When Cayan began handing over flats in its Silverene project in Dubai Marina late last year, it was a rare success story for the real estate sector.
The construction began in 2009, at the height of Dubai's real estate market turmoil, but now has 425 of 500 keys handed over. At the beginning of 2012, the project is actually seeing rents rising, says Cayan CEO and partner Kareem Derbas.
"We can't believe it, but since it was finished last August rents for the prime units have gone up 35 per cent," said Derbas. "Even our other properties are doing well.
"The Jewels, for example, is fully occupied, rentals are still doing well — one-bedrooms are back to Dh85,000-Dh90,000, where in other places in the Marina you're getting Dh50,000 or Dh45,000."
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Not that the last two years have been easy, explains Derbas. Finishing Silverene has been a challenge at a time where clients — many of whom bought properties at pre-crash prices and struggle now to make payments on post-crash salaries — and contractors are suffering.
"It was still a cash-flow struggle, the whole project. People either got made redundant and left the country or lost money in other investments; so there had to be a lot of empathy with clients on collections," he said.
But while it was possible to get by with Silverene, Cayan's Infinity Tower — the twisting building designed by Burj Khalifa designers Skidmore Owings and Merrill (SOM) — has proved an even bigger challenge. Originally set for completion in December last, Cayan is now eyeing a handover this year — over deadline, but inside a contractual one-year grace period.
"At the beginning of the project there were some delays because of the technical know-how," the CEO said. "If you speak to SOM [Skidmore, Owings and Merril] and Arabtec, they will tell you Infinity is more complex than Burj Khalifa. The dynamics of the structure and the construction and the concrete was definitely a learning curve."
But Derbas conceded that, unlike Silverene, client payments — and lack of — have been critical.
"There have been major delays with customers on their instalments. Some people ask, ‘Why didn't you have the same problem with Silverene?'"
"It was just luck really. It wasn't inferior clients, but those clients were just unfortunate, they had lost money on the Palm or other areas and they struggled to make payments."
As a result, Cayan took the decision to slow down construction to what it could afford.
If clients were making payments of Dh30 million per month, the budget for the contractors was set at Dh30 million.
"I would say the current pace is an OK pace. Could it be faster? Yeah, but this is a comfortable pace. We're hoping we'll have the building 100 per cent wrapped up by the end of February."
Unlike some of its competitors, Cayan expanded slowly in Dubai despite the boom. Derbas pointed out that while come companies went from one project to hundreds at the time of the 2008 crash, Cayan had eight when the market dropped out, two of which were already finished.
"We were a developer and cash was coming in from everywhere, we could have bought hundreds of plots," he said. "I think we were just conservative.
"We were a bit more conscious and we always tried to look at what the real value would be. All our projects are waterfront.
"None of them are second line or third line — it had to be on the water. If we couldn't get it we wouldn't buy it."
Finishing projects, Derbas said, is key for developers at the beginning of 2012, but financing remains a perennial problem. He said that unlike the US or UK, where money has been pumped in to make sure projects don't end up stalled, getting funding in Dubai in 2012 is near on impossible.
"The biggest issue in the market right now is for those who didn't collect enough to ensure that construction could continue. The biggest hurdle is finance from the banks.
"Banks either have been over exposed and are not willing to finance more. You have some prime projects [in Dubai Marina], and it is a shame to see them stopped.
"But if there is no collection, no new sales and no bank finance, how do you move on?" It is no surprise that Cayan isn't eyeing any new projects in Dubai this year, although Derbas is upbeat that the market will level out.
Cayan has recently shifted its attention to Riyadh, where demand is still high in the residential sector, although land prices — which have skyrocketed — remain a challenge.
In the meantime, Cayan has pushed its focus more toward managing its existing projects. "The main reason we manage our buildings is not profit, but about maintaining our reputation," Derbas said. "I don't want people to be driving past Silverene in four or five years and saying what a poorly managed building.
"If you look at the Jewels, it's still in excellent condition, it attracts some of the highest rents in the Marina, and that's because we manage it well.
"In the next boom I want people to come back and say Cayan did this in the recession, they did that, they managed their projects, they finished their projects.
"How long will we have to wait? I don't know, but Dubai still has a lot to offer."