Demand for real estate in Dubai has moved from an over supplied onshore market to exclusive holiday homes particularly offshore projects on the manmade The World, it is claimed.
Kleindienst Group, the developer of The Heart of Europe project on The World islands development, launched sales of 20 villas on its Germany island in December and has since increased its prices by over 50% per cent, the company’s chief executive said.
In December a three bedroom villa on a 6,000 sq ft plot was selling for about Dh4.3 million. Today, it is more than Dh6 million and 11 out of 20 villas are already sold, said Josef Kleindienst, the group’s chief executive officer.
It is perhaps a sign that buyers are coming back into the Dubai luxury market and prices are rising as a result. ‘When we started selling it was at a small profit margin. It was not important to optimise profits from day one. But there has been so much demand, we decided to increase prices and therefore profitability has shot up,’ explained Kleindienst.
He expects other developers on Nakheel’s master development to soon realise the demand in the market for quality holiday homes and subsequently begin their construction activities.
‘The demand is coming from Europe. They want exclusive, luxury holiday property. And they want those on The World, because it will not be diluted in its offering. People are very busy taking customers to the islands,’ revealed Kleindienst.
But the developer is fussy about who buys. ‘We can choose who we sell to. We are not interested in speculators or investors. Recently we turned down an offer from an Egyptian investor for three villas. We want end-users who will create their own communities,’ he said.
Construction of the villas is expected to begin in March. Some 20 villas re scheduled to be complete in 2011.
Kleindienst, however, conceded that the negative publicity that has plagued the project since its inception, heightened by the global financial crisis, and that has resulted in sales staff spending a lot more time in clarifying and allaying doubts. ‘Customers are worried about the situation. It takes a lot of discussion, explanation and proof. They want to see the properties and need to have real trust in the developer,’ he said.