A large number of Indians are among hundreds of buyers who queued up in the heat early on Wednesday to buy luxury homes on Dubai’s largest but undeveloped island — Palm Jebel Ali. These villas, the project for which was launched two decades ago but never built, are now selling for 10 times the initial price.
It is well known that Dubai has a red-hot real estate market. Last year, business tycoon Mukesh Ambani bought one of the most expensive houses in the most famous of the palm-shaped islands called ‘Palm Jumeirah’ while Bollywood actor Shah Rukh Khan is also among many other rich Indians to have invested in this island. Indians and Russians make a beeline to buy properties in Dubai’s unique artificial archipelago, making its real estate market primarily fuelled by the wealthy.
Nakheel, the state-owned developer, is now reviving the Palm Jebel Ali project years after it was halted. With this, the United Arab Emirates is seeking to cash in on an influx of newcomers for its newly restored real estate market that was suffering from a seven-year slump.
According to a report in Bloomberg, investors and brokers were spotted outside the sales centre of Nakheel PJSC where five-to-seven bedroom villas are being sold on the yet-undeveloped Palm Jebel Ali. Homes start at 18.7 million dirhams ($5.1 million), which is an estimated Rs 42.21 crore; the cheapest plots of land are selling for about 40 million dirhams, which is an estimated Rs 90.30 crore.
The Bloomberg report states that luxury real estate has revived in a big way even as the city bagged the top spot of global rankings in the second quarter for transactions of homes valued at $10 million or above, according to real estate consultancy Knight Frank.
“The Palm Jebel Ali designs are exceptional,” the report quoted Tamer Bazzari, founder of Dubai-based investment firm Genero Capital LLC, who bought a 7,000 sq ft property for 19 million dirhams (Rs 42.89 crore approx) and is planning to buy a second villa. “The location and square foot value is much better than other properties. We think it will be a very lucrative investment.”
The report also stated that buyers will have to pay 20 percent of the villa’s value upfront and a further 40 percent during construction. The remaining amount is to be paid when the properties are complete in 2027.
Bloomberg was unable to get a comment from Nakheel.
Why is Palm Jebel Ali in the news again?
In 2003, Nakheel started selling townhouses and high-end waterfront residential properties on the Palm Jebel Ali for between 1.8 million dirhams (Rs 4.06 crore approx) and 5.6 million dirhams (Rs 12.64 crore approx). While these properties were resold many times thereafter, not a single house was constructed.
This was the first time the emirate allowed foreigners to buy homes but this wave was met by sudden downturns. Palm Jebel Ali was called the “eighth wonder of the world” in the brochures laid out by Nakheel, Bloomberg reported. The development has 17 palm leaves and adds 110 km to the emirate’s coastline, it added.
But, the 2008 economic crisis pushed Nakheel to the brink of default, leaving hundreds of buyers in a limbo. The project was eventually halted.
Now, Nakheel’s redesigned plan includes 80 hotels and resorts and housing for 35,000 families. Construction will start across four fronds of the island, which is roughly twice the size of Palm Jumeirah. Some of the largest villas will be more than 12,000 square feet – about a third of the size of the White House, as per Bloomberg.
What does the Dubai real estate market look like?
When it comes to real estate, Dubai has been a prime attraction for Indians looking to invest abroad. And not for the luxury segment alone but also for rental and other properties. A report by an affordable housing group in the city stated that such properties in Dubai were cheaper than those in suburban Mumbai.
But, coming back to luxury real estate, Dubai is performing “in a completely different world”. Bloomberg stated that rents on average across Dubai are up 26.9 percent year-on-year and the city had 86,849 residential sales last year, beating its previous record of 80,831 from 2009.