Time to invest? Payment plans, discounts flood Dubai property market

Dubai's real estate market is witnessing fewer but very attractive bids that offer homebuyers and property investors great discounts

  
Glamour Dubai. Image used for illustrative purpose.

Glamour Dubai. Image used for illustrative purpose.

Getty Images

Dubai's property market is witnessing a typical 'buyer's market' offering great opportunities both in off-plan projects and secondary market with flexible payment terms, affordable prices and incentives, according to industry experts interviewed by Zawya Projects.

Jason Hayes, CEO & Founder, Luxury Property said property buyers could expect more flexibility in terms of price as sellers in need of liquidity are keen to do business and willing to negotiate.

"Buyers can easily find themselves a discount of 10 to 20 percent below the asking price. For example, a recent transaction that I conducted was for a villa on Pearl Jumeirah, which had an asking price of 20 million dirhams, but was negotiated down to 17 million dirhams, a reduction of 15 percent. But these are in line with the level of discounts we saw at the start of the year," he said.

He also noted that remote transactions enabled by the Dubai Land Department have helped buyers and sellers complete their business while following government guidelines and protocol.

Numerous choices

Prathyusha Gurrapu, Head of Research and Advisory at CORE, said many investment opportunities are available from top developers in the off-plan market with heavily incentivised payment plans.

"Most preferences have been for smaller units as they historically have provided higher returns. However, in the current climate, most buyers are taking a wait and see approach. At the same time, some have deferred their decision due to the liquidity issues caused by a general slowdown in business activity, salary cuts and job losses."

For the cash-rich investors, she recommended looking for ready and tenanted properties by top developers within well-managed premises in centrally located areas. "These units would have a higher probability of maintaining occupancy levels in the near to mid-term," she said in an email interview.

Times of crisis always create opportunities for those with liquidity and the nerve to take advantage, said Richard Waind, Group Managing Director at Better Homes.

"Before Covid-19, we were seeing a real surge in buyer activity and sales. Both end-users and investors realised the great values are found, especially in the secondary market. Well established villa communities were transacting at more than 40 percent lower than they were five years ago. It is this segment that I think those with cash will be taking a keen interest in."

We have already seen several large villa sales taking place towards the end of April," he said in his emailed response.

He said there would be some distress deals in the secondary market. "However, investors should note that values in the UAE have been falling since the peak of 2014, so they should not expect the wholesale price to drop in the short term," he said.

Lewis Allsopp, CEO of Allsopp & Allsopp said investors wary of committing to off-plan owing to potential uncertainties could look for highly attractive secondary market units.

"We've sold a couple of units in Downtown recently that have offered the buyer just short of a 7.5 percent net return. When you consider the average maybe 4-5 percent in Downtown - which in itself is very good when compared globally - then here you're getting a 50 percent increase on your return," he said by email.

Luxury Property's Hayes pointed out that Signature Developers, Ellington and Vincitore are also guaranteeing rental returns of more than eight percent over a specified period to their buyers. 

"Each developer has their way of honouring the guarantee, which also depends on the plan the buyer chooses," he said.

Buyer's preferences

Allsopp said end-users are mostly opting for ready properties. "The COVID-19 sterilisation process has certainly highlighted, in a lot of cases, how little outdoor space people have when restricted at home. Many clients now look at properties which cater to their newfound love for the time at home with their families," he added.

Riyaz Merchant, Chief Executive Officer at Realty Force, agreed that many buyers have realised that a home is an essential investment due to the quarantine and are looking for large ready properties with great layouts and more breathing space.

"Enquiries for premium properties have increased as people see better deals and more value in investing in more spacious homes. Buyers must note that prices have dropped for rentals, but sales not as much because we have already seen a decline in the past two years. "

Merchant added that increase in Loan-to-Value (LTV) ratio from 75 to 80 percent has meant that home buyers need to shell out only 20 percent from their pockets.

"This ideally would help buyers to stretch the budget and probably buy a slightly larger house, which they were unable to do before. Secondly, they could retain some part of their initial capital, maybe towards furnishing or to have a better cash flow for the next few months," he said.

Off-plan market attractive

Merchant pointed out that the off-plan market is also offering some attractive deals with incentives as buyers facing cash flow constraints amid obligations to pay instalments are selling units below the original purchase price to cut losses.

"Some may have an existing EMI running but wants to close out to improve their liquidity for living in the UAE, resulting in his short sale of the unit," he said.

He said cash-rich buyers and investors could avail themselves bargain deals in primary and secondary markets that would be impossible in normal market conditions.

"There are a lot of variables that can be negotiated besides the price, such as extending the payment plan with certain projects, DLD fees waiver getting included in the property price, getting service fees relief from 2 to 5 years that may not be part of the original deal. Some projects that required full payment on handover are now offered with post-handover payment plans," Merchant added.

Rajiv Ghanekar, Senior Real Estate Broker with Keller Williams Real Estate, added that cash buyers (investors) should focus only on prime and developed communities.

"This is the time to invest in units with special features, such as 'full sea view' or a 'full golf course view' or 'unobstructed views of Burj Khalifa'. Such properties always remain out of reach in normal market conditions, thus accessible only to the wealthy," he said.

(Reporting by Hina Navin; Editing by Anoop Menon)

(anoop.menon@refinitiv.com)

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