Nakheel to cater to less well-heeled on Dubai's Palm

Nakheel is to build 192 studio apartments on the Palm Jumeirah, catering for younger generation of customers and making the Palm more affordable to live on.

Nakheel is set to build 192 studio apartments on the Palm, catering to a younger and slightly less well-heeled generation. Jeff Topping / The National
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Once an address reserved for top footballers and the ultra-wealthy, The Palm Jumeirah is targeting homeowners in a somewhat different league.

Nakheel is set to build 192 studio apartments on the Palm, catering to a younger and slightly less well-heeled generation.

"We identified a segment where we think there's going to be a demand," said Ali Rashid Lootah, the chairman of the Dubai developer. "Young people want to live on the Palm and at the moment a lot of them are sharing. It's not a question of affordability but dealing with all segments of different people."

Nakheel expects to hand over the apartments in the first quarter of 2014. They are located on the marina area of the Palm, overlooking Jumeirah Beach Residence. Called Palm Views East and West, the studios will be pied-à-terre style studios priced at Dh1million (US$272,242).

Nakheel hopes investors will buy the studio properties and rent them to young people but the rates are likely to be quite high if investors are to see a return on their investment.

Renters in Dubai currently have a huge amount of choice, with many prices 25 per cent below the peak of 2008, according to Jones Lang LaSalle (JLL), a property specialist.

Prices vary wildly depending on the development in Dubai but four-bedroom villas are available to rent in some areas for less than Dh100,000 a year, while two-bedroom apartments can be found in Dubai Marina, close to the Palm, for a similar price.

"This is something normal in big cities in Europe. To make studios available for business managers, regular visitors, young people, who want their own space," said Mr Lootah.

On the ground floor, there will be a selection of retail and food outlets. Mr Lootah said financing had already been put in place for the project, but would not disclose the cost.

Nakheel is offering a payment plan of a 20 per cent deposit, a further 20 per cent on handover and remaining 10 per cent each quarter thereafter for 18 months.

When first conceived, the Palm was expected to offer luxury high-end properties for the super-wealthy but the development mix has been reworked since the onset of the financial crisis.

Craig Plumb, the head of research at JLL, said buyers in the market were generally looking for developments that were already finished and that they were unlikely to buy off-plan.

"The market at the moment is determined by people who want something finished," he said. "I think the idea is to bring in some different products to the Palm. Previously, it was not necessarily high end, but larger units."

Nakheel last month announced a profit of Dh1.3 billion for last year, up 33 per cent on the year before, after the property market in the emirate slowly began to recover from its 2008 lows.

Mr Lootah said the company would report a increase in sales in the first quarter on the same period last year. "It's much better than the year before," he said.

Nakheel has embarked on a major expansion plan this year, particularly in retail, following the completion of its debt restructuring in August. It is now owned by the Dubai Financial Support Fund, which was set up to distribute $20bn of investment from Abu Dhabi and the Central Bank.

The developer is set to build a number of retail developments on the Palm.

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