Rakeen is on schedule to complete the first homes on Al Marjan, a 270-hectare, man-made island located west of the city of Ras al Khaimah, in the middle of next year despite turmoil in the property sector. The first homes will be part of the Dh1 billion (US$272 million) Bab Al Bahr development, which consists of six residential buildings, an office and mall tower and a hotel on the reclaimed island resembling a coral atoll.
"We have six identical apartment buildings," said Wahid Attalla, a board member and executive director of Rakeen, the property development arm of the Ras al Khaimah Government. "Three of them will be completed by mid-2010 and the other three six months later. Each phase consists of 410 units." Rakeen has completed piling work for three buildings and started building skeletons. About 5,000 cubic metres of concrete is being poured every week in various sections of the development, the company said. The placement of the structural columns and walls of the basement has almost been completed for the first three buildings.
As confidence in the property market has deteriorated, Rakeen has started to issue monthly status reports including photographs of the development, and invited buyers to visit the site. Rakeen has been hit by the market slowdown and has revised its marketing strategy to sustain cash flow. "It is not a secret that the UAE market has been based to a great extent on speculators," said Mr Attalla. He said Rakeen had adopted a three-step strategy, to consolidate investments, extend payment plans for investors who are performing and, in some cases, cancel sales for those who default.
"If somebody comes and says, 'I have 30 units in Bab Al Bahr and cannot continue', it is to my advantage that he continues with 15 rather than defaulting on the 30," he said, adding that he could also sell the units at a higher price later. The most important issue, he said, was to keep cash flow up throughout the construction phase. "The whole idea is to try to accommodate the client and at the same time, ensuring that there is an incoming cash flow which would also allow us to continue the construction."
The company has cancelled some contracts when no other solution could be found, but Mr Attalla declined to reveal the scale of the defaults. He also said he had been approached by large construction firms willing to finance projects, for instance, under a barter arrangement in return for units. "They would either get units or get paid the higher price, of course, in the end." Prices in Bab Al Bahr, which doubled last year to Dh1,200 per square foot, have dropped back to their original levels, brokers said.
"Everything we have in Bab Al Bahr are all selling without any premium," said Rafayel Papikyan, an agent for Hunt and Harris, the property broker. In Ras al Khaimah, Rakeen acts mainly as a master developer for Rakia, selling land to other developers. Bab Al Bahr is the only project that Rakeen is developing alone in the emirate, although it is involved in several developments abroad. Bab al Bahr is just one project on the island, which is also home to The Pacific by Select Group and Marbella Bay by Manazil. Another project, the Dh2bn La Hoya Bay being developed by Khoie Properties, has ground to a halt because the company went insolvent and is in talks with the Government on how to proceed. @Email:ngillet@thenational.ae
