Developer declares an end to ‘off-plan’ sales

Bradley Hope

• Last Updated: April 07. 2009 11:20PM UAE / April 7. 2009 7:20PM GMT

Peter Wilding, the deputy chief executive of Capitala, says the company will start offering homes in line with market demand. Maisam Darwish for The National

ABU DHABI // A major Abu Dhabi property developer called the off-plan sales model “defunct” yesterday, indicating that companies would have to put more money into early stages of projects to convince buyers to invest.

The off-plan model has fuelled a construction and property price boom in the Emirates since Dubai first began selling unstarted homes at the beginning of the decade, but buying interest has dried up as credit has become scarce, confidence has dropped and many projects have suffered delays.

Capitala, which is developing a 147-hectare site on Abu Dhabi island, is considering a plan to make most of its buyers’ payments due after the completion date.

“The selling off-plan model is basically defunct,” said Peter Wilding, the deputy chief executive of Capitala. “We haven’t officially changed anything but it is certainly under review to change the payment plans.”

Capitala is a joint venture between CapitaLand of Singapore and Mubadala Real Estate and Hospitality. Its first project is ­Arzanah, a development with a focus on health and an active lifestyle.

The project includes 9,000 homes, 7km of bike tracks, a mall, three medical centres, the existing Sheikh Zayed Stadium and other recreational facilities. It was launched on to the market near the end of the five-year property boom.

Developers across the country have been struggling with fewer sales and sharply reduced cash flow for their operations. The effects have been felt all the way down the supply chain to contractors.

Capitala has managed to sell 86 per cent of the apartments in the first phase, including all 14 villas, but the challenge remains to find buyers for the unsold units and keep earlier buyers up to date with their payment plans.

Mr Wilding said the company’s strategy would be to start offering homes that were in line with market demand. One of the next phases, for instance, is a more affordable set of buildings called The Lofts.

Changing the payment plan to have most of the money due after construction would also help convince buyers to make an investment, he said.

Mr Wilding said that company staff have been speaking with earlier buyers to assure them the project was going forward, thanks to the resources of CapitaLand and Mubadala.

“We have very strong balance sheets,” he said.

The two companies have so far committed to invest up to US$300 million (Dh1.1 billion) into the project, which will allow the developer to start building parts of it without a launch.

A visit to the site yesterday showed construction was under way on the first phase of the project, Rihan Heights. A crew of 650 workers is labouring on the five towers, which will range from 18 to 32 storeys. So far, the workers have raised the buildings to the first level of the parking areas.

The Rihan Heights buildings would be ready in late 2010 and early 2011, Mr Wilding said.

Arzanah was launched almost a year ago with a conceptual model at Cityscape.
A new model is being shipped from China that will be ready in time for this year’s Cityscape on April 19. The model would show a few changes, Mr Wilding said.

After discussions with the Urban Planning Council, some of the heights and aspects of buildings have been altered to stop them blocking views of the Sheikh Zayed Mosque and the Sheikh Zayed Stadium.

Capitala has also opted to include more retail space. Total retail area could grow to as much as 150,000 square metres, with 115,000 sq metres in a single mall that will have its own underground metro stop.

bhope@thenational.ae