A range of offers from real estate companies in Dubai aims to encourage investment and inject interest in the emirate’s realty sector.
Developers are now taking a more aggressive and imaginative approach to clinching deals and getting presales off the ground amid rising competition and warnings of a downturn in the UAE property market.
Earlier this year, credit rating agency Standard & Poor’s predicted house prices and rents in Dubai would fall throughout 2017 because of the continued fallout from low oil prices and currency woes.
In a note to investors, the agency forecast a drop of 5-10 per cent in rents and prices this year, on the back of an 8-11 per cent drop in Dubai’s house values and a 6 per cent decline in rents during 2016.
Many developers in the emirate see seasonal offers as an opportunity for new impetus in the sector.
“We are currently working with sellers who have recently reduced their asking prices, or are prepared to pay the buyer’s fees, with a view to securing a buyer before month end – so it pays to be searching the property portals during this time,” says Nick Grassick, Managing Director of PH Real Estate.
He says his company was seeing particularly high activity within the Emirates Living developments — Springs, Lakes, and Meadows — as well as Dubai Marina and Downtown.
“These are traditional expat locations, and we’re assisting a considerable number of homeowners and investors looking to take advantage of a buoyant yet competitive marketplace.”
Sameh Muhtadi, CEO of Bloom Holding, another firm currently running offers, feels the Dubai market is one for buyers looking to own property, and that low prices, attractive payment plans and discounts mean the time is ripe to take advantage.
“We are continually enhancing our offer, payment plans and incentives to stay competitive with the market,” he explains. “Over the past year or so, the real estate market has stabilised in terms of pricing and the offer has continued to increase, specifically in Dubai. These offers ensure we have a healthy competitive market.”
Jason Hayes, Managing Director at high-end property brokerage Luxhabitat – which specialises in exclusive portfolio of luxury villas, apartments and penthouses for sale and rent in Dubai – says the company was currently offering to swap buyers to purchase across some of the most affluent areas of
“Our developer partners have been offering some fantastic incentives across the luxury off-plan sector,” he says. “These include Dubai Land Department fees being paid and extended payment periods, which contribute positively towards a healthy marketplace.
“Investors in Dubai have a plethora of luxury investment options to consider, offering fantastic capital growth potential and strong yields.”
However, Brigitte Tenbergen, Luxhabitat’s Luxury Sales Specialist, points out that incentives themselves only prompt a small number of sales in the high-end market.
Incentives for end-users
“End users who buy luxury real estate tend not to get swayed by incentives,” she says. “They would much rather prefer a discount on the transaction and offer to pay the property in full, rather than opt for a payment plan.
“Some back-ended payment plans have been offered for mid-tier projects that will deliver by 2019 or 2020. Ultra high-net-worth individuals choose to invest in these projects as it gives them flexibility and spreads the risk on their portfolios,” adds Tenbergen.
Changing market conditions means developers must have affordable options so mid-income buyers can put some money down, says Mohanad Abusidu, Sales Manager at MENA Properties.
“In the past, market conditions made renting the only possibility but today, due to affordable options and payments plans, buyers can finally get on the property ladder,” he explains. “Besides affordable housing, it has been interesting to see developers challenge each other by offering the best payment plans in the market.”
This is in comparison to the past where the developer offered a standard payment plan which was 70/30 — meaning 70 per cent money paid during construction in staggered payments, and 30 per cent paid on handover.
“Here is where many people felt the market decline as quite a few developments were delayed and buyers got caught in the middle,” says Abusidu.
Developers are offering different payment schemes such as 20 per cent on booking and 80 per cent on handover. “Developers are also regulated by the Dubai Land Department today [and] payment plans are now approved by the department before any launch occurs,” Abusidu adds, emphasising buyer security.
According to real estate firm Core Savills, the strength of the dollar has affected the buying power of the sector’s traditional audience, with Britons, Indians and Pakistanis all seeing their currencies devalue over the last year.
However, its CEO David Godchaux recently pointed out that the overarching picture remains positive: “Despite a year-on-year contraction in the total number of real estate investors in Dubai last year, the city continues to be the most mature real estate investment destination in the region, with a diverse pool of investors from more than 136 countries.”
But for developers across Dubai, it remains to be seen whether thinking outside the box will bring the buying boost they are hoping for.