Dubai-based ETA Star Properties will continue work on its existing projects in the emirate, but will not launch any new ones until the second or third quarter of 2009, when it hopes for an improvement in the realty market.

With Dh13 billion worth of projects already underway across the Middle East and India, the developer, which is part of ETA-Ascon Star Group, was looking to launch a couple of mid-income residential developments but has deferred those plans until the middle of next year.

Speaking to Emirates Business, Abid Junaid, Executive Director of ETA Star said the firm was not particularly affected by the current crisis and would not be revising any of its strategies.

“In our entire 35 years of existence we have grown organically and would like to continue that, which means no acquisitions for us in good or bad times. We believe we will be one of the few developers who will walk out of this crisis relatively unscathed,” said Junaid.

“We have maintained sustained growth in the UAE. If you look at the projects we have handed over, we have not raised maintenance fees in them and continue to charge around Dh10 to Dh12 per square foot.”

Going forward ETA Star will be looking to secure partnerships with mortgage lenders on its forthcoming projects. The developer said even in rough times like this in Dubai realty, there are lenders willing to lend to reputable and sustainable developers. ETA Star is already in talks with a number of banks for securing partnerships in its upcoming projects.

“For us, currently, the ideal partner is a mortgage lender. Our land bank is limited at the moment. Moreover, we are only targeting an end-user market which would depend on the mortgage lender,” said Junaid.

“Even during these tight liquidity conditions in the market we have launched our recent mixed-use project, Liberty House in DIFC with ADCB, as our mortgage lender secured the development. When the project is right and developer is right there will always be offers for lending.”

According to ETA Star, much of their projects launched in 2004 and 2005 with secured mortgage lending in place have been sold out. “These projects are in advanced stages of construction and our customers have already paid us substantial amounts on them. The only payments pending on these projects are those payable during hand-over,” said Junaid. “We are hopeful to come out of the crisis in a relatively unscathed manner,” he said. “The other advantage is that most of our buyers are end-users.”

By end of 2008, ETA Star is due to handover Liberty House on the DIFC main thoroughfare. The 41-storey tower will offer select freehold residential apartments. ETA Star has so far delivered two projects, Belverdere, a seven-storey residential development in Dubai Marina, and Palladium, a 34-storey mixed-use tower in the Jumeirah Lake Towers.

In the year 2008, ETA Star launched two projects, Centre Court a residential development in Jumeirah Village South, and Verde Towers, a mixed-use project to come up in Dubai Maritime City. Centre Court has been sold out, the developer said.

“We need to assess the level of interest and payment that will come in for these developments. However, we don’t foresee anything negative from an interest perspective,” said Junaid. “Having said that, if the lending situation in Dubai realty does not improve until the middle of 2009, we will have to study the impact it will have on the sales of the two launches in 2008,” said Junaid.

Meanwhile, ETA Star said construction on its joint venture development, 23 Marina, was well under-way and that contractors and consultants were on board.

“Construction is perhaps not in the originally envisaged plan. However, the contractors are proceeding with the construction and he will complete it as per their revised programme. There will be a delay in handing over the project. Currently construction has reached the 42nd floor and there are 40 more to go. We are hopeful of completing construction by the middle of 2009. The 23 Marina is a tall tower and with every tall tower comes a set of challenges. These challenges one overcomes in due time,” said Junaid.

Going forward, ETA Star is looking to exercise caution on its future launches and will reassess strategies in terms of what the current market requires. “We will then determine when it will be appropriate to develop. We should be looking to launch new projects only in the second or third quarter of 2009,” Junaid said.

He said Islamic finance was still an untapped segment in the real estate market across the GCC region and had potential to grow in times of an economic crisis, helping to spruce up lending in the region. “Islamic Financing and banks are quite strong and have weathered the storm of financial crises quite well previously, as Islamic funding is asset based and there must an underlying asset while lending. “Conventional banks and products off late, however, have been more aggressive and more accessible than Shariah-compliant funds, but with the merger of Amlak and Tamweel, Shariah-compliant funding could be spruced up as well,” said Junaid.

ETA star would be cautious about launching any real estate fund into the market owing to the tight liquidity situation across the globe. “If there is a liquidity crunch on a global level, the challenges will also be felt in this region,” said Junaid. “When the situation eases world-wide more funds will flow through into the Middle East.”

ETA Star welcomed any new mergers and acquisitions in tight market conditions and said consolidations were always a step in the positive direction.

“Firstly in any partnership there must be a leader who is the captain of the ship. In a joint venture if the partners are successful there can be a successful partnership. If there is a liquidity crunch at the global level then it will also be difficult to bring in funds into the country and mergers at these times can prove beneficial,” said Junaid.

ETA Star expects market stabilisation by the third quarter of 2009. Junaid did not anticipate any foreclosures in Dubai, as there is a continued demand for housing.

Firm rules out lay offs

ETA Star will not be laying off any of its staff, according to its executive director.

“We are sensible developers and have grown sustainably in the realty market in Dubai. Our business model of selling has always been geared towards outsourcing brokers and agents to do our sales. Our direct selling force was kept to a bare minimum and due to this, we have not felt the impact of a sales slow-down the way other developers have. We have tried to derive the maximum out of a compact number.”

ETA Star has staff strength of 200, with 20 members in the developer’s sales team. “Our customer relationship management will continue; our support team will continue,” Junaid added.

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