It is astonishing to think that only four years ago the Dubai property market went through one of the worst crashes in the world during the global financial crisis. Today its real estate prices are rising  by the fastest in the world, according to the Knight Frank index, and rental increases are also topping the global league table. Off plan sales are also flying again.
Who are Skai Properties? That has not stopped this unknown, new privately-owned developer from selling 98 per cent of a luxury apartment complex on the Palm Jumeirah that looks a bit like a beached cruise liner (see above), albeit in a business venture that includes the world’s largest contractor, China State Construction Engineering.
Almost sold out
Yesterday Skai reported that it has sold 98 per cent of the 702 units in this project for $654 million. That’s 470 of the 481 hotel rooms and 219 of the 221 hotel residences. Skai CEO Kabir Mulcandani said investors particularly liked the hotel rooms, ‘a unique business model here.’
Piling and foundations work is due to begin this month. Skai has a deal with Indian hotel chain Viceroy to lease back the rooms and apartment to generate returns for investors that it says would be around 12 per cent in current market conditions. This is of course not guaranteed, the investment return could be nothing or even negative as running costs will always continue whatever the market, and room rates can fall as well as rise.
You also have to trust that you are in safe hands. The Dubai Real Estate Regulatory Authority has made it far more difficult for developers to sell off-plan and now has a proper escrow account system in place and supervision of disbursements for construction. Mr. Mulchandani is also not new to Dubai real estate .
As the Arabianbusiness magazine put it: ‘Kabir Mulchandani is the ultimate Dubai comeback kid. Arrested in 2009 on accusations of real estate fraud, he was eventually cleared of all charges by a Dubai court in December 2010 and despite the Dubai property market being on its knees, he set up a new property venture.’
His timing proved to be remarkably good. You get a lot of time to think in prison. The Dubai real estate market has romped back to life in the past two years, accelerating over the past year to become the hottest property market in the world once more. But he is not alone with off-plan sales, although these have been nothing like on the scale of the 2007-8 explosion that ended in disaster for many buyers.
Cautious state developers
Both top state-controlled developers Nakheel and Emaar Properties have launched comparatively small projects thus far, with Emaar’s serviced apartment towers in Downtown Dubai particularly successful. Nakheel is selling in several locations though given its near bankruptcy in 2009-10 buyers have perhaps been more cautious.
Only yesterday Deyaar and Dubai Properties  reported that the first phase of their Central Park residential tower in Dubai International Financial Centre is sold out. Emaar also announced this week it is having four sales launches to sell 178 serviced apartments next to The Dubai Mall with a lottery system to invite those registering online to buy because of previous queues to buy.
So far there is no sign of the off-plan market being flooded with new offerings, a sign the new RERA rules are working. Instead there is pent up demand helping to push prices higher. One GCC investor is advertising in Gulf News to buy 50 of Nakheel’s recently launched off-plan Jumeirah Park Novo villas.