such as Arjaan and Al Furjan in the southern part of Dubai.

“I have an edge over the competition - that’s why we’re able to offer the lowest price,” Sajan said, attributing the lower project cost to his ability to supply building materials to his own developments.

Prices for Bayz start at 650,000 dirhams for a studio, he said, with an 18 percent return on investment forecast based on a 75,000 average annual rental rate in Business Bay.

Sajan added that he noticed that other developers have begun dropping their prices following the launch of Bayz, in order to compete.

“They have to lower their prices, which we’ve already seen as soon as we’ve announced this project,” he said.

Danube Properties has three billion dirhams worth of projects under construction, with four projects worth about 1.1 billion dirhams due to be delivered this year.

© Zawya Projects News 2017