Another of Dubai’s 2005 legacy projects is being given new life.
The ‘Dubai Lifestyle City’, originally launched by ETA, recently saw 68 plots sell for Dh175.6 million. The location in Dubailand has seen significant infrastructure and development activity in recent years, making it easier for the new Lifestyle City buyer to move forward with any project.
Surprisingly, there was only one bidder on the project. Lifestyle City had been listed twice before but received no bids. (When the project was announced in the mid-2000s, it was envisioned as an upscale residential community, one of the first of its kind by a private developer. Until then, Emaar and Nakheel dominated the freehold sub-market, while private developers focused on tower projects.
Falcon City sales
Lifestyle City’s auction marks the second such sale of a project during that period. Previously, 794 plots in the Falcon City development were purchased for Dh1.3 billion, down from an initial listing price of Dh2.5 billion. This, too, is in Dubai Land.
In the current Dubai real estate boom, investors and developers see enormous opportunities to revisit and revitalize previous projects. Of course, extensive redesigns and repurposing will be required, but the new buyers will find the effort worthwhile. Given that some of these are distressed projects being sold at auction, the seller can pay off some of their outstanding debts. Overall, a win-win scenario.
“Legacy projects are being revived through the auction process – investors would be well-advised to use this route to get large land banks that are clear of liabilities,” said Fadi Massouh, CEO of Ai Real Estate, an advisory firm.
This is the third project sold through an auction between 2005 and 2008, the other being the luxury ‘Pentominium’ skyscraper site in Dubai Marina. That was purchased for $100 million and is now being developed as a Six Senses-branded property by Select Group.
The land gets pricey – and scarce
For some time now, private developers and investors have been talking about not finding new land to launch projects. Whatever is available already has buyers, or will soon do so. “New land releases from master-developers are highly anticipated, but not enough land supply is available in established freehold zones,” said an investor. “This is why turning to auctions and checking out availability makes sense.” (To offset the issue of land availability, developers are even pooling resources to launch projects, with someone bringing land into the project while the other does the build-up.)
Also, land prices have risen significantly in the last two years, a trend that is spreading even to emerging areas. “Depending on the location, it would be no surprise that land values have doubled in the recent past,” said Vijay Doshi, Managing Director of the developer Vincitore, in an interview.
