Mirwais Azizi says he is concerned about oversupply
Offplan sales in Dubai are strong and oversupply is not a long-term issue, according to Azizi Developments founder and chairman Mirwais Azizi.
In an exclusive interview with Arabian Business Azizi said: “Believe me the market is going very well. Our sales down in August a little bit due to the holidays and Hajj. But from the start of September every week they are going up.”
Azizi funds the bulk of its projects using “historic and current unit sales”. If further finance is required in order to keep the construction running to schedule, Azizi admitted that “we may use bank finance, though this is rare. And following that, and if necessary, we will inject our own money to ensure timely completion of projects. But until now I have rarely needed the second two options.”
The Afghan businessman, who has launched a raft of projects since 2013, also said is unconcerned about oversupply, pointing to the many hundreds of cranes dotted around the city as proof of confidence in the market.
“Sure, there are businessmen who make mistakes, there are good and bad projects, but people are still purchasing. Dubai is a strategic and prestigious place where people with money want to own a house. For example, all the rich people in India have a business and family here, and then the Arabs come for shopping and investments,” Azizi said.
Property broker JLL estimates that as many as 34,000 homes could be completed this year, with another 28,000 due in 2019.
However Azizi said the government had “learned a lot from the 2008 crisis” in how to manage the real estate sector.
“We now have very good regulations from the Land Department. Whereas a developer could previously pay 10 percent of land costs and then open an escrow account, they must now own 100 percent of the land. And in addition to the 20 percent escrow project value, they must continuously verify ownership of a project, benefiting all parties involved. If the project fails then it is easy to manage,” he said.
Azizi Developments currently has a pipeline of projects worth $12bn and more than 200 ongoing projects across Dubai. The portfolio includes plans for the world’s fifth-tallest skyscraper, located on Sheikh Zayed Road which will be ready by late 2021 or early 2022.
Last year it handed over 13 projects and seven more are set for delivery from Q4 2018 onwards, adding 2,268 units across various Dubai locations to its growing portfolio.
Dubai residential property prices and rents declined by 5 to 10 percent overall in 2017, according to data from Standard & Poor’s (S&P). The credit ratings agency predicts the “three-year downturn” in Dubai’s property market to continue until at least 2020.
Dubai government recently approved its biggest ever budget for 2018, with infrastructure expenditure set to surge by almost 20 percent this year to more than $15.24bn in the runup to Expo 2020.
Azizi said of the city’s longterm economic health: “This is a city without metal, copper, crude oil, or even drinking water, but it has prospered because we have the best leadership in the world who have built beautiful things in the desert. You can find anything you need close to where you live. This is very attractive to many people.”