Dubai developers offer heavy incentives to attract property buyers

Developers in Dubai are going the extra mile to dispose of unsold stock

  
Image used for illustrative purpose. High-rise residential and office towers are seen near Sheikh Zayed road in Dubai.

Image used for illustrative purpose. High-rise residential and office towers are seen near Sheikh Zayed road in Dubai.

REUTERS/Jumana El-Heloueh

Lucrative incentives, innovative payment plans and freebees are tempting investors and tenants to own a home in Dubai as developers are going the extra mile to dispose of unsold stock ahead of potential upcoming supply of over 50,000 homes this year.

Developers in Dubai are pulling out all the stops to win over buyers for newly launched and existing projects by extending post-handover payment plans on off-plan properties to ready homes as well as arranging bank financing for initial down payment of the property.

Extended post-handover payment plans from three years to anything up to 15 to 20 years, rent-to-own schemes and guaranteed rental returns are now the industry norm as the developers get creative to compete with other investment markets.

Lynnette Abad, director of Research and Data, Property Finder, developers have become quite creative over the last few years to sell their properties, both under construction and ready stock. The most popular have been the post-handover payment plans, rent-to-own and new schemes such as the one offered by Emaar and DMCC, she said.

"Developers are very aware that they need to be creative with new offerings to attract more foreign direct investment and be competitive with other popular investment markets," she said.

Recently, developers have been playing the role of banks to stimulate demand for both off-plan and ready properties with ingenious payment plans. This is because under the current loan-to-value requirements in the UAE, the majority of buyers find it difficult to raise bank finance, and establish a foot on the ladder, due to hefty deposits and fees required.
The latest incentive deployed by Azizi Developments for a newly launched scheme in Al Furjan is to partner with one bank for down payment loans while another financial institution will service the remaining portion of the mortgage.

This has been conceptualised to bring in people who cannot afford the initial down payment. The first bank in question is also offering a six-month interest free facility to customers.

Public, private developers

While government-affiliated developers are the ones offering flexible payment plans and rent-to-own schemes for ready homes, private players are jumping on to the bandwagon as well. Nakheel is offering a payment plan for the Al Furjan villas and townhouses where buyers can move in now and pay across seven years. Customers only need to put down a five per cent deposit. Other perks include no Dubai Land Department fees, two years free service charges and two years free club membership.

The average price per sqft for ready homes in Al Furjan is Dh820 per sqft, according to data from the Dubai Land Department over the past three months.

Rent-to-own schemes

Rent-to-own schemes could see a good take-up since tenants only need to produce a small down payment unlike the 25 per cent sought by banks for mortgages.

Even industry giant Emaar Properties is offering back-loaded payment plans for a slew of its off-plan projects across Dubai. The developer offered post-handover payments for buyers of ready villas in Arabian Ranches 2, where the average price is D1,160 per sqft.

Emaar is also providing a scheme at a Dubai Hills Estate project where buyers of an apartment get a three-year renewable business licence, three-year renewable family residence visa and 100 per cent business ownership in DMCC.

Similarly, Sobha Realty is offering a discount on school fees for those buying an apartment in its project -- Hartland Greens, where the average price for off-plan projects is Dh1,870 per sqft, according to DLD data.

"Dubai's ability to innovate and implement new strategies and regulations in a quick manner has and should continue to support the real estate sector," Abad of Property Finder said.

Guaranteed returns

In a bid to offload unsold stock from their inventory, developers are also offering a guaranteed rental return for several years on their serviced apartments to bring in investors. Damac Properties in particular has been piloting such schemes. However, longer payment plans can also result in higher property prices for buyers. Such properties are always traded at a significant premium to the general market price.

Even in the rental market, big developers like Dubai Properties are offering up to 12 cheques and adding in sweeteners like a month's free of rent to fill up unoccupied units in communities like Remraam and Ghoroob Mirdif.

Emerging communities such as Dubai Silicon Oasis, Sports City, Jumeirah Village Circle and Jumeirah Village Triangle are also seeing a proliferation of such sweeteners on rental agreements to fill vacant units.

- muzaffarrizvi@khaleejtimes.com

 

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