Paolo Soro

Dubai developer takes freehold out of core areas

Wasl Properties lines up projects in emerging locations of the city

For Wasl Asset Management Group, launching freehold projects does not mean sticking to the tried and trusted locations in the city. By placing its launches in as yet untapped Nad Al Hammar and in Jebel Ali (spanning 20 million square metres), the Dubai Government’s asset management arm favour the untested over the familiar.

And there are more locations it is homing in on, such as the one in Al Kifaf near World Trade Centre Roundabout and behind the Etisalat tower and close to Zabeel Park. Phase 1 will have four buildings and then will be expanded to include more residential and office buildings, a convention centre (makes commercial sense given the closeness to World Trade Centre), a shopping strip and hotels.

“In any freehold project we launch, Wasl properties, a subsidiary of Wasl Asset Management Group, retains a certain component that will go into our leasing portfolio,” said Hesham Abdullah Al Qasim (left), CEO of Wasl Asset Management Group. “It also sends out a message to the rest of the investors about the level of confidence we have in our own projects from a return on investment perspective. We are not launching to sell and make a full exit.”

But won’t going for less developed areas of the city put a clamp on the kind of pricing that Wasl properties as the developer can command? Al Qasim reckons that is not how the company’s business model works: “We follow a lot of pricing indexes, both developed internally and from external sources, before arriving at the launch prices. We go by what the market at a particular location can reasonably expect.

“It’s what we have done with our leasing portfolio — and that’s three times what we build under freehold each year — and that stretches across the entire city. This includes highly developed areas such as Jumeirah and Karama.

“Wherever we see that general pricing of rentals in a particular neighborhood is starting to get too high, we build new capacity there to stabilise asking rates.” (This is the strategy the developer has deployed with its “Dar Wasl” project on Al Wasl Road, where the rents on the villas and apartments are going slightly lower — about 5 per cent — than the prevailing rates. According to Al Qasim, from the 2014 peaks, villa rents on Jumeirah have dropped and could take another year for them to balance out.)

The developer’s upcoming freehold projects, particularly Wasl Gate in Jebel Ali, will get more expansive. The Jebel Ali location will go in for multiple property categories, including offices. “In the first phase, we will be selling town houses — but when the market is right,” the CEO said. “If we don’t sell, we can always lease.

“Leasehold will always be part of the company’s DNA — as such, there’s a lot that other developers are doing with freehold. But leasehold options are what a majority of residents still want and what the city needs.”

Being a government-owned entity might mean that for Wasl it is not too much of a stress to expand the land bank. But the company’s fortunes are still dictated by the tides of market movements.

“It was in 2007 that we launched with a portfolio of 7,000 units and now that’s gone up to 35,000,” said Al Qasim. “During the worst of the crisis years we were still building and delivering mid-income leased properties in Muhaisnah. And yet we had no problem in leasing those.

“More recently, we had people queuing from 4am when we opened leases for another project in Muhaisnah, Wasl Oasis II. Queues for rental projects are unheard of in Dubai — but we saw that happen.

“A market economy will always have a high beat and a low beat — but something in the market will always force you to do something.”

Source: Gulf News

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