It's business as usual for Select Group

dubai - Developer presses ahead with projects in Dubai Marina and plans a mid-income property in Jumeirah Village Triangle

When the going gets tough, the tough get going. A case in point is the Select Group, a cash-rich developer which has risen to prominence by specialising in Dubai Marina projects. Despite a soft market, the group is busy designing, developing and proceeding at full pace with construction on already announced projects.

The developer's flagship project, Marina Gate comprising 1,500 units, is progressing as planned. The 400-apartment Marina Gate 1 will be ready by Q3, 2017. "It is already on 30 floors. By November, the project will have topped out, finishes are going up and we are starting the glazing work," informs Rahail Aslam, Group CEO of Select Group.

The 500-unit Marina Gate 2 is scheduled for handover in Q3, 2018. Shoring and piling work have finished on site and the main contractor has started sub-structure work. Meanwhile, the Jumeirah Group will manage 508 apartments in Marina Gate 3. There will be 104 serviced hotel apartments and 400 branded residences. This will be released to the market before the end of this year and delivered in Q4, 2019.

Select Group claims to have sold a majority of units in Marina Gate 1 and 2. Defying reports of a slowdown in sales of luxury properties, the group says it continues to sell volume stock every month. The average price for property in Marina Gate is Dh2,000 per sq ft.

"Since when we launched Marina Gate, it has outperformed the market. The location is prime and the design and specifications are world class. There are a lot of buyers who see value in this project since there is constrained supply of this quality in Dubai Marina," says Aslam.

Focus on Dubai Marina
It's not hard to see why the group has invested all its energies in this particular cluster in Dubai. Dubai Marina has consistently outperformed the wider market in terms of sales and rents.

"We'd be silly not to focus on Dubai Marina. We have been developing here since 2005 and delivered thousands of homes and dozens of high-rise projects. There are continued improvements to the location - Bluewater Island is opening up, the Dubai Tram opened 18 months ago and more road infrastructure work is in progress. It's a very compelling place to continue to develop while there are a few land parcels available," explains Aslam.

With land prices coming at a premium in Dubai, the developer leveraged the current soft market to pick up distressed assets in Dubai Marina and Jumeirah Village Triangle (JVT).

"In the last 18 months, we have acquired four land plots for future development. We have acquired two plots in Marina. They are already in the design and development stage. We also acquired land parcels in JVT. There is a lot of infrastructure already completed there. We don't like to bite off more than we can chew. Acquiring four plots is more than enough for the time being," the CEO adds.

There are plans to develop a mid-market property on the plots purchased in JVT. The project, where prices will be pegged at Dh1,100 per sq ft, is already in the design stage and will be launched in Q1, 2017.

"Dubai was more transient five to 10 years ago. A lot of people now consider it home. They have more confidence to buy houses rather than rent. There is a large segment of mid-income demand. It is indeed viable to develop a mid-income property and turn a profit," Aslam points out.

Project this year
The developer will also launch another G+29 residential project in Dubai Marina later this year. The building will comprise 400 one-bedroom apartments and studios and will be primarily targeted at investors. "Design is ongoing and construction will start in August. We've floated tenders for the project," informs Aslam.

Select Group also plans to expand its income-producing unit of the business. As part of this strategy, it owns the InterContinental Dubai Marina, a Radisson Blu hotel in Birmingham and is also developing Jumeirah Gate - Marina Living where some of the units will be retained as income-producing assets. Fifty retail units in Marina Gate spanning 150,000 sq ft will also add to the revenue stream.

"The group's five-year strategy is to have five hotels by 2018. We are currently evaluating several hotel opportunities, both in Dubai and in the UK. There are a lot of assets in the UK that are overleveraged. The lender may pull the plug on the owner, which may force them to sell the asset. In Dubai, we are looking to acquire land and build," says Aslam.

The Select Group has also capitalised on the weak sentiment in the Dubai property market to negotiate better terms with its supply chain. "We have been negotiating better design, construction and material procurement for the past 18 months," the CEO adds.

The group primarily deploys group equity to fund developments. "We have very little external funding, whether it be private equity or bank debt. This is one of the business' key strengths, particularly when the market can be tough. Off-plan sales is complementary to what we do."

The chief executive believes the Dubai property market is hovering near its bottom and rules out a further price correction. "From 2017 onwards, we will start seeing improvements and prices entering positive territory. The economic environment will start to improve, oil price has started to stabilise and the US presidential election will be out of the way. The market has been declining for the past 18 months," he forecasts.

- deepthi@khaleejtimes.com