Dubai is a better market for builders than India, says an established India developer entering Dubai for the first time.
Pacific Township Holdings shows faith in Dubai
An Indian developer plans to invest more than Dh300 million (US$81.6m) in Dubai, bucking the slowdown in the property sector.
Pacific Township Holdings expects to break ground in the first quarter of next year on its first project, a 28-storey residential development in Media City called Pacific Waterfront. The company, which has built several residential projects in Pune, is also looking to buy partially completed projects in Business Bay, Tecom and Sports City.
"I'm already negotiating" on projects, said Parvez Khan, the company's director.
Mr Khan said he was seeking residential and office projects that were at least 30 per cent completed, with investors committed to making their payments on the basis of construction milestones.
"This is a buyer's market," Mr Khan said. "There is really good rental income compared to India."
Other Indian developers have been active in Dubai with mixed results. Sobha Developers is working on projects in Business Bay and Sun and Sand Developers recently opened a tower in Silicon Oasis.
But many projects have been stalled or delayed, and investors have retreated.
"It is unusual to be seeing new developers coming in," said Craig Plumb, the head of research for the Middle East and North Africa at the property consultancy Jones Lang LaSalle.
After the property slowdown, land is far cheaper in Dubai than in India, Mr Khan said.
In Tecom, the area including Media City, Internet City and Knowledge Village, land is selling for Dh200 a square foot, Mr Khan said. In Business Bay, land prices are between Dh200 and Dh250 a sq ft.
Land prices have skyrocketed in India in recent years as developers race to meet the demand for residential and commercial projects.
On the outskirts of Bangalore, developable land sells for about 6,000 rupees (Dh410) a sq ft. In Mumbai, prices can be much higher, analysts say.
"Margins are also good in Dubai," Mr Khan said. "Construction costs have come down, and materials costs have come down, compared to two or three years back."
Pacific has already bought a second plot in Tecom, where it expects to build studio apartments.
Completion of Pacific Waterfront is planned for 2015. With the market for off-plan sales having dried up, Mr Khan does not expect to begin selling apartments in the development until construction is far along.
"I want the confidence of investor[s] to see the project first," he said. "I will build it more than 50 per cent and then, inshallah, I will start selling it."
Any new residential development will enter a crowded market. Some 50,000 more homes are scheduled to be built by the end of 2014, according to Jones Lang LaSalle.