From waiving the 4 per cent of Dubai Land Department (DLD) fee and exempting buyers from service charges for a few years, several property developers in Dubai are taking more proactive measures to reduce the financial burden on homebuyers, particularly those purchasing a house for first time. Many buyers may not even need a mortgage as some developers also offer extended, interest-free payment plans, says Riyaz Merchant, CEO of Realty Force Real Estate Brokers. Typically, a new homebuyer getting a mortgage has to put in approximately 32 per cent of the property value – 25 per cent down payment, 4 per cent DLD fee, 2 per cent agent fee plus other charges. Along with the yearly service charges, the upfront costs have discouraged many residents from purchasing a house.
“If you intend to stay in Dubai for another 5-7 years, it’s recommended to own property rather than rent,” says Merchant.
Several new housing projects are also now priced more competitively, such as Villanova (from Dh1.27 million), Cherrywoods (from Dh1.62 million), The Valley (from Dh1.1 million) and Arabian Ranches 3 (from Dh1.35 million), says Merchant. “In 2014, property prices had boiled due to the announcement of Expo 2020. However, since then prices have been more realistic. Back then you could not buy anything under Dh2.2 million to Dh3 million. Now the starting range is around Dh1.1 million to Dh1.3 million.”
According to Parisa Kabiri, head of sales and leasing at SRG Holding, the property market has transformed from being fast-moving and high-risk, where only those with high liquidity could invest, to a much more sustainable and stable market. “Even today we can still easily achieve returns from 4-6 per cent net every year, which is far greater than other investments,” says Kabiri.
Kabiri encourages buyers to take advantage of more affordable prices. “There is a young, affluent population of expats who, with the help of new and affordable real estate opportunities, can avoid paying rent and instead contribute to their investment,” says Kabiri. “If we can make it easier for first-time buyers, then they will be encouraged to settle down and lay long-term roots.”
Kabiri says incentives such as guaranteed returns are also generating interest. “Our new post-payment plan with the rental guarantee is directed towards what new buyers or first-time investors might be looking for.”
Another innovation is MAG Development’s all-inclusive package that covers all payments and provides exclusive benefits to buyers. The scheme has three flexible plans for the MAG City project in Mohammad Bin Rashid City — District 7. “Customers can own a town house or apartment without registration fees, down payment or final payment on handover,” says Talal Moafaq Al Gaddah, senior executive vice-chairman of MAG Development.
Lynnette Abad, director of research and data at Property Finder, notes that around 40,000 units were completed in 2019, putting pressure on sales and rental prices. She cites Town Square, Dubai Marina, Jumeirah Village Circle and Damac Hills as areas that offer good value for money, partly driven by the supply level.
“Developers have been very creative with payment plans, rent-to-own schemes, waiving fees and service charges, etc. In 2020 we will continue to see this trend, and perhaps more incentives and new schemes will be introduced.”