Select Group chief Rahail Aslam on why he remains bullish about Dubai’s property market

Rewind to 2009 when Dubai saw an exodus of real estate developers after the market went through a bust. Several private developers were forced to shut shop as property prices fell by up to 60 per cent after years of heady growth. One company which survived the tough period was Select Group.

Its founder and chief executive Rahail Aslam admits the experience was a learning process. But he notes that the property market today is incomparable to 2008.

“There are not many private developers left (now),” he tells Gulf Business in an interview. If you compare it to pre-2008, the volume of developers is very different. To become a developer (now), you have to have delivered.”

He claims his company delivered nearly 2,500 properties to its clients between 2008 and 2012.

Select Group also cashed into the market as property prices staged a rebound in 2013. The following year, which Aslam terms as “exceptional”, the developer launched a number of residential projects after seeing increased investor interest in the local market.

The firm launched three major projects in 2014 including the residential tower No.9, which is currently under construction but fully sold out. It also launched the first and the second phases of Marina Gate – another residential development.

“Cumulatively we did sales of more than Dhs 2bn across all three projects. When I mean sales, I mean transactions where we entered into solid sell and purchase agreements and received first instalments and in many cases the second and third instalments. In terms of sales, it was an exceptional year for us. In terms of execution, most projects are under construction. So that is also a good result for the company.”

Property price growth, however, has dropped considerably in the last year and a half, dragged down by a global economic crisis and tightening liquidity among local investors.

“Our 2015 focus is more to do with the execution and delivery of the projects. Since we launched a number of projects last year we will focus on the deliverability of those projects,” says Aslam.

But he is not averse to considering more phased launches if the market improves. With the possession of key land plots in Dubai Marina, Select Group is ironing out details of the third stage of Marina Gate.

“We are planning to launch this year but we are also dynamic enough to move the launch date depending on the market dynamics. We won’t just launch it without looking at how the market would react to such a project.

“It is a big project and has about 500 units. The intention is to launch it at the end of this year. At the moment we are planning this year but closer to the time we will assess the market and see. We have got several projects in the planning and development stage but they won’t be launched this year.”

With the latest trend being projects targeted at affordability, Select Group too will be looking at a similar project, Aslam notes. The project, set to be launched in 2016, will be situated within an established master development where the infrastructure is completed.

“One of the key components of our sub developments is that we always ensure that there is no infrastructure risk when we are acquiring plots and that the master developer has completed most of the work. Ensuring that limit our risks so that we can be more in control of what we deliver and not depend on master developers,” says Aslam.

In addition to the affordable housing project, Select Group will also launch a waterfront residential development in another master development. The project is still in its early planning stages.

Fighting slowdown worries

Even with a slew of projects set to enter a market that is yet to recover, Aslam is undaunted by the possibility of slowing sales or lack of response to off-plan sales.

“Our planning when we develop is not subject to off-plan sales. We look at the land and the location and then we put in the financial engineering in place to ensure that once we start, we finish that development; it is not dependent on third party sales.

“We are watching the market. When we launch a development we are confident about finishing it because it could be anywhere between three and four years before we can finish a project. The market will fluctuate within that period but we don’t worry because we have robust planning in place for all that,” he says.

Aslam is also confident that the market will have to worry less about speculative buyers, thanks to stringent regulations put in by the authorities.

“Entry level for a developer is a little difficult now so that has got rid of a lot of speculative developers. This is good for investors and (the emirate’s) reputation because it now means that whoever is around now will mostly deliver because now you got to have deep pockets.“

Select Group’s finances are boosted by investments in diversified sectors across several markets, Aslam states. The company has acquired a number of income-producing assets in the United Kingdom, such as a residential property and the 225-key hotel Radisson Blu hotel in Birmingham.

The developer is also largely optimistic about Dubai’s economy although Aslam concedes that its recovery will be linked to the global economy. But worries of a temporary slowdown are not holding it back, asserts Aslam.