The Pointe is latest rebuild in Dubai’s property upswing

Reuters

• Nakheel to repurpose 130,000sq m Palm Jumeirah F&B destination
• Other projects include Merex’s J1 Beach, GJ Properties’ Dubai tower
• Residential tops real estate market growth, with prices at 2014 peak

The Pointe is the latest in a string of retail and leisure destinations in Dubai that are being repurposed as landowners seek to capitalise on the emirate’s growing property market.

State-owned Nakheel Properties confirmed this week that it plans to shut down and redevelop its 130,000 square metre The Pointe on Palm Jumeirah from next year.

The project opened in 2018 and features more than 70 food and beverage outlets, a 1.5km promenade, shops, salons, a beach, children’s play area and other entertainment.

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AGBI understands that a waterfront residential scheme including luxury villas is one option being explored.

Meanwhile, asset manager Merex Investment Group is redeveloping La Mer South, part of a beachfront tourist attraction that opened in 2018 with 130-plus restaurants, cafes and shops, a cinema and waterpark. 

The new project, known as J1 Beach, will feature three beach clubs and 10 restaurants and is due to open by the end of this year. The restaurants will debut in the UAE and be fully licensed for day-to-night trade.

Dubai’s real estate market is burgeoning, driven by high oil prices, post-pandemic economic resurgence, and perceptions that the Gulf is an investment hotspot given the recession fears plaguing other global markets. 

Anthony Spary, head of office investor leasing and retail at property consultancy CBRE Middle East, told AGBI developers have been forced to consider how relevant their portfolios are, “especially given the amount of excess supply that was prominent prior to Covid”. 

Dubai’s strong recovery over the past two years has given developers the confidence to “play on the strengths of the market” and consider a change of use or strategy. 

He added: “The majority of this repositioning has stemmed from seasonal or outdoor schemes that have struggled since delivery.

“La Mer is a great example of a scheme that was underperforming as a result of being over-exposed due to the quantum of space delivered, especially in F&B, and had struggled over the summer months in particular.”

Merex chief executive Shahram Shamsaee told AGBI last month: “We felt like we needed to do a major redevelopment of that site. You don’t go looking [to put] additional capital into developments when you’ve already invested heavily in it, but sometimes it’s the bravest decision.”

Residential growth

Other developers have sought to kickstart developments in the high-performing residential sector.

House prices in Dubai increased by 5.6 percent quarter on quarter in the first three months of this year. This was the ninth consecutive quarter of growth, according to a report by consultancy Knight Frank published this week. 

Villas showed the strongest performance in terms of prices, up 5.1 percent to AED1,450 per square foot, equal to the last market peak of 2014. Apartment values rose 5.7 percent to reach AED1,230/sq ft.

Ajman-based GJ Properties is redeveloping a vacant 40-storey block built 12 years ago in Al Sufouh into an upscale residential and retail destination. The project features 480 apartments, retail outlets and amenities including an Olympic-sized swimming pool, gym and health club, and gardens.

Sean McCauley, chief executive of Dubai-based Devmark Group, a development consultancy, said property owners and developers are seizing the opportunity to refresh and repurpose developments, driven by rising demand and attractive returns. 

“By transforming properties into luxury villas and high-end residences, they align with evolving market demands, ensuring a competitive edge and enhanced profitability.” 

Villas on the upmarket Palm Jumeirah saw the highest price increases over the 12 months to end of March, up 53 percent, according to Knight Frank. Dubai’s prime residential in general is projected to see further growth of 13.5 percent in 2023, helped by a shortage of prime land and a strong economy.  

“We actually have a shortage of ready-to-activate waterfront residential,” said Faisal Durrani, Knight Frank’s partner and head of Middle East research.

“Any redevelopment opportunity that allows for waterfront sites to be capitalised to meet demand both from domestic buyers and international ultra-high net worth individuals is likely to see renewed interest from developers.” 

Nakheel declined to comment on whether or not villas feature in The Pointe redevelopment plans.

As part of the plans, Nakheel closed The Fountain at The Pointe this week. The 14,000sq m venue holds the Guinness World Record for the world’s largest fountain, having taken the accolade from Dubai Fountain after it opened in 2020.

Meanwhile, several high-profile developments in Dubai from as far back as 2008 – which were never completed – are being redesigned and relaunched for sale while the market remains buoyant. These include Nakheel’s man-made Palm Jebel Ali island, and the Dubai Pearl.