Property prices in Dubai and Abu Dhabi have started bottoming out as end-users and investors show renewed interest in buying apartments and offices, according to the new chief executive of a Dubai-based developer. Federico Tauber, who joined Tameer Holding in April, said the market had passed its most volatile period in the wake of the property downturn that started last October. "Four or five months ago, there were no sales," he said. "Now, we have investors interested again in buying."
Property brokers and analysts said recently prices had been stabilising in Dubai and Abu Dhabi after months of consecutive declines. To spur sales and accommodate investors who bought at the peak, Tameer recently cut prices at its Dh6 billion (US$1.64bn) Tameer Towers project on Reem Island in Abu Dhabi to Dh1,800 a square foot for residential units and Dh2,500 for offices from highs of Dh3,000 and Dh4,000 respectively, decreases as much as 40 per cent from peak prices.
Mr Tauber said the prices represented the new natural equilibrium for higher end property in the capital. However, Tameer's prices still remain above market levels. Apartments on Reem Island are selling for between Dh900 and Dh1,700 a sq ft, according to property listings. Tameer has also changed payment plans for the Tameer Towers to match up with construction milestones. The changes come after the company started receiving pressure from some investors who were unhappy with what they perceived to be a lack of progress at the project.
The group, called Tameer Towers Investors Group, sent a letter to Mr Tauber last month asking for more concessions. However, the company said it would meet investors only one-to-one. The problem, group members say, is that buyers are required to have paid 35 per cent of the price of their units at the time of the completion of enabling works, which are now finished. Several investors said they had received letters saying their contract would be cancelled unless they paid enough to reach 35 per cent of the total. Under the new payment plan, another 5 per cent will come due with the completion of the basement of the building and 5 per cent more when the building reaches the third floor by the end of the year. Handover to buyers is scheduled for Jan 2012.
Asked about dealing with investor issues, Mr Tauber said the company was "learning by talking to the customers". "There is a shift of relationship with the customer," he said. "Before, it was launch and you give the buyer a payment plan. Now it's a more one-to-one relationship with investors." Investor groups have formed across the UAE in the wake of the global financial crisis. One group in Dubai boasts a membership of hundreds. It meets regularly with the Real Estate Regulatory Agency to advise on the predicament of investors. The Hydra Investors Group in Abu Dhabi successfully pressured Hydra Properties to put back the majority of their payment obligations until after construction is complete.
Tameer has also been cutting costs and negotiating new construction contracts to manage cash during slower times. A year ago, there were nearly 300 employees. Now, the figure is closer to 120. Mr Tauber said his main strategy was to "deliver what we have promised". "My mandate is to make sure we deliver all the projects as fast and efficiently as possible," he said. "That's what I am going to do."