Developers in Dubai are once again finding value in chasing end-user buyers. This is where the 1 per cent payment option comes in. Especially as mortgage rates remain at their peak. Image Credit: Shutterstock

Dubai: It’s 2024 and in Dubai’s property market, the 1 per cent monthly payment plan is starting to show up everywhere.

Possibly for the first time, even some villa projects are featuring the 1 per cent offer, whereby buyers have a chance to stagger their payments on a monthly basis that could be relatively easier on their budget plans compared to the lump-sum 10-20 per cent (of the property value) every 3 months or so.

“This 1 per cent payment plan is one of the best ways to get end-user buyers for offplan,” said a developer who has just launched a new project in Dubai. “2024 could well see the return of end-user buying in a big way, and developers need to be ready with affordable/easier payment plans.”

It is also a reflection that buying dynamics could be changing in the Dubai real estate market. The last 3 years had seen spectacular growth in demand, which has been fueling the offplan boom. But there is a feeling that such growth will start to stabilize – and this is why end-users are vital for the next phase of the Dubai property market.

“Only select master-developers such as Emaar, Nakheel, Meraas and now, of course, Aldar can retain the traditional selling patterns on Dubai offplan launches,” said an estate agent. “Most other developers need to have some zing to their offers – and the 1 per cent monthly right now is the sweet spot.”

Tight mortgage market

For potential buyers, these 1 per cent – there is even a project that’s offering 1.1 per cent – offer a relatively easier entry. It gives them better visibility on what their funding needs will look like as and when they have to take mortgages to meet the rest of their payments.

Also, access to mortgages are getting tighter – and costlier, with home loan rates in the 5 per cent plus range. This is where end-user buying is feeling the biggest squeeze. Plus, they also have to factor the 15-30 per cent value increases Dubai property has had in recent years, irrespective of locations. 

So, what should buyers do?

Already, many developers have started to lower their upfront payment requirements, to even as low as 5 per cent. Buyers should also be checking out what sort of payment periods are being offered.

At Expo City’s latest releases, the payment period can extend to 8 years on apartments that are priced from Dh1.4 million and 3- to 4-bedroom townhouses that start at Dh3.8 million. The units are to be handed over early 2026, a timeline that also fits in neatly when it comes to meeting end-user demand.

“If it’s end-users, handover timelines are now as crucial to the sales process, and developers with timely completion track records are the ones who will benefit in 2024,” said the estate agent. “If one has to standout amidst the flood of offplan launches in the last 2 years, meeting the promise of on-time delivery is a big plus.”

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But in recent weeks, there have been project announcements and sales launches where prices start at eminently accessible Dh850,000 to Dh1.2 million range. And with built up areas that should interest both end-users and property investors who wants to rent out.

Samana has come out with a project in the Al Barari area that mixes both - under Dh1 million starting prices and the 1 per cent payment plan.

Unsold properties will have tax liabilities

There are new factors coming into play for developers and their offplan projects from this year on. Unsold units beyond a certain time period come with corporate tax obligations, and which require careful management on the part of developers. (Standard property transactions involving individual property investors are exempt from any tax. So too is rental income under the new UAE corporate tax rules.)

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Build and sell around the Wynn.
Multiple offplan projects have been launched close to Ras Al Khaimah's landmark and history-making Wynn hotel, which is still under development. "This is going to be the other big trend in UAE real estate in 2024," said an estate agent. "Visibility about the Wynn hotel is already high, and that will help the wider property market in the emirate. We can see some heavy pricing action between now and 2026-27."