Construction at Dubai South. Emaar has introduced a monthly payment scheme at its project in Dubai South, at 1.25 per cent of the property value. Image Credit: Ahmed Ramzan/ Gulf News Archives

Dubai: Worried about meeting those down payments and subsequent instalments on the property? If yes, why not opt for more manageable monthly payments of Dh2,000 or Dh3,000?

More developers in Dubai are offering such schemes on off-plan purchases, with the instalments set on terms easy on buyers’ pockets. For instance, someone buying a Dh475,000 studio at MAG City in Meydan needs to put up 10 per cent on booking and then pay off another 40 per cent through instalments set as low as 0.7 per cent of the property value. What this means is that the monthly outgo will be Dh3,000 and then some.

They can continue with this until August 2021, and then the balance 50 per cent should be paid in one go in November of that year, according to a MAG spokesperson.

Another developer, Nshama, has pegged a limited-period offer at Dh3,588 a month for a Dh428,888 apartment in Town Square.

Monthly payments make transactions more affordable for the buyer, without affecting their cash flow.

- Sameer Lakhani, Managing Director at Global Capital Partners

Market sources say there have been recent instances where the developer is not even asking for a down payment, instead signing up the buyer to immediately start the monthly payments.

And it is not just private developers who are going all out with monthly schemes. Emaar introduced one at its project in Dubai South, at 1.25 per cent of the property value.

“We expect such schemes to proliferate to some of their other communities as well,” said Sameer Lakhani, Managing Director at Global Capital Partners. “Monthly payments make transactions more affordable for the buyer, without affecting their cash flow or the need for them to cough up lump sum payments.”

It was Danube Properties that kicked off the monthly payment trend some three years ago, right from the first launch itself. Payments were set at 1 per cent of the value, and something the developer continued in subsequent launches. But it has taken time for other developers to get into the act — a situation they are trying to rectify now.

It may also be that developers realise they need to come up with incentives other than super-stretched post-handover payments. So much so, it seemed every other developer in the last 24 months had some variation or the other of a post-handover plan, with some going all the way up to 10 years and more.

But now, Dubai’s master-developers are reining in post-handover periods to an average of three years. “It’s quite a contrast to what was seen last year,” said Lakhani. “For the most part, these post-handover schemes are not being designed to increase prices. There are a number of “special offers” developers have also resorted to, which include the possibility of price reductions as well as customised payment plans.”

Will private developers in Dubai follow the lead of the big guns and gradually bring down post-handover plans to three to five years? The impression has been building up that anything over and beyond five years was excessive and end up hurting the property market long-term. Clearly, post-handover schemes from developers are losing their flavour of the season status.

Instead, developers are again bringing back banks to offer mortgages on their projects, “in a way that buyers do not have to make lump sum payments,” Lakhani added. “Instead, they can graduate from aligning with the developer to dealing with banks while keeping their monthly instalments virtually unchanged.”

What works in off-plan can work for ready properties too

If something clicks in the off-plan space, chances are that developers will not be waiting too long to see whether it could be made to work in selling ready homes as well. Much the same could happen with the monthly payment offers too.

For now, however, these are being deployed to sell off-plan units, with their handovers scheduled in the next two years or so.

Market sources say with more homes likely to be delivered this year, developers will want to extend their offers to ready units too. “Especially via tie-ups with banks, which is what developers are now moving towards as they curtail extra long post handover payment plans,” said one industry source.