The World developers ‘will profit’
Despite the crippling downturn and real estate slump, one property firm has seen a 50 percent increase in plot prices on Dubai’s man-made islets, and insists there is still money to be made.
February 17, 2010 4:47 by Ben Flanagan
According to a recent report by Jones Lang LaSalle, UAE property prices will remain flat this year, following the heavy declines of 2009. The consulting firm predicted general price fluctuations of 5 percent, but falls of up to 20 percent in certain segments of the market.
But this doesn’t seem to bother Josef Kleindienst, CEO of property developer Kleindienst Group, which owns six islands on The World, the man-made archipelago 4km off the Dubai coast.
For Kleindienst claims to have seen a 50 percent increase in the price of 20 plots on the ‘Germany’ island since he started marketing them in December. He is selling the plots as part of a high-end development called ‘The Heart of Europe’, which also includes the islands of Austria, Switzerland, the Netherlands, St Petersburg and Sweden.
From an initial selling price of AED300 per square foot in December, Kleindienst says that “very high” demand has forced prices up to AED450-AED500 per square foot today. Including construction costs, this means that a three bedroom villa could fetch more than AED6 million, compared to just AED4.3 million at the end of 2009.
Not that the prices have returned to the (arguably, inflated) levels of before. Typical prices of islands were about AED500-AED700 per square foot in 2007-2008, says Kleindienst. “Before the crisis, you could sell it for not AED4 million or AED6 million – but AED15 million,” Kleindienst tells Kippreport.
So can developers who bought islands on The World from troubled Nakheel, the master developer, ever hope to make money? “Definitely,” says Kleindienst, who says he has already sold 11 of the 20 plots on the ‘Germany’ island.
“The World will become the most expensive real estate in Dubai. Globally, there is nothing to compare with these islands. Prices will return [to previous levels] when the islands are built and completed.”
Despite the troubled times, Kleindienst says his company will stick to its policy of selling to individuals, rather than investors. “It’s very important to sell to the right people. We don’t sell to speculators or investors; it’s only for the end users,” he says.
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