Dubai: It makes no sense to keep talking about oversupply in Dubai’s property market to the newly created Higher Committee, set up to come up with a plan for the longer term future of the sector.
That’s according to Talal Al Gaddah, CEO of MAG Lifestyle Development. And he’s got plenty of reasons why this is the case. “You have Emaar coming out with off-plan launches and booking sales in the billions of dirhams in what everyone says is a tough market,” said Al Gaddah. “When the Higher Committee looks at the market, are they going to be convinced by Emaar’s numbers or those developers who are not selling? I don’t think that’s a difficult question to answer.
“Halting all new off-plan launches is not the solution to counter a difficult market. Markets cannot operate that way — those developers who find it difficult can always stop selling at their own projects.
“Or they could keep building until the market cycle changes for the better. That’s the strategy we are adopting. We are building for the next upturn.”
It’s been two months since the announcement setting up the Higher Committee was made, featuring government departments such as Dubai Land Department/Rera as well as master-developers such as Nakheel, Meraas, Emaar, etc. Industry sources expect the Committee to give an indication of its thinking and directions by early next year.
This year, off-plan launches were definitely in the minority, with only Emaar and Meraas-Dubai Holding venturing out with new launches. The latest to hit the market is “The Valley”, an Emaar project located on Dubai-Al Ain highway. Town houses are priced from Dh1.16 million, with a 2.5-year post-handover plan.
On MAG’s part, it has focused on getting buyers into recently completed projects, as well as come up with the “Dh120-a-day” payment schemes that can stretch up to 20 years.
Al Gaddah is not too concerned about the extended tenors of these post-handover plans. “I am looking for end users, not any other kind of buyer for these properties,” he added. “In Dubai South, even in this market situation, we recently had Dh85 million of sales from 80 units in 30 days. Those were ready properties backed by 10-year lease-to-own schemes. And these homes had slightly higher prices than the market average.
“My challenge is to deliver something more than what’s been promised. Because all that the buyer gets to see in an off-plan sale is a lovely presentation and brochure, some of the material and finishes. All that from pictures only.
“But at the time of delivery, if buyers are convinced they have gotten more value, those projects will not have difficulty selling. Even if a competing developer were to come in with even more generous incentives.
“Developers have failed not because the market’s turned, but because they failed to match buyer expectations at the time of delivery.”
Apart from Dubai South, MAG has projects at Health care City, Meydan and in JLT. “We have to be realistic about price strategies — for example, the overall Jumeirah Lake Tower cluster is already 99 per cent developed. So, with my off-plan project, I need to price it to ready prices in that area.
“But just a few miles away, at Downtown, there are still variations in prices between what the master-developer charges and what private players have for their off-plan. And just a step or two away, in Business Bay, you come up with even more variations on the pricing.
“But it all goes down to what’s been promised and what will be delivered.”
Payment plans and more
This year saw a sharp drop in the number of new project launches, and 2020 forecasts suggest it may not budge from current levels.
But “Even if project launches reduce in number in coming years to manage the supply issue, the off-plan segment is heading towards ever better times,” said Naval Vohra, CEO at Appello Real Estate. “Highly attractive house prices are forecast to continue for a while and with feasible payment plans — some going well beyond handover — and other great incentives, developers are opening the door for more people to come in.
“The dynamics of the market have shifted. I think three factors — the UAE Central Bank getting rid of the 70-year age limit for the last mortgage repayment in order to ease mortgage loan requirements for customers of banks and finance companies; the lifting of the 20 per cent cap on real estate lending for banks; and the excitement of a finally approaching Expo 2020 Dubai have come together.”