The boss of Falconcity of Wonders, a huge mixed use project out in the Dubai desert, has hit out at developers selling new units at knock-down prices.
The emirate’s largest real estate firm Emaar on Saturday launched sales at Mira, a new townhouse development next to Arabian Ranches, with prices for a three-bedroom villa starting at less than AED1m ($270,000), or AED450-AED500 per sqft.
The launch saw chaotic scenes as investors jostled to snap up properties, with police being called in at one point. Hours later, the same townhouses were being listed on third-party websites for sale at a up to a 30 percent mark-up.
Salem Al Moosa, chairman of Falconcity, said developers are not following “the ethics of a community” by pricing their properties so low.
“Everyone has a right to do whatever they want to do, but if you are in a community, you should at least have the ethics of a community,” he said. “Why am I selling at AED1,000 [per sqft] average, when people are selling at AED400? How in the hell can they do that?”
Al Moosa suggested that if he were to price villas at his own development, located off Sheikh Mohammed Road on the outskirts of Dubai, he would lose money. “If I put tomorrow [a price of] AED450, [buyers would] queue up here, but I’d be losing,” he claimed.
Falconcity was launched in 2005 and when complete in seven to ten years’ time the 41m sqft development will include life-size replicas of the Taj Mahal, Eiffel Tower and Great Pyramids.
The project has suffered significant delays and has so far only seen 300 or so villas completed out of the more than 1,000 that are planned. Al Moosa blamed the delays on time-consuming infrastructure works as a result of Falconcity’s isolated location, which cost the company AED600m. “Nobody is doing the infrastructure for me. I’m a poor man doing my own infrastructure,” he said.
Property prices in Dubai crashed by up to 65 percent after the emirate’s housing bubble burst in 2008, but have rebounded in recent months. According to real estate services firm Jones Lang LaSalle (JLL), property values increased by 18 percent in the first quarter of this year, compared to the year ago period.
Values, however, continue to lag behind their peak five years ago, with average villa prices 8 percent below Q3 2008 and apartments 22 percent behind.
Around 40,000 new units are scheduled to enter the market over the next two years, said JLL.