Dubai: Not seeing enough of new off-plan launches in Dubai this year?
Absolutely right, as developers and property buyers take some time off from last year’s excesses where just about every launch had small upfront payment requirements and the bulk to be paid post-handover. Initially, these were five years post-handover, which soon turned to offers of seven years and, in some cases, all the way up to 10 years.
This year, thankfully, the market has been seeing less of these “stretched” incentives and fewer off-plan launches. But that’s not the same as saying that off-plan launches are not going to make a comeback any time soon. It’s just that developers are tweaking their strategies to accommodate the new realities of selling property in Dubai.
Video: Clint Egbert/Gulf News
“What is likely is that they (post-handover plans) have maxed out and therefore unlikely to provide a further impetus in demand over and above what they achieved last year,” said Sameer Lakhani, Managing Director at Global Capital Partners.
Instead, more developers are concentrating on offering “immediate” cost benefits to buyers. A waiver of service charges (even extending to 10 years) seems to be gaining favour, and there are the usual ones where the developer absorbs the registration charges in full or partially.
In actual terms, how do they add up in cost savings for the property owner?
“These over time can amount to a fairly significant percentage of the overall costs,” said Lakhani. “For example, in Dubai Marina, a waiver of service charges for up to 10 years (at an average of Dh22 per year) plus a 4 per cent waiver of Dubai Land Department charges (at an average of Dh1,500 of the sales value) totals to Dh280 per square foot.
“This is 19 per cent off on the prevailing sales price there. Now, this is not a cent per cent accurate way to look at it, as we have to factor in net present value analysis. But whichever way you look at it, these are generous incentives, and in certain cases (depending on the developer) did have certain success rates.”
The year-to-date property transaction figures in Dubai suggest buyers are interested in what they can get now and not necessarily about how long they can get on their post-handover payments.
Between January to end September, there were 8,730 ready units registered with the Dubai Land Department — that’s down just 5 per cent on the 9, 197 units last year. But when it comes to off-plan sales, the year-on-year numbers are 30 per cent off — 12,812 units up to end September against the 18,359 sold last year, according to data from GCP-Reidin.
“The clear standout remains Al Furjan, where the incentives in the ready space show a surge in demand. This is likely to be replicated by other developers as a way to clear inventory,” Lakhani said.
On ready, Sports City continues to be the sole freehold community that is showing a positive over last year, up by 14 per cent. But Dubai Marina, the Downtown and the Palm are narrowing the declines compared to last year.
But when it comes to off-plan sales, none of the city’s key freehold clusters are anywhere near to showing gains over last year. In fact, the end September numbers from GCP-Reidin show nearly all of them are down by 30 per cent and over. The only exception have been the off-plan sales at Jumeirah Village Circle, where this year’s decline has been 28 per cent.
