By Staff writer
Propertyfinder chief says buyers continue to take advantage of less onerous payment plans
Propertyfinder Group, the UAE-based real estate listings portal, has said it expects the boom in Dubai residential off-plan sales to continue at least until the end of 2017.
It said in a statement that buyers are seeking to take advantage of less onerous payment plans and a greater choice of projects in the emirate.
Exclusive Propertyfinder data shows median residential prices in Dubai fell 20 percent from November 2015 to April 2017, extending a slump that began two years earlier as the strong dollar and weak oil prices weighed on investor sentiment.
“Since December 2013, expat buyers of completed properties must put down a cash deposit of at least 25 percent and they also need a minimum extra 6 percent to cover the various fees,” said Propertyfinder Group CCO Lukman Hajje.
“That’s a large amount of money and it’s forcing many potential purchasers away from the completed property market to off-plan where developers are enticing them with low upfront and even back-ended payment plans.”
Emaar sold AED6.05 billion ($1.65 billion) of Dubai property in Q1 - up 44 percent from a year earlier – as it launched seven projects totalling 2,923 units in the emirate.
Rival Damac, Dubai’s largest privately-controlled developer, booked Q1 off-plan sales worth AED2.2 billion, up 11 percent year-on-year and 29 percent higher than in the final quarter of 2016.
Off-plan properties are discounted relative to completed units and accounted for about half of all Dubai residential property deals in 2015-2016, according to Reidin.
“In theory, buying off-plan allows investors to take advantage of historically low Dubai property prices for a very low cost and a get a foothold in the market, but this strategy does not come without risk,” said Hajje.
“Projects are often delayed and buyers have little option but to wait. Also, the finished product may not be what they expected - glossy brochures can look amazing but market conditions and political or economic situations change, as do the price and availability of certain materials. All these can impact what’s eventually delivered.”
Hajje cautioned potential buyers to be aware of potential difficulties in securing financing.
“Except for those who plan to pay 100 percent in cash, most off plan buyers will eventually require a mortgage,” he said. “And just because you may be eligible for a mortgage today doesn’t mean you'll qualify in the future, particularly if your employment circumstances or lending criteria change.”
Consultants Cluttons predict Dubai’s off-plan market will remain upbeat despite predicting in a recent report that sales prices will fall a further 5 percent correction.For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.