Danube Properties is one of the largest private real estate developers in Dubai with a portfolio 6,194 units in 14 projects, worth Dh4.5 billion. It has delivered 7 out of the 14 projects in six years. Danube Group has a team of 1,800 plus people working across strategic locations across the GCC and India. Established in the year 1993 by Founder and Chairman Rizwan Sajan, a Non-Resident Indian (NRI) entrepreneur, Danube Group has achieved US$1.3 billion (Dh5 billion) annual turnover in 2019. Despite the Covid-related issues in the market, Danube group achieved its targets. Asian Lite’s Iqbal Azeez meets Danube chief Mr Rizwan Sajan to get an update on Danube’s activities:
According to the Dubai Land Department, 2022 marked the highest volume of sales transactions so far. The demand for residential units is still growing. Is there any Supply – Demand issue in Dubai and how the Danube group is handling the surge in demands?
Yes, this year the total value of real estate transactions in Dubai is going to break all previous records in sale, re-sale and mortgage transactions after exceeding Dh300 billion for the first time in the emirate’s history in 2021. The market is very buoyant and you can feel this by the number of new property project launches that has taken place this year.
As a developer, we have launched five projects, four of which have been sold out in the first few days after launch. Earlier, we never launched more than two projects in a single year – till 2021. This tells you how the market has changed in a year’s time following the COVID-19 pandemic.
I don’t think there is any demand-supply mismatch here. The market is well supplied and people are moving in to their homes. Investors who invested in properties for rental income, are now seeing new tenants moving in their properties and they are witnessing an increase in rental returns. The vacancy rate is quite low now and you can see it from slight increase in rents. So, the market is doing well in terms of demand-supply situation.
Having said that, there is also a strong demand for offline properties as well as ready-to-move-in properties due to a number of local, regional and international factors. One of the key reasons behind this is the UAE’s effective handling of the COVID-19 pandemic that showed the country’s leadership in handling crises and pandemics, making it a safe haven for people to live in.
While other countries were grappling with the 2nd and the 3rd wave of the COVID-19 pandemic, the UAE had already created a safe haven for people by vaccinating everyone with the two mandatory doses and booster dose by 2021 – that inspired the wealthy people from other countries to relocate to Dubai temporarily to save their lives. While in Dubai, they saw the vibrancy of the emirate, especially with the pick up of economic activities at the beginning of the Expo 2020 mega event. This encouraged them to invest in Dubai and relocate their families here. As a result, they started setting up businesses and buying up properties for staying and for renting out to increase cash flow for the families.
This gave Dubai’s real estate market the biggest impetus for growth and we have seen the market returning to a strong growth trajectory in the last two years. In addition to the above factor, the Ukraine-Russia conflict encouraged lots of people to move their wealth to Dubai – which is being pumped into the emirate’s real estate market.
Currently, the real estate market is well regulated with investor protection mechanism in place. Due to strong regulatory environment, developers are also delivering their property on time and this has strengthened the investor confidence further.
I believe, this growth will continue for a while and most real estate businesses as well as property buyers and investors will benefit from the current market situation.
The UAE population is growing at a fast pace. There is a new influx of customers from Russia and Arab world. Are there any special projects to cater that market?
I think the UAE has created a number of sub-segments for all types of property buyers – local Emiratis, Arab expatriates, Europeans, Asians, Africans and others. There are projects and homes for everyone – the affordable home buyers, the luxury home buyers and the ultra-luxury home buyers – who are into the Dh100 million and above level. We have seen how some properties on the Palm Jumeirah has been snapped up by foreign ultra-high net-worth individuals and the global super-rich.
So yes, Dubai has properties and projects for every market segments – affordable, middle-income, luxury, ultra-luxury and the super-rich ones. There is room for everyone.
What is the new trend in the real estate sector in Dubai? Did you notice any visible changes comparing to pre-Covid period?
Yes. Investors are back in Dubai’s real estate in big numbers, while families with fixed income – who were priced out before – are also buying, due to the fact that there are properties catering to their needs as well. In the payment options, some developers have started to collect money through crypto-currency.
Indians constitute the major customer segment in Dubai. What are they looking for, and how the Danube group is helping them to relocate to Dubai?
Yes, Non-Resident Indians (NRIs) as well as people from India are one of the biggest buyers of properties in Dubai. We have a good number of customers from India and UAE-based NRIs buying homes from us.
As careful buyers, Indians obviously look at the best value for money, convenience, location, flexible payment options as well as the best utilization of space. We are the best in all these areas – so they find our properties the best and more pocket-friendly. Besides, our 1 percent monthly payment scheme is a trend-setter in the market and helps them a lot.
How was your business in 2022 and what is the agenda for 2023? How many new projects and their unique features?
As mentioned earlier, the business in 2022 has been great and we expect the current trend to continue in 2023 as well. We are planning to launch more projects next year. However, as a responsible and credible developer, we will assess the market situation before every launch. If market could absorb more, we will launch more projects next year.
The new features that we are adding to our new homes is built-in swimming pools as well as adding open spaces for the home-owner to create office space inside the house.
Following COVID-19 pandemic, we have seen a new trend of professionals working from home. Companies are allowing employees to work from home. So, home-owners might need co-working space at home to carry out office work from home. This trend will continue for a long time. So, we are adjusting our designs to create those spaces – both swimming pool built-in homes and office space.
The idea is, if you work from home, you will save time in commuting and might have more time to work out and swim as well.
What is the advantage of investing in the property sector in Dubai?
The advantages of investing in Dubai’s property sector are multiple. In fact, it is one of the most lucrative investment vehicles that offers the best return on investment. Most investors with deep pockets want to invest in safe instruments with high return on investment. Dubai’s real estate offers one of the best returns.
Stock, bond, mutual funds, bank deposit or bank investment products, commodities and real estate are among the most popular investment options. Investment in stocks comes with risk. Although bonds and mutual funds are safe, they offer lower returns. Gold and commodities are good investment, but again comes with risk.
Savings and investment products offered by commercial banks do not fetch much returns, although there are high-risk high-gain products, where investors could lose or gain money depending on where the bank invests the money.
Investment in real estate is asset-based investment where the investor couldn’t go wrong as the assets give fixed rental returns and the value of the property would appreciate. However, in Dubai’s real estate, return comes in higher rate, in addition to the appreciation of the property.
Let’s take the current market scenario and how investment would fetch returns. For an off-plan two-bedroom apartment, let’s say the buyer invests Dh1 million on a 60:40 payment plan with 60 percent payment on handover. So, the buyer is getting the apartment delivered after paying Dh600,000.
Once put in rental market, the property could easily fetch Dh60,000 a year – which means, the real return on the first year is 10 percent, when calculated on the amount invested. If the buyer is smart in negotiating the payment, he might be able to pay the rest Dh400,000 from the rental income in less than 7 years.
Then he can look at earning cash return for the rest of his life. Whenever he wants to sell the property, he could secure a 20-50 percent premium depending on the market situation at that point of time.
So, investment in Dubai’s real estate is the safest and best bet, from a return-on-investment perspective.
What is the advice to the younger generation to step into the housing ladder?
Do your homework before putting your money in. Due diligence is critical. Even in Dubai’s real estate market, your investment could be stuck for years – if the developer of the project lacks credibility. There are many developers, who could not deliver homes even after collecting installments regularly – creating more legal cases.
Developer’s credibility is crucial. One has to see the developer’s track record in delivering homes at the right time. This is crucial.