Monday, December 17, 2018 4:26 AM

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Making homes more affordable


Atif Rahman, Director and Partner of Danube Properties was suitably chosen by Founder and Chairman of Danube Group Rizwan Sajan to spearhead and start the property development business of the multi-billion Dirham Danube Group.

With his vast experience in construction and a view different from the regular, Atif Rahman has proven that he has all the elements that are required for establishing a brand and transforming it into a popularly successful venture.

Danube Properties, which started operations in 2014, has launched and sold out 11 mega projects involving 4,744 apartments and townhouses, worth Dh3.70 billion in just four years – or 1,460 days.

This means, the popular developer has sold 3.25 homes per day. And if we exclude the weekends, this translates to selling more than 4.5 units per day over a period of four years! This is no mean achievement and demonstrates the consistency in the developer’s strategy.

This has been the result of a brilliant team work headed by a passionate and hardworking Atif Rahman. He believes that he has the best set of people working with him and has the highest regards for the consistent effort they have put in building one of the strongest property development firms in Dubai.

The developer has delivered 831 residential units across four of the 11 projects launched so far, worth Dh1.12 billion maintaining one of the fastest launch to delivery record.

In June-July, he launched Lawnz – Danube’s first gated community comprising of 1,064 units at International City, right after the month of Ramadan and Eid and at the beginning of the summer holidays.

It was a gamble, not many developers would have dared to take. However, Atif Rahman had immense confidence in the product and the reputation of Danube. The result, the project was sold out in just a few weeks!

He has developed a corporate culture at Danube Properties with a recipe of success built in. One can’t go wrong with that system and processes – it’s that air-tight. The focus as Atif says is never on the result but on the process which he ensures in every aspect of the business.

For Atif Rahman, marketing and sales are both arts and science. “People spend their life-long savings into buying a home and a developer has to keep that in mind while designing, pricing, selling and developing what people will call their home,” Atif Rahman says.

“It is a very serious business that deals with a family’s dreams, emotions, aspiration and happiness. As the saying goes, home is where happiness is.

“So, property development requires meticulous planning, strict discipline and ruthless execution where one doesn’t have much room for error or leniency. From day one of our journey, we were very mindful of our duties and obligations to our customers.

“While we want our customers to pay on time for the project to be completed, we are obliged morally and ethically to deliver their home on time, on budget and with the promised quality and finishing. In fact, in all our projects we have been able to deliver several upgrades which we did not promise to our customers.”

For customers in an industry that is more known for delays in delivery of property, this is music to their ears. But how does one ensure that?

“It starts from the procurement of the land itself. I first look at the location and the surrounding neighbourhood or community,” Atif Rahman explains. “I personally do a thorough survey of the land and while doing so I create an image of how I want the project to look like – on the overall supply and demand in that particular neighbourhood and create my technical, commercial and financial feasibility on the project – if all the boxes are ticked and shows positive indicators for the property then I have final discussion with Chairman and we decide to go ahead with it.

“Then comes the design and concept of the property, followed by pricing and payment plan. The design and concept of the project is I believe where the story is created. I personally sit down with the architects and my design department to ensure we have left no stone unturned to deliver the best possible option on the piece of land. I remember on few occasions we have had lock-down design session of uninterrupted 35-40 hours with no breaks and sleep. The idea is to experience and visualise the property while on the drawing board. Once I am happy with all the aspects including common areas and amenities, we then proceed to get the necessary approvals and registration done before we plan the marketing and sales.

“Marketing and sales is again a very crucial part. I believe, if the location, price and payment plan are right, then it becomes easy to sell. However, the key is to get the message out to the customers and keep them in the loop.

“When we launched Lawnz right after Ramadan and Eid Al Fitr – as long hot summer season sets in – many people were not sure about the success of the 1,064-apartment project if sales campaign will bear the intended fruit.

“But to everyone’s surprise, it was sold in a few weeks. In fact, the first half of the project was sold in three days! Then I decided to halt the sales to clean up and complete the documentation before we continued selling more. And the phase 2 was sold out in just two days. So, we have a very fool-proof system in place that ensures that the property is aligned with the demand in the market and it will be sold out. That’s what happened to all the projects that we have launched so far. Its also important to be ready with your plan B just in case some market dynamics has impact on the project sales”

What about the construction, quality control and the delivery of the projects? How does the company ensure that these are also taken care of?

“In any business, success comes from planning, systems, process and people. Unless you have all these in place, nothing works. Something or the other will go wrong. Because we first perfected the systems, processes, planning and putting the right people at the right position with adequate responsibility, all these collectively ensured that we remain on track on the project planning, sale, execution and delivery phases,” he says.

