The market has shifted from speculators looking for a quick profit to people who wanted to own their own home.
Eta Star goes back to basics
DUBAI // As developers struggle with low sales across the country, ETA Star is focusing on the core demand for homes in Dubai to make it through the downturn, a company executive said. Abid Junaid, the chief executive, said the market had shifted from speculators looking for a quick profit to people who wanted to own their own home. The result was the need to cater to regular people, he said. "Our moorings are in the old part of Dubai," he said from his Deira office on Salahuddin Road, which has an worn-down sign on the front that says "ETA Star House". "We always focused on the end user. We knew that was what's sustainable. We're not the Jumeirah culture."
For most of the year, the company will focus on delivering six buildings. After that, depending on the market, Mr Junaid said he wants to launch more middle-class housing projects and reintroduce finance schemes that help people get housing. "All the earlier schemes that were abandoned in 2007 and 2008 in the days when the boom was going on will be taken off the shelves and put back in place," he said.
ETA Star is considering launching "rent-to-own" schemes for some projects, where consumers can opt to contribute their rental payments toward the purchase of the home. The company is also planning to change payment plans so that the majority of the owed amount fals due after handover of the apartment or villa. If the economy does not recover significantly, ETA Star will make more of its units into rentals to ensure a revenue stream while the company tries to sell off the remaining units. It has already started moving some of its sales staff to other companies under the ETA Ascon Star Group, a conglomerate co-owned by two companies from the UAE and Hong Kong, as local sales have fallen.
In the past year, the property market saw transaction volumes drop by more than 50 per cent and prices sink back to the levels from two years ago, Mr Junaid said. This is requiring developers not only come up with new strategies in a changed market, but to deal with an increasingly regulated market." "One must not take this concept of free markets too literally," Mr Junaid said. "We need a regulated market that protects buyers and developers interests. In fact, it is not good for the industry if developers launched projects that they did not have the funds to see the project through."
The Real Estate Regulatory Agency (Rera) has taken a bigger role in all transactions and projects, whereas before it was the master developer that set many of the standards. "All contracts are now being vetted by Rera," he said. "You can't do anything without pre-registering the units with them and there are many requirements to do this." Mr Junaid predicted that Government support for the industry would soon start having an impact. The plan for the Dubai Government to use part of its $10bn (Dh36.7bn) in funds from the Central Bank to help property companies meet their obligations would have a "trickle down effect" on the market, he said.
"This downturn is very severe and was not something we envisioned early on," he said. "The real estate market is a function of sentiment and liquidity. Today both are affected. The Government is working to improve both. These moves could kick-start the real estate economy." email@example.com