Nakheel launches first project on The Palm Jumeirah in three years

The contrast is stark between Nakheel’s launch of a 1-km-high tower at the Cityscape exhibition three years ago and the unveiling today of a modest development of 102 beachfront town houses on a new promontary at the base of the Palm Jumeirah.

But this is also something of a comeback for Nakheel, the Dubai state-owned developer whose debts brought a $20 billion rescue by Abu Dhabi two years ago. The new Palm Residence is a 102-unit development of smallish town houses, admittedly with great water views and private beaches.

Off-plan sales

This is a gated community of the type first popularized by Emaar with three distinct types of town house on offer. Off-plan sales started today for the units featuring contemporary architecture. We saw no queue.

Nakheel is putting its feet back in the water. It is not alone. Damac is selling units in another sweeping mega-tower now at level four, close to its recently completed Ocean Heights and adjacent to the famous twisting tower now also nearing completion.

There are doubtless plenty of units still available in existing residential properties now finished. For example, Union Properties has half the apartments in its top-quality 270-unit Limestone House in the Dubai International Financial Centre for sale from AED1,500 per square foot and plenty of space still free in the nearby Index skyscraper.

Of course commercial space is a different story. Almost a half of the commercial office space in the city of Dubai is vacant, and there is well over two million more square feet due to hit the market very soon.

Arab Spring

Hotels and retail units are less of a problem. The Arab Spring has brought more tourists to Dubai because the alternatives are unsafe and there are new residents establishing homes in Dubai for the same reason.

Hotel occupancy of 80 per cent in July compared with 60 per cent a year earlier, albeit with room rates down, particularly in the downtown hotels. But it is still impressive that with all the new inventory coming onto the market Dubai hotels are pretty full. The shopping malls are not without vacancies but again the situation is far better than forecast at the beginning of the year.

Is Dubai real estate therefore turning the corner with off-plan sales starting up again from Nakheel? To be fair Damac and Emaar never actually stopped off-plan although things did go very slow for quite a while.

Well, it has to be said Cityscape this year is smaller but livelier and perhaps a more realistic place. Rents and asking prices have stabilized this year, and are rising in a few areas. Three years after the crash that is what you might expect. But the financial crisis brewing in the eurozone is like a thundercloud overhead that threatens another downpour and how far it will impact on Dubai real estate is very hard to judge.