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The Cube Sports City - Good investment? Anyone interested in Co-invest

Discussion in 'Dubai property' started by papakilo, Feb 24, 2008.

  1. papakilo

    papakilo New Member

    Anyone have thoughts on The Cube in Sports City as an pure investment?
    Looks like an interesting business model and risk spread across the whole hotel - they say every owner gets the same returns. Any thoughts would be welcome.
     
    Last edited by a moderator: Feb 24, 2008
  2. Roshan

    Roshan New Member

    The cube is an interesting model as you put it. This looks to be a good investment, but was all sold out the last I heard of it.

    How much are you paying for it is the question.

    The developer is German and this model should work in sports city. Keep us informed of the developments.

    Regards

    Rosan
     
  3. papakilo

    papakilo New Member

    Rosan,
    thanks for your thoughts.
    Not sure what your background is, but would you suggest any better investment opportunities.
     
  4. Roshan

    Roshan New Member

    Each investor has a particular model. Some investors would like to enter flip and exit making money or at times loose also.

    My model is cash flow, which means renting out once ready. A lot of research is involved in real estate investing. It begins with evaluating a project which interests you.

    With the help of a mortgage calclator ( google to get one ) you enter all the requested parameters which are easy to understand and enter. Then you see what your monthly EMI's work out to. If your rental should be more than the EMI's ( at times mind you not ), then you are on positive cash flow and have money coming in instead of going out.

    I would like money to come in every month and supplement my income to a stage where I do not depend on my job.

    Read the book " Rich Dad - Poor Dad" by Robery Kiyosaki. It will change the way you think about real estate and investing.

    Studios & 1 bedrooms tend to rent out easily. Most investors start with these kind of projects.

    If you have enough money to back you, then you could look at commercial space.

    It's never late to invest in real estate. The best time to invest as all say is "NOW".

    My suggestion is to take up a real estate course whichteaches you how to invest and gives you the confidence. That's how I started and since then I have never looked back.

    Regards

    Roshan
     
  5. dpc

    dpc New Member

    Hi, I have invested in the Cube and bought about 8 months ago. The Cube is not sold out. In phase I they release floors 1-11, and in the second round of sales floors 12-23 were released. They have another round of sales in the future to finish off the building. The Cube is in my opinion, one of the best projects out in Dubai for rental returns. I spoke to the project manager at the Cube and they have absolutely no funding problems so they are phasing the sales so they benefit from the appreciating value. They have already increased the price several times and resales are aplenty for those who have made a profit and want to flip their Cube properties. The price will continue to go up.

    The Cube sold itself offering 10%+ returns. They do a 50-50% split of the room night with the owners (split according to the proportion of the square foot of the hotel that you own). Essentially, if your room gets £100 (AED ~750) a night, you will get £50. Occupancy, given Dubai's 5 star hotel occupancy this year, will be 90%. The Cube's original figures were based on 70% occupancy at £100 for the smaller suites. However, the likelyhood is that it will see 90% at nearly £200 based on current rates. This means that returns will be nearly 30% (with around 3% maintenance costs) per year. I would also expect the room rate to increase by the year as Sports City completes and becomes one of Dubai's main attractions.

    From my conversations with the Cube's project manager, they are also tying up with major sports brands such as Germany's biggest football club Bayern Munich ( a huge name in European sports) within the next couple of months.
    I own a Dubai property investment and sales company and I believe this to be one of the strongest investments in Dubai (despite recent price increases). I will be happy to offer any property consultancy and of course any sales of Dubai properties.
     
  6. papakilo

    papakilo New Member

    Thanks DPC.
    Is anyone out there interested in co-investing in THE CUBE.
    I want to buy but can't afford the whole thing and don't really want to go down the mortgage route.
    Let me know.
     
  7. dpc

    dpc New Member

    Hi Papakilo,

    Unfortunately there aren't any mortgages on the Cube. There was talk of HSBC doing it but this didn't materialise. For some reason, there is no finance for sports city. This is really a bit of ridiculous situation by the Dubai Banks - all the developers and property people I talk to in Dubai can't understand why Banks don't finance it as it fully meets all the legal requirements and is a huge project.

    If you are interested I can possibly find you a co-buyer from our network. Are you looking for a 50-50 split? Are you looking to flip or hold long term? I imagine you will have to split the owners usage to 15 days each.

    The Cube is available from 800,000 AED for a studio for resales(which is cheaper than the developer's price for the same unit types). They have started construction and they are confident of July 2009 completion - last time I spoke to them.
     
  8. papakilo

    papakilo New Member

    DPC,
    not having any mortgages available for Sports City is a little concerning?
    Basically this suggests the banks see this as greater risk than other areas?
    ALso why would their be resales if it's such a good deal?
    Where do you find the resales anyway?

    In terms of the co-investing I know a few other that are interested as well so together maybe worth a shot.

    What is your background by the way? Is this your full time job or just a hobby? I ask as you mentioned your network?
    Papakilo
     
  9. Roshan

    Roshan New Member

    WOW a good decision. I have friends of mine who followed the same idea and co invested 5 properties. They have done well for themselves.

    However your co investor should have the same outlook as yours and should not want to sell when you want to keep. You all have th have the same mind sync.

    Regards

    Roshan
     
  10. Roshan

    Roshan New Member

    Falak has 90% fnance by Amlak.

    Regards

    Roshan
     
  11. mpat

    mpat New Member

    Mashreq banks provides finance up to 80 % finance on rufi real estates's all projects in sports city.For the info to all friends on the forum.
     
