Such initiatives have been extended to apply to ready homes as well
Developers in Dubai are pulling out all the stops to win over buyers for newly launched and existing projects. While post-handover payment plans for off-plan properties were common place in 2017 and 2018, these incentives are now available for ready homes as well. These plans run from three years to anything up to 15 to 20 years.
Recently, developers have been playing the role of banks to stimulate demand for both off-plan and ready properties with ingenious payment plans. This is because under the current loan-to-value requirements in the UAE, the majority of buyers find it difficult to raise bank finance, and establish a foot on the ladder, due to hefty deposits and fees required.
The latest incentive deployed by Azizi Developments for a newly launched scheme in Al Furjan is to partner with one bank for down payment loans while another financial institution will service the remaining portion of the mortgage.
This has been conceptualised to bring in people who cannot afford the initial down payment. The bank in question is also offering a six-month interest free facility to customers.
- For a project in Al Furjan, Azizi Developments has roped in two banks: one to finance the initial deposit and the other to fund the mortgage for the remaining price, a first for the market
- Extended post-handover payment plans, rent-to-own schemes and guaranteed rental returns are now the industry norm
- Developers get creative to compete with other popular investment markets
Most popular incentives
“Developers have become quite creative over the last few years to sell their properties, both under construction and ready stock. The most popular have been the post-handover payment plans, rent-to-own and new schemes such as the one offered by Emaar and DMCC. Developers are very aware that they need to be creative with new offerings to attract more foreign direct investment and be competitive with other popular investment markets,” said Lynnette Abad, Director of Research and Data, Property Finder.
While government-affiliated developers are the ones offering flexible payment plans and rent-to-own schemes for ready homes, private players are jumping on to the bandwagon as well.
For instance, at the Al Furjan villas and townhouses, Nakheel is offering a payment plan where you can move in now and pay across seven years. Customers only need to put down a 5% deposit. Other perks include no Dubai Land Department fees, two years free service charges and two years free club membership.
The average price per sq ft for ready homes in Al Furjan is AED820 per sq ft, according to data from the Dubai Land Department over the past three months.
Developers are very aware that they need to be creative with new offerings to attract more foreign direct investment and be competitive with other popular investment marketsLynnette Abad, Director of Research and Data, Property Finder
Rent-to-own schemes could see a good take-up since tenants only need to produce a small down payment unlike the 25% sought by banks for mortgages.
Even industry giant Emaar Properties is offering back-loaded payment plans for a slew of its off-plan projects across Dubai. The developer offered post-handover payments for buyers of ready villas in Arabian Ranches 2, where the average price is AED1,160 per sq ft.
Emaar is also providing a scheme at a Dubai Hills Estate project where buyers of an apartment get a three-year renewable business licence, three-year renewable family residence visa and 100% business ownership in DMCC.
Similarly, Sobha Realty is offering a discount on school fees for those buying an apartment in its project, Hartland Greens, where the average price for off-plan projects is AED1,870 per sq ft, according to DLD data. “Dubai’s ability to innovate and implement new strategies and regulations in a quick manner has and should continue to support the real estate sector,” added Abad.
In a bid to offload unsold stock from their inventory, developers are also offering a guaranteed rental return for several years on their serviced apartments to bring in investors. Damac Properties in particular has been piloting such schemes.
However, longer payment plans can also result in higher property prices for buyers. Such properties are always traded at a significant premium to the general market price.
But faced with potential upcoming supply of over 50,000 homes in Dubai this year, developers are going the extra mile to dispose of unsold stock.
Even in the rental market, big developers like Dubai Properties are offering up to 12 cheques and adding in sweeteners like a month’s free of rent to fill up unoccupied units in communities like Remraam and Ghoroob Mirdif.
Emerging communities such as Dubai Silicon Oasis, Sports City, Jumeirah Village Circle and Jumeirah Village Triangle are also seeing a proliferation of such sweeteners on rental agreements to fill vacant units.