Supply, demand, investment opportunities
Dubai's residential property market is crowded: buyers, sellers, real estate. The commercial real estate segment is still in its shadow, but, as recent studies show, it is much more attractive to investors. In order to replenish our knowledge about commercial real estate, we turned to an expert - Mr. Shahram Abdullah Zadeh, Executive Director of one of the largest developers in Dubai, Al Fajer Properties.
Dr. Shahram, how did it happen that in Dubai, positioning itself as the center of business in the region, thousands of units of residential space are being built, and only dozens of office space?
It happened historically. Since 2002, when foreigners were allowed to invest in the emirate’s real estate, the housing market began to grow rapidly. Most of the investment went into the purchase of apartments and villas, and the lack of demand for commercial space did not give rise to offers.
Today the situation has changed dramatically. Many world business leaders are moving their head offices to Dubai, opening branches and representative offices. Dubai businessmen are also replacing old offices with new, more spacious and prestigious ones. Over the past four years since the introduction of the freehold, the city has received several hundred finished housing units, hundreds of towers and villas on the way. Where will their owners work? Of course in Dubai.
It turns out that investing in commercial real estate is now much more profitable than in residential?
Of course. A return on investment in Dubai's commercial property is guaranteed for up to 5 years. Nowhere in the world are investments paying off so quickly. In the residential real estate sector, a full return on investment occurs only within 7-8 years.
The need for commercial space in Dubai today is about 3 million square meters. meters. By the time they are completed, Dubai will need another 2-3 million square meters. meters of offices. And while the emirate is growing, this process cannot be stopped. The fact that there is a shortage of good office space in Dubai is also proved by rising rental prices.
What can investors expect to buy an office in your Jumeirah Business Center 1, 2, 3, and 4 projects?
We guarantee a full return on investment for 4 and a half years. And this does not take into account the fact that the cost of renting in Dubai rises every year by 20-30%.
Judge for yourself. Today, a square meter of office space in a prestigious area of Dubai is rented out for at least 700-800 dollars a year. A month ago, it cost $ 100 cheaper. Given that the cost per square meter at Jumeirah Business Center 1, 2, 3 and 4 starts at $ 3,000- $ 3,300, it’s easy to calculate how profitable our offer is. Investors who purchase offices for their companies will be insured against surges in rental prices by making contributions for their own premises, rather than paying someone else's.
This is provided that the purchased office will not be empty. But how can one be sure of this?
There should be no doubt about this. We guarantee the delivery of the purchased premises for a long-term lease after the conclusion of the transaction, for this the company has a special department. And since we take this responsibility, we are confident that the offices in Jumeirah Business Center 1, 2, 3 and 4 will be commissioned before the overstatement of work
What is behind your warranties?
Firstly, there were no competitors near the Jumeirah Lake Towers area, where we are building the Jumeirah Business Center 1, 2, 3 and 4, and probably will not. This is the best place to do business in Dubai. The center is located in a strategic location, next to the largest buildings of the "new Dubai", where more than 3,000 residential buildings and villas will be commissioned, whose residents are unlikely to want to spend several hours a day in a car. Their time is expensive.
Secondly, just five minutes from Jumeirah Lake Towers is the Jebel Ali Free Economic Zone, where, as you know, you have to stand on the waiting list for two to three years to get an office. Soon, one of the largest airports in the world will be opened in the Jebel Ali area. Nearby are two of Dubai's most grandiose shopping centers, which are already operating.
Thirdly, billions of dollars have already been invested in the infrastructure of Jumeirah Lake Towers, and if you look at the General Plan, which is simply necessary when making a purchase decision, you will see how well thought out it is: the buildings are located at a distance from each other, a lot of free green space, a lot of water, wide roads.
Is it true that Jumeirah Lake Towers will also be a free economic zone?
Yes it is. Jumeirah Lake Towers will become part of the Dubai Multi Commodities Center (DMCC), under the patronage of the Government of Dubai. This is a strategically important point, since, along with all the rights of the owner of freehold real estate, our investors receive a company license from the SEZ. This means that they will be able to completely own the business without the participation of local partners, forget about taxes and paperwork. 100% office ownership + 100% business ownership, what else does a business person need?
How are Jumeirah Business Center 1, 2, 3 and 4 different from other buildings in the area?
They are distinguished by the fact that they are under the tutelage of the huge harmoniously working corporation Al Fajer Enterprises, known for more than 40 years in the UAE market. Therefore, we can provide our customers with A to Z service under one roof.
Business centers are being built by our own company, which donated Wild Wadi water park to Dubai, Ibn Battuta Mall, Al Mooroj Rotana complex and several buildings on Sheikh Zayed Highway. We guarantee that our business centers will be delivered on time, and this is stated in the contract. The architectural design and interior design of all Jumeirah Business Center meets the highest demands of today's business environment. Each of the buildings has a spacious atrium hall, special rooms for general use, the necessary equipment and services for the efficient conduct of business, opportunities for recreation and sports.
We have a special unit that will deal with interior design. Our investors will be spared from such a headache as interior design, they will simply receive turnkey offices by the time the objects are commissioned. All buildings will be serviced by a special “smart system”, which will beneficially affect utility bills.
We also offer our customers 27 years of experience in the real estate management market. At the same time, they will all join the association of owners, which will be able to "dismiss" Al Fajer from the post of manager. But it will be more likely nonsense: we know our work.
Is it true that investors from Russia and the CIS countries bought a total of one and a half out of four of your buildings?
Yes, this is so, and now we conclude a number of large contracts with investors from the former USSR. The entry into force of a new law on real estate, which was published in March this year, gave a new impetus to investment activity. As banks began to give loans more willingly, investors understand that there are more creditworthy people in the market, and this will lead to higher prices.
But citizens of the CIS have now become more choosy: they are well informed and prepared for the purchase. They are interested in specific papers, figures and facts. Apparently, therefore, it is easy and pleasant for us to work with each other.
Recently, together with our long-term partner, the Commercial Bank of Abu Dhabi, we have developed a special mortgage loan package for Russian-speaking investors. Largely thanks to him, our buildings were sold in record time.
