Dubai: Developers with new off-plan launches in Dubai are now working on reducing the burden imposed on the buyer by the upfront payments as well as on their mortgage instalments. Going forward, with the market more in need of end-users and investors who think long-term, generous payment schedules will be critical in ensuring success of off-plan launches.
The Danube Group is launching the Glitz — the first residential project at Studio City, a project from Tecom and located near Motor City — with a payment plan that requires up to 75 per cent of the payments to be paid via 1 per cent instalments each month and the lowest in the market. The intention is to make it as accessible as possible for a buyer — preferably an end-user — with a monthly income of Dh20,000 and more.
On making the booking, 10 per cent needs to be paid followed by another 15 per cent 60 days thereafter. According to Central Bank regulations, UAE banks cannot offer more than 50 per cent mortgage support on an off-plan property.
“Transactional levels are slowing down in Dubai, which requires developers to be extra careful with how payment plans are structured,” said Rizwan Sajan, Chairman of Danube. “The best way to do so is to keep the monthly outgo of an investor within certain bounds. Our arrangements with banks ensure that a buyer at Glitz can maintain the 1 per cent monthly instalment — which works to Dh4,750 on a studio and Dh8,000 for a one-bed — over 75 months.
“The target is to ensure the delivery of the project in 13 months flat, which also means that buyers can save on rentals by moving in at the earliest.” (The Glitz project is expected to cost Dh300 million and will create 300 units. Prices have been set at Dh900 a square foot, which compares well with the Dh1,100 at Motor City, according to Sajan.) It does seem that a clear demarcation of buyer activity is building in buyer activity. High-end projects such as the recently launched Anwa high-rise in Maritime City have picked up significant investor support. So have more “affordable” projects in the emerging locations. The slowdown, in contrast, has been apparent in the middle and upper-middle end of the pricing spectrum.
“Another option open to off-plan launches is for the developer to have a smaller upfront payment requirement and then hold off from any further ones until the handover,” said Niraj Masand, Partner at the property services firm Banke M. E. “Just recently, there was a developer with a tower in Business Bay offering a 20:80 payment plan, with 80 per cent paid post the delivery. The developer even tied up with a couple of banks to ensure buyers had access to mortgages.
“This is the way more such transactions are going to be set in the near term — the emphasis is on a stretched payment plan for a win-win between developer and buyer.”