“In construction process, we apply a strict guiding principle while selecting contractors. I have my own engineering department sub-divided into many departments comprising of extremely qualified and experienced professionals who take full control of the construction process. In order to ensure we control the selection of material we retain large volume of final fixtures under what is known in the industry as Prime Cost and Provisional Sum (PC & PS) that allows us to procure building materials and finishing directly from the factory for our projects. This helps us to control quality of the building, finishing, amenities and fittings – some of the most important aspects of a building and home that touches lives every day.

“This also helps us to control costs and help pass it on to the property buyers.

“On top of these, transparency and accountability play a very important role in the overall game plan. Each and every person is adequately empowered with delegated responsibility and they have to deliver their bit. Transparency ensures accountability and together they ensure clarity of work all the way – till the handover of the key and maintenance for the first year.

“But the main reason for our success and why property buyers snap up the properties is due to our credibility as a developer, our ability to uniquely design property, in convenient locations and offer them at attractive price with the convenient payment plan – some of the key unique selling points of our projects.”

In an exclusive interview with the Gulf Property, Atif Rahman, Director and Partner of Danube Properties, elaborated his thoughts. Excerpts:

Gulf Property: What is your view of the current real estate market in Dubai?

Atif Rahman: The UAE’s real estate market is maturing, while Dubai’s property market has achieved an international and regionally unparalleled degree of maturity.

The property market is currently undergoing a cyclical phase where the prices and rents are more attractively placed. We have already experienced a buying spree from those customers who were priced out during the last 15 years of freehold property development in the UAE and this trend will gain more momentum with several immigration perks announced by the UAE government.

I am extremely confident that once these residency provision announced by the government starts taking effect, more local and international buyers will enter the market with long term plans.

The market situation is marked by a slightly weak demand and oversupply in the luxury property segment, while the market is undersupplied in the affordable categories – where there is a pent-up demand that, if served properly, will trigger massive growth.

In terms of regulations, Dubai real estate market has become the most investor friendly market where interests of all stakeholders, including developers, property brokers and property buyers have been well protected by law.

Besides, the recent tightening of the rules pertaining to banking and financial transactions, the market has now become more transparent where room for error is virtually none. Each real estate transaction is well recorded and accounted for.

The Dubai Government has also continued to spend heavily on infrastructure expansion which is one of the best compared globally, while creating new attractions in the emirate to attract more international attention.

The trade liberalisation will further attract more businesses to call UAE and Dubai their new home leading to spike in population growth.

I strongly believe Dubai is ready to welcome the world to a completely new world of living, driven by happiness.

If other emirates catch up, the UAE’s real estate market will be the best regulated, most sophisticated and most advanced in the world.

 

Looking back at the evolution of the real estate sector, how would you assess development of the real estate sector in the UAE?

It’s superb. It’s phenomenal – in all aspects.

The growth of the UAE’s real estate sector has been phenomenal. What the sector in the UAE achieved in terms of maturity, regulatory reforms in just 15 years, most countries can’t achieve these feats in a hundred years. In most countries you will not find such strong regulations, investor protection through escrow account, off plan and built property survey, off plan sale registration, technical and financial audits all leading to trust and transparency – something that many countries are yet to implement.

While maintaining such control systems, the ease of buying property in Dubai is one of the best if compared internationally. You don’t need any lawyers and you can complete a property purchase in matters of minutes through conveniently located trustee offices.

I am of the view that the Real Estate Regulatory Agency (RERA) and Dubai Land Department have been the most instrumental in how the Dubai real estate market is shaped today, they have reinforced immense confidence in the sector through their proactive governance.

 

Where do you see lacking and opportunities?

The UAE’s property market has matured a lot over the last 15 years. However, it lacks enough affordable homes – a sector that will drive future growth.

We are a dominant player in this sector and our success under challenging environment speaks a lot about where the demand comes from.

Affordable homes – or lack of it – are a problem and this is where the opportunities lie and this is the sector that will trigger future growth.

There is also need for more flexibility in the consumer financing which can further attract a lot of mid-income segment aspirants.

 

When do you think the market return to growth mode?

One segment of the market is growing and that’s the affordable housing. This market will continue to grow as it is still under-supplied.

Besides the government’s new announcements in liberalising the socio-economic policies, such as offering 10-year residence visa to select categories of professionals and businesses, a 100 percent foreign ownership in companies that might eliminate the provision of having a local partner, providing visas to retirees and students will go a long way to encourage expatriate families to buy homes – due to a stronger sense of belonging to the UAE.

For years, expatriate families have shied away from buying homes as there was no real sense of belonging among many foreigners. The new regulations will help them to plan their future stay, retirement life in the UAE and this is going to encourage people to buy homes.

