Dubai: Developers in Dubai are once again extending their payment plans and waiving off in full/partial the property registration and other fees to ensure the offplan momentum is sustained. Some of the incentives are rated as among the “most generous” on offer in the last two years, including raising the payment period from three- to five years to five- to ten years.
There are other reasons for the developers wanting to push incentives along with their properties. The dollar has been gaining in strength and particularly so since the start of the Russia-Ukraine conflict on February 24. “That immediately means buyers from India or Pakistan will have to pay for the dollar’s strength over and above the property price,” said Sameer Lakhani, Managing Director at Global Capital Partners. “This is why developers who had been trimming their incentives in the last year are suddenly bringing them back, particularly by luxury developers.”
Developers are thinking ‘flexible’ on what the payment plans should be. If the buyer wants to extend his payments to four, five or six years, it’s all fine. Also, one of the biggest developers in Dubai is offering an 8 per cent guaranteed return for five years at its recently completed project. More developers will likely go the ‘guaranteed’ route to keep their sales pipeline churning.
- The dollar's recent strength could impact buyer interest from markets such as India, Pakistan and Russia/East Europe. This is why developers here are doubling down on the offers and incentives to make the cost of buying property in Dubai as smooth as possible.
- The Russian rouble remains under duress, while the Indian rupee slipped to a new low against the dollar.
- This week's interest rate hike in the US could further bulk up the dollar.
After Eid, developers are expected to make another heavy push with offplan launches in Dubai. Many of them are closely following the situation in Ukraine and what this could mean for European buyer interest in the local property market. Some of them could even bring forward their launch plans to capture any increased buying interest from abroad.
Some of that interest is already on display. “We are seeing a genuine increase in buyers from East Europe, and particularly Russia,” said Mark Castley, COO of LuxuryProperty.com. “At present, we are in the process of finalizing three separate deals on Palm Jumeirah with buyers from Europe.
“What we are noticing right now is that many European investors are liquidating their other assets and looking to pour funds into Dubai real estate as it is a safe bet under current market conditions. Dubai is all about providing security and a safe haven, which is why many of them are opting to purchase here to the extent that they can.”
Market sources say the next three months will be crucial as European buyers scout for possibilities. Anything that is skewed towards luxury and backed by incentives should be doing well.
Ready demand is steady
"We have seen a surge in enquiries from European investors and HNWIs - this demand is primarily for ready luxury units and we anticipate prices for these will go up further this year by at least 10-15 per cent," said Alina Adamco, Secondary Market Sales and Leasing Director for Metropolitan Premium Properties. Families are relocating to Dubai and prepared to pay the price for the best option as the city offers them an unparalleled lifestyle and a high level of security.
"The uncertainty in today's geopolitical climate is driving investment from European countries especially HNWIs who are looking to relocate to a safe location with world-class infrastructure. Also, price per square foot are lower than at other international cities and investors can also achieve, on average, between 5-10 per cent higher rental yields than other more established markets.
Dollar’s strength as an advantage
Developers in Dubai can afford to be generous on incentives. The dollar’s steady gains means the cost of imported building materials from Asia or even Europe will be costing less. So, any gains they make on their project costs can be passed on to buyers as well, or so goes the thinking. This is what is showing up in the payment plans.
“This year, developers’ focus is to do everything within their power to keep the buyers interested,” said the CEO at a leading developer. “We have to prove that 2021 – with its Dh14 billion worth of real estate deals – can happen again and again.”