  12. dpc

    dpc New Member


    Hi Papakilo,

    It seems that there are the odd mortgages that I was not aware that have been mentioned in this thread, however banks don't really do sports city as they should. We don't really know why banks don't. The escrow accounts for developers are now mandatory, so this greatly reduces the risk to lenders. This means that the developer can't start on another project with the money made from the sale of a previous project until it is complete. One of the reasons could be that banks in the UAE are generally acknowledged to be slow to change. They have been so in the past. For example, they are slow to cut interest rates (UAE's interest rates are pegged to the US) so the lenders should have slashed their rates ... but they haven't. In reality, its a bit of a controlled market and really needs competition. The mortgage situation frustrates the life out of buyers and investors in and out side of the UAE.

    In saying that, the mortgages will eventually come - like they did in other areas. That will increase prices.

    In regards to your questions on resales ... there are still quite a few people who flip their properties, as it was always their intentions to do so or because the prices have gone up and they want to cash in. However, resales shows a vibrant market. I always worry when there are very few resales (i.e. Spain). Its one of the reasons, why I'm waiting a bit longer on Abu Dhabi and Ras Al Khaimah - they don't have any resales.

    I would say in Dubai, if you can find a great location at a good price in any project, you have nothing to be worried about. This is because of the fundamentals of Dubai's growth (GDP, population, tourism etc..).

    As for my background, I was business strategy consultant for big consulting firm in the UK. I started investing in Dubai a while back and have made a lot of contacts as long term investor. I now invest in Dubai and run an investment and sales service only for properties that I have invested in or would like to have done (if I had that much). It's much more enjoyable than my previous job and something that I actually have a passion for !!
     
  13. papakilo

    papakilo New Member



    hey dpc i have a similar background! any chance we can talk of line?
     
  14. Euroreal

    Euroreal New Member

    WARNING Read this before buying the Cube

    I was considering buying into the Cube about a year ago, at prices around 1230/sft on 18th floor. Now prices are around 20% higher.. And I still think it is a good solid project with a high quality German builder.

    BUT, the system for distributing/pooling the rental income on the individual units is very unusual and with quite unpredictable effects on the future value of respective units: The normal way of pooling income would be to take the individual units area size as a percentage of the total rentable area. BUT, instead, in order to "guarantee" all units the same rental return, the pooling is done as the following:

    Each unit sale price as a percentage of the total sale amount after all units have been sold. In this way, a unit sold today for a price 20% higher than an identical unit a year ago, will also have a 20% higher share in the total income pool. This will ensure same yield for both units. But this will also make it quite complex in the future to assess values of the units. I have never seen this pooling system anywhere else before, and I am sure it will have many surprising side-effects for the unit owners when they will sell.

    AND...think many times before you buy a resale unit for a price below the official price list. Because it will most likely have a smaller part of the income pool, it might in effect be a much less attractive deal than what appears..
     
  15. Roshan

    Roshan New Member

    Mortgage in Dubai is still in the baby steps as compared with international fiancing. Interest only mortgage, ballon mortgage are un heard of in Dubai but are very popular in UK, USA.

    The reason why banks don't do mortgages in Sports city is because when a developer gets into an agreement with a finance company, they should provide a bank guarantee equivalent to the development in some cases because if the project should go bust, the finance company has some kind of security to fall back on and help the investors. Besides credit worthiness also plays an important role in securing finance facility.

    Since Dubai is going great guns at the moment, then don't see any need to get mortage facility on their projects.

    I saw a great market in Abudhabi sometime back but have reservations now as the prices have started where Dubai ended. No doubt the payment terms like 40% during construction and 60% on completion ( in some cases 20% during construction and 80% on completion ). GoodDevlopments in Abudhabi start nothing less than 1800 dhs psf which is a bit on the higher side. Abudhabi would be more of an equity market with a buy, hold and then sell policy. The cash flow model might be hard with those kind of prices.

    RAK shows a lot of promise in the long run. Prices are comparitively low and a great opportunity to invest in waterfront property.

    You comments make a lot of sense like a few other members. Perhaps on your next visit we can meet up. We are starting a meeting for Dubai chapter investors and it would be great to meet up on your next visit.

    Investing is a learning curve and we would benifit by sitting and talking about property investing which we all love.

    Regards

    Roshan
     
  16. Roshan

    Roshan New Member

    Very intersting information which we didn't know about. I always thought they would be a fixed percentage in these kind of models.

    Look outfor the hidden clauses when you get into such investments. Usually the returns are linked to a certain percentage of occupancy.

    Regards

    Roshan
     
  17. ashk75

    ashk75 New Member

    Hi

    Re- your post regarding The Cube.
    I have recently co-invested in a studio at the Cube (paid a deposit) but am not 100% sure of this investment.

    Is the rental based on the price or sq. foot of the apartment?

    What are the long term prospects of this investment?

    Thanks.

    Ash.
     
  18. Euroreal

    Euroreal New Member

    Think twice before buying Cube

    See my answer above. To my understanding the distribution of income is made according to purchasing price NOT the sqft area of apartment. This is very unusual and will create quite unpredictable prices in the second hand market for the various apartments bought in different price levels.. Due to this I would think twice before committing to an investment here. Since you've paid a deposit - check this directly with the developer to get the facts.
     
  19. ashk75

    ashk75 New Member

    Hi

    Re- your post regarding The Cube.
    I have recently co-invested in a studio at the Cube (paid a deposit) but am not 100% sure of this investment.

    Is the rental based on the price or sq. foot of the apartment?

    What are the long term prospects of this investment?

    Thanks.

    Ash.
     
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