Properties in Dubai are far more affordable than housing units in Mumbai, says Rizwan Sajan, founder and chairman of Dubai-based Danube Group that has so far built close to 15,000 apartments worth about 12-14 billion dirhams.
Dubai comprises two segments—the expensive, high-end market where villas can put you back by $50 million or $100 million. There’s also the affordable segment where “property is much cheaper than what you can buy in many parts of India. I am from Mumbai and prices here (Dubai) are definitely affordable compared to India,” he told Moneycontrol.
Asked what the minimum investment required to buy a property in Dubai is, he said that a studio apartment can set a buyer back by Rs 1.5 crore to Rs 1.75 crore. A 1 BHK will cost a buyer close to about Rs 3 crore. These are fully furnished properties in prime locations.
There is also the size to take into account. Flats in Mumbai are priced upwards of Rs 50,000 per sq ft while in Dubai this works out to be a little more than Rs 30,000 per sq ft.
Besides, “we offer a 20 percent down-payment plan and the balance 1 percent to be paid per month”, he said.
These projects are located within a radius of 10 km from Dubai downtown and in the suburbs including Dubai Marina. An investor should make sure that all the infrastructure is in place in terms of schools, hospital and road connectivity, he told Moneycontrol.
As for maintenance, it costs almost 15-16 dirhams per sq ft. For a 450-600 sq ft studio apartment, the annual maintenance works out to be about 7,500 dirhams per year, which is close to Rs 1.75 lakh per annum or Rs 15,000 per month, he said.
Maintenance includes facilities such as a nanny on board to take care of your children, a doctor on call, an office secretary to take care of the plug-and-play office within the complex and other amenities.
The 1 percent payment plan
Sajan, often referred to as the ‘1 percent man of Dubai’, said that when he decided to get into the real estate business in 2013, he knew that he had to do something different.
“When we started a building material company, everybody was selling basic building materials. We started selling decorative building material. That worked very well. When we started Danube Properties, part of the Danube Group, we realised that 85 percent of consumers were expats, people who were residing in Dubai but in rented apartments. Most of them were in Dubai for five to 20 years. They wished to own a property but could not because they did not have the money. Therefore, we came up with a payment plan wherein you make a 20 percent down payment and 1 percent per month for the next 80 months. The property is delivered to the buyer in three years. The balance payment is made to the company after the buyer has received possession of the apartment,” he explained. Sajan added that this model could be implemented in India but “strict rules are required.”
Dubai’s RERA
After the real estate market in the emirate went bust in 2007, and as part of a regime change, a real estate regulator was established. “It has proved to be an effective mechanism that protects not only investors' rights but also the rights of the developer. This means that if a developer defaults or he is unable to construct the property which he has promised, the buyer can go to RERA (Real Estate Regulatory Authority) which will ensure that the buyer gets back the money. Similarly, in case the investor does not pay, the developer can also approach RERA and get the unit cancelled, forfeit the amount and sell the unit to another investor. Both the investor and the developer are protected under the regime,” he told Moneycontrol.
Who is investing in Dubai?
The emirate is a magnet for people from all over the world. The investor profile includes people from India, Europe, US, Canada, Pakistan, Afghanistan, China and Russia. Importantly, these are genuine buyers who are investing in Dubai and not ‘flippers’—those who buy today to sell tomorrow for a profit—as was the case in 2006-07.
The majority of people who are investing in Dubai want to make the city their first or even second home. Some decide to buy for investment purpose, he said.
Sajan decided to set up the real estate company around 2013 when the “time was ripe”. “People approached me in 2005 when the real estate market was booming but I was convinced then that the boom was unrealistic,” he recalled. “At that time I desisted from getting into the real estate space and I'm happy for my decision. The market collapsed in 2007 and people lost a lot of money.”
The Indian investor
This class of buyer is primarily from Delhi and Mumbai. “We also have people from cities such as Chandigarh, Surat, Ahmedabad, Kochi and Hyderabad,” Sajan pointed out, adding that these include both businessmen as well as professionals.
Golden visa programme
This is a way to fast-track access to the emirate, and the company has several investors availing of the golden visa programme. To get a golden visa as a real estate buyer, a person needs to invest 2 million dirhams or about Rs 5 crore, depending on the exchange rate. The amount has to be paid upfront. One cannot avail of this scheme under the ‘20 percent down payment 1 percent per month’ scheme.
Future plans
Sajan wants to stay put in the Dubai market for now. “For the next three to five years, I plan to be here… You need to stay where you make your money,” he explained.
The company on August 7 announced that it has launched Elitz 3, a residential project in Dubai at the Jumeirah Village Circle (JVC), with a development value exceeding Rs 1,800 crore. The project will be in the same area as Elitz and Elitz 2 towers, which are currently under construction at JVC, the company said in a statement.
Mumbai’s redevelopment projects
Sajan is of the view that redevelopment is the best thing to have happened to Mumbai. “A builder gets to give a certain portion to the people who are residing in slums and the balance is for himself which he gets to develop and sell in the open market,” he said.
“It is definitely one of the best options available to any developer. But that person should know the game of how to get approvals and get it moving fast. And if he knows the game, I think it's a very, very good business. This will also give the city a new lease of life,” he underlined. “I was born in a slum. So I know how the people in slums live. If they are going to move from the slums and move into apartments, their lifestyle and the whole city will look very different.”
“And that brings a lot of joy to me,” he added. “Unfortunately, I am so tied up over here and I'm not able to move out from here. Otherwise, I would be going and doing something over there.”
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