In addition to Topaz Residence 2, the GGICO project includes the Topaz Residence 1 tower, which was completed recently, and the Topaz Residence 3 tower, which is 75% complete and is expected to be delivered in Q3 2018.
GGICO holds 34% of the total residential projects in DSO, with its portfolio including Axis Residences and Platinum Residences, in addition to the ongoing Topaz Residences scheme. The developer is currently building its projects in some of Dubai’s newer and more affordable communities, including Dubai Sports City, and its focus remains end-users in the mid-market segment.
Dubai’s current market conditions are testing for developers, particularly in light of reports of oversupply and low liquidity, which are likely to cause concern within the UAE’s investment community. According to Osman, GGICO is up to the challenge, however.
“On any construction site, you will face challenges. This may even start with initiating enough cash flow to run the project, which ultimately depends on sales,” he says. “DSO’s zoning authority has also set some very strict rules about development, which have to be taken into consideration during construction.”
Growing competition in the property development sector is driving an increase in supply, even as demand remains unchanged. This trend, combined with rising pressure from larger companies entering the market, is compelling some developers to cut prices, according to Osman.
“I believe that the property market is oversupplied for now, and this must be controlled. However, I don’t believe it is declining – what we are seeing is more of a correction. As we get closer to Expo 2020 Dubai, conditions will become more stable,” he says.
According to JLL’s Q3 2017 Dubai Real Estate Market Overview, the majority of completions during the third quarter of last year were apartments. The data also suggests that up to 80,000 units could be delivered before the end of 2019 as construction activity intensifies in the lead up to Expo 2020 Dubai, although actual deliveries are likely to be below this level.
Further to this, Osman says he has observed that sales prices for both villas and apartments in the emirate have remained largely stable during the last quarter, adding that he has noted an increase in the number of vacant apartments in locations such as Downtown Dubai and Dubai Marina.
Osman says he expects these conditions to continue throughout 2018. He states: “We will face similar challenges [this year], including oversupply, but I am also expecting increased regulation within the market.
“I expect to see more investors entering the market in the next couple of years, especially from 2018 onwards, as more people start buying properties to sell in 2020.”