If more and more families start buying affordable homes, the market will start to grow and we could see a potential boom in the coming years. So, it all depends on ‘when’, rather than ‘if’.

What’s the biggest challenge the industry is facing today, and how are you overcoming that challenge?

As a developer one of the biggest challenge one can face is selling homes due to that looming oversupply and cost overrun. Because of these issues, payment problems can creep up putting the planned project in risk.

I am of the view that supply should not be measured by how many projects are being launched but must be based on deliveries. There is no way one can predict a situation of oversupply and that risk remains in any and every market but there can never be oversupply of good property. So if you have bought your property from a good developer at a decent location and at optimum price, you insure yourself against such risks.

However, we have not faced this as we are able to create new demand in the affordable segment by catering to the middle-income families who were priced out earlier due to the development of luxury properties.

Now, with our industry-leading 1 percent monthly payment scheme and affordable price, they are able to purchase property and pay for it without having to borrow money from banks.

 

You have somewhat championed selling affordable homes under challenging times. Why did your company venture into affordable homes?

The affordable home segment caters to the mid-income consumers which forms the largest volume of any economy and I think this is the biggest opportunity.

If you look at any real estate market, there remains a large risk of oversupply in the luxury segment as it caters to a very limited client base while most real estate market globally experience shortage in affordable housing sector. So, which segment do you want to serve? The answer for us, is very simple. We build homes where we see continued demand.

We entered the real estate sector in 2014 at a stage when the market started to show signs of recovery backed by some game changing regulatory reforms and amazing infrastructure development by the government of Dubai. We could see a saturation point in the luxury property segment, while there were inadequate supplies for the middle-income families who were living in leased properties. And they were the largest groups occupying homes in the UAE.

The freehold property market somehow failed to attract the larger pool of customers – the middle-income families. We felt that there was a huge gap in the overall real estate development game and we saw an opportunity in fixing the gap.

If these tenants could be attracted to the freehold home ownership with convenient payment options and a better price point, then this could help the real estate sector to grow faster. This is exactly what we did. It was a business decision and we could foresee the future demand coming from affordable homes segment.

Our phenomenal success is a living testimony of this fact.

 

Could you kindly share the secrets of your success – especially selling properties like hotcakes at a time when others find it difficult?

We do not have a magic wand. It all boils down to proper understanding of the market dynamics, consumer demand and then develop properties as per these parameters and the needs of people.

If one develops the right property with the right price, at the right location and offers them with the right payment plan, one can’t go wrong. The problem lies in identifying all these ‘right’ solutions, such as the right location, right price, right property and the right payment plan.

It can only happen if a company assesses the real needs of the market and plans the properties accordingly. The key to our success has been our ability to map the real estate market properly and offer the right property at the right location, with the right price and the best payment plan.

Like any other industry, if a property developer is able to create a great product and offer it at the right price, failure can be avoided, except for marketing the property successfully. Danube has a proven recipe for marketing our products and we have been able to capture the imagination of our target audience.

Once you have a consumer centric approach built in your strategy then the rest all generally falls in place. It’s also about delivering the commitments and promises which has long term impact on the business.

 

Could you give us a low-down of the projects that you are currently working on?

We have launched 11 projects in just over four years involving 4,744 residential units, worth Dh3.69 billion. We have delivered four projects involving 831 homes, worth Dh1.12 billion, so far while two other projects will be delivered this year.

Of these, 171 are townhouses and the rest are apartments with some shops in each block to serve the residential community.

We stick to our policy of launching one project at a time, sell it, initiate tendering and construction activities of the project and move on to the next project. There is no point biting more than one can chew.

This has helped us concentrate our focus on one project at a time, sell them all in record time and commence construction with one single goal of delivering asset with great value and reasonably on time.

All the other projects are under construction while the latest project, Lawnz, will undergo tendering process later this year. We plan to deliver Starz, Glamz and Resortz in the next two quarters.

 

You sold out Lawn in a few weeks during the summer – a low season. How?

The customer response for the first phase of the project – about half of the total inventories – was amazing and overwhelming.

For me it was very nostalgic and reminded me of the great boom days. While though this was great, the response to the second phase was even better – so much so that we sold 350 units in 4 hours – an industry record in the current time!

One of the key aspects of our sales strategy was to give priority to the end-users and the first-time buyers, for whom owning their home was very unaffordable. However, our sale strategy put them at the forefront of our massive marketing campaign – by bringing down the price barrier below Dh300,000 for the first time in recent history.

As a developer, we work for the satisfaction of the homeowners – our biggest stakeholders – and it is important to make them feel confident with our properties and our approach. It is exactly what we have done with Lawnz sales and I am glad that we now have a large customer pool who earlier could not think of buying a home in Dubai. Now they have bought their dream home – from Danube Properties.