Dubai's Palma picks luxury homes over hotels in island project

Palma Development, a privately owned developer, plans to build a seafront residential community on Dubai's Palm Jumeirah man-made island, according to its chief executive.

The 1.5 billion dirham project will include 250 apartments in three buildings that utilise just 25 per cent of the land located between two luxury hotels at the tip of the Palm.

The 227,000-square-foot plot came with a hotel licence that the developer decided not to use.

"The conventional approach is to build hotels and residences, but we threw away our hotel licence, which is worth a lot of money," said Kareem Derbas, chief executive and co-founder of Palma.

"We wanted to make this project 100 per cent exclusive."

Serenia, as the development will be known, is the latest in a string of projects being started even as Dubai's residential market slows. Home prices and transactions declined as buyers from Russia and western Europe are put off by currency declines that make the United Arab Emirates' dollar-pegged economy expensive.

"The market is slow but the demand for beachfront properties is unlimited and ever-growing," Derbas said.

"You always have a clientele for a beachfront property." Three "presidential penthouses" will be priced at 36 million dirhams, he said.

The rest of the apartments, ranging from one to four bedrooms, will be sold for two million dirhams to 15 million dirhams.

Construction has started at the site and the project is set for completion by December 2017.

The development will be funded by equity and pre-sales and the company will resort to loans only if needed, Derbas said.