Aquarius Gate on Nakheel Waterfront is the First Development in Compliance With Dubai’s New Escrow Law

The Nakheel Waterfront development in Dubai is, among other things, a key part of the United Arab Emirates’ plan to become one of the leading tourist destinations in the world. The idea for the development, billed as the biggest waterfront development in the world, grew out of Dubai’s desire to increase the amount of its waterfront property, which is in high demand.

The project proposes to convert 1.5 billion square feet of desert into a community with 1.5 million residents. The Master Plan for the “Waterfront City”, the centerpiece of the Waterfront, was revealed in March. Waterfront City is comprised of a central island surrounded by four neighboring districts, and aspires to be a center of commerce, retail, and culture and the workplace for 310,000 people.

Waterfront City, in parts, will have a density similar to Manhattan and it is clear that the project seeks to create a Twenty-First Century urban center with the amenities and attractions one finds in New York, Hong Kong or Singapore, while still remaining true to Dubai’s roots as an Arab and Islamic state. Trumpeting a theme that seems to be recurrent in Dubai, the recent news reports repeatedly point out that this new development will be twice the size of Hong Kong Island.

Aquarius Gate-Waterfront’s first mixed-use development

A couple of weeks ago Cirrus Developments LLC launched, at an “invitation only” event, a new Dhs3bn mixed-use development: Aquarius Gate. This project is the first development at Waterfront to have commercial and residential units, and to gain full technical approval from Nakheel. Aquarius Gate is the developer’s second major excursion into the Dubai real estate market, the first being the Celestial Heights development in downtown Jebel Ali (PDF).

The Aquarius Gate project will consist of a 29 story Commercial Tower which boasts a panoramic view of the Gulf. The 19 story Residential Tower will offer everything from one-bedroom apartments to luxury penthouses and will be built in an L-shape to maximize the available views. This will be an environmentally sound project, which has undergone Traffic Impact and Environmental Impact studies which are aimed at gaining the project the LEED Gold Certification.

The new project will be adjacent to a metro, restaurants, shops parks and other amenities and will have an art wall, which will depict various Islamic cultures from throughout the world.

Aquarius Gate is one of the first in what will likely be a long series of new developments as Dubai seeks to execute this Waterfront project. Whether investment this kind of project is the equivalent of ‘getting in on the ground floor’ of a Twenty-First Century replication of Manhattan or Hong Kong remains to be seen. However, one can’t help but be impressed by the effort that Dubai is making to create a world-class center of commerce and culture with projects like Aquarius Gate and Dubai World Central. Also impressive is Dubai’s clear commitment to employing state-of-the-art green technology in the execution of new development projects.

The first project in compliance with Dubai’s new Escrow Law

A very interesting point about Aquarius Gate is that it is the first development to have an operational trust account under Dubai’s new Escrow Law, and the approval to sell from the Dubai Land Department before starting off-plan sales.

Dubai’s Escrow Law of 2007 is designed to protect off-plan property investors. Previously, investors had no guarantee that the payment installments they were remitting to the developer were being used to construct the development in which they were investing. There was also no guarantee that a particular stage of construction would be reached before the next payment was due.

Under the provisions of the Escrow Law, payments made on off-plan developments must be paid into a trust account which will be specially managed by a financial or banking institution that has the approval of the Dubai Land Department.

The new law, implemented with the aim to avoid situations like the recent Damac Palm Springs controversy has produced both rejoicing and doom and gloom, with some celebrating it as a needed measure of protection for investors that will make Dubai a more attractive place to invest, while others lamenting the possible chilling effect it may have on the “freewheeling” real estate market in Dubai.

Watch out for more on the Dubai Escrow Law in future posts.
[tags]Dubai property, Dubai real estate, Dubai Escrow Law, Nakheel, real estate, real-estate, off plan property, off plan, property investment, real estate investment, overseas property[/tags]