Dubai: On off-plan property prices in Dubai, expect more of the same in 2020. That is, launch prices remaining stable even as developers continue to pack in more incentives that translate into cost savings for buyers.
Despite the still soft market, developers in Dubai are still not resorting to outright price slashing to rope in buyers, Instead, they are waiving off the 4 per cent registration fees, offer monthly payment schemes, and have post-handover plans anywhere from two-and-a-half or three years all the way to 20. Some had also been offering five-year freeze on service charge costs. (But it remains to be seen whether developers can still promise anything anymore on service charges after Dubai brought in a revised law on freehold properties and their management through owners associations.)
Whatever be the case, there are still sizeable savings for prospective buyers. Just take the case of registration fees — a 4 per cent waiver on a Dh2 million property translates into a Dh80,000 cost saving. “That’s still Dh80,000 less than what a buyer would’ve paid for the same property a year or two ago,” said Firas Al Msaddi, CEO of fam Properties. “Developers have tried their best not to touch the launch price because that would created negative perceptions.”
Secondary is where the pain is
From a developer perspective, much of the price corrections in Dubai continue to take place in the secondary market. And there is no way sellers in the secondary market can compete on the incentives from developers. Waiving off registration fees totalling Dh80,000 or more, for instance, could mean sellers exit a transaction with a big dent in their profit expectations. Or worse … “Secondary market sellers cannot compete with developers unless they really drop their prices,” said Al Msaddi. “But if you take an area like Downtown, there is a massive difference in the price per square foot between the secondary and primary market.
“The average for secondary is probably Dh1,450 a square foot while as per Land Department data, the average for primary is Dh2,000. So, off-plan is a lot more expensive. Today, the secondary market is actually cheaper than off-plan.”
But a potential buyer coming in now will more likely go with the easy instalment plans direct from the developer than opt for a secondary market deal. And if the developer throws in registration and service charge sops. there is no way that offer can be bested by anything in secondary.
So, what should someone holding a property bought anywhere between 2016 or 2018 do? Simple — keep holding on.
“You will basically be competing with the developer and you will never be able to offer the advantages offered by them,“ said Al Msaddi.