Damac looks to shake off Trump storm with rental returns incentive
Damac Properties, the developer caught in a storm over its partnership with the controversial US presidential hopeful Donald Trump, is offering lucrative rental returns on some of its properties to lure investors.
Damac, which said it would stick with Trump International despite his anti-Muslim tirade, is providing a 24 per cent rental guarantee on selected units in Dubai, including the Akoya project associated with the billionaire, the developer said in a statement.
Owners of selected properties will be able to secure an eight per cent annual return in the first three years after handover.
The company was offering these returns because it believes the Dubai property market is “set for stable growth in the medium term”, Damac said. “We have seen quite a bit of scaremongering in the market in recent months, which can have a detrimental effect on sentiment in the market,” said Niall McLoughlin, the senior vice president at Damac. “By providing such a high, tax-free offering on our units, we are putting our head above the rest and underwriting any fluctuations that may occur down the line.”
Damac’s shares have taken a beating since Mr Trump said last week he would call for a total ban on all Muslims from entering the United States, weeks after he said he would consider closing down some US mosques in response to the Paris terror attacks.
The developer teamed up with The Trump Organization in May 2013 with a plan to operate a Trump International Golf Course at the heart of the 42 million square foot Akoya by Damac project in Dubailand.
Dubai residential property prices are softening because of excess supply and dwindling demand, brokers have said.
Average house prices in Dubai fell by a further 4 per cent in the final quarter of this year, meaning that apartments were 16 per cent cheaper than a year ago and villa prices were 14 per cent cheaper, according to the broker CBRE.
Nearly a third of all the homes expected to be completed in Dubai this year are sitting empty, CBRE said.
Poor market conditions and construction delays have been blamed for the situation as brokers slashed their estimates for completions.
About 6,000 homes in areas such as Sports City and Dubailand have been largely completed but have not yet been handed over to buyers, according to CBRE.
This year, Ziad El Chaar, Damac’s managing director, accused property brokerages in Dubai of “professional malpractice” by publishing Dubai market reports forecasting excess supply, which “have a detrimental effect on the generally positive sentiment in the market”.
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Published: December 17, 2015 04:00 AM