With a DJ pumping out ambient music and a buffet large enough to feed a village, all aboard a yacht sailing around the azure waters of the Arabian Gulf, Azizi Developments became the latest Dubai developer to pull out all the stops in an attempt showcase off-plan luxury apartments.
Using a press conference and marketing shindig aboard a 125 foot superyacht sailing from Dubai Marina, Azizi attempted to lure potential investors to shell out between Dh2.2 million and Dh4.5m on a block of 90 partly-built apartments on Palm Jumeirah.
As long-legged Russian models milled around the boat offering soft drinks and Azizi staff directed some 200 VIP guests to study a large, twinkling scale-model of the development between the Anantara and the Viceroy hotels on the crescent of the Palm, there was little talk about Dubai’s second property squeeze in six years.
The falling price of oil and the strong US dollar to which the dirham is linked has hit the housing market in Dubai, pushing average prices down by about 15 per cent in 2015, brokers report.
Last month, KPMG predicted that prices will continue to fall throughout 2016 pressured by political unrest in parts of the Middle East and economic uncertainties in China and further depressed by government budget cuts and job losses precipitated by global oil prices far below their mid-2014 levels.
Brokers say that the difficult market is already hitting Dubai housebuilders hard. According to the property broker CBRE about 6,000 nearly-completed homes in Dubai are currently sitting empty as developers wait for prices to stabilise before they can even think about attempting to sell.
But that picture of job cuts and price falls seems a very long way from the boat parties and lavish project launches still taking place in the emirate.
Despite the price falls, Dubai developers have continued to market a flurry of new off-plan homes amid what seems to be ever increasing levels of opulence.
Last month, Dubai-listed Damac Properties announced it was planning to build its Dh7.4 billion Aykon City – six new towers of hotels, apartments and offices overlooking Dubai Canal and Safa Park.
The development will include an 80-floor hotel with hotel apartments and a tourist attraction in which consenting adults walk around the perimeter of the roof, a 63-floor tower of hotel apartments, a 65-floor office tower and two 30-floor towers, each of which will be home to “ultra-luxury” flats.
Construction will begin in the summer and should be complete by 2021. Damac will shortly begin to sell off-plan properties in the development, it said.
Emaar and Meraas, meanwhile, have started marketing Sidra Villas, a new neighbourhood of posh three, four and five-bedroom villas that local agents say are being sold for between Dh900 and Dh1,000 per square foot. In addition, Dubai Properties Group has also launched its 8.2 million square foot Serena development to be built in Dubailand. Azizi’s new Dh350m Royal Bay Residence block is just the latest in the company’s Dh4.5bn Dubai development plan, which is expected to complete eight blocks of apartments in Al Furjan in 2016 and also plans to launch a second apartment building of another 180 apartments on the Palm later this year.
All of this begs the question: if the market is so tough, why are developers still willing and able to press ahead with launching new projects?
Certainly when asked outright, developers, as always, talk up the market with perhaps overstated optimism.
“We are in a very healthy phase of the property cycle,” says Farhad Azizi, the chief executive of Azizi Developments. “The next few months will see market stabilisation and then the economy is going to recover very fast by mid-2017. These are good times for buyers to invest in a good location and good property to make a profit and capitalise on quick price appreciation.”