An increase in the number of Dubai developers offering post-completion payment schemes to off-plan investors is a “worrying” trend, the head of the emirate’s Real Estate Regulatory Agency (Rera) has warned.
Rera CEO Marwan Bin Galita claimed developers are increasingly permitting up to 60 percent of payments from buyers to come in after the units have been handed over.
This is concerning, he said, as it would pose problems for developers if a large number of buyers failed to meet their commitments.
Bin Galita told a media briefing in Dubai on Monday, according to Gulf News: “Developers are allowing 50 or 60 percent of the payments from investors to come in after the completion.
“This is what’s most worrying for me right now – it’s nothing to do with the developer or the contractor, but related to the investor.
“Developers are free to go for any marketing scheme that will help them sell…it’s not Rera’s responsibility to oversee these. But the developers [had] better ensure that investors’ dues are received.”
Real estate regulations have been tweaked in recent years to give better protection to off-plan investors in the event that the developer was unable, for whatever reason, to complete the scheme.
There are several examples of stalled schemes where off-plan investors have claimed to have lost money as a result of having made large payments upfront.
However, Bin Galita reportedly said the subsequent growing practice of ‘backloading’ instalments – making payments two or three years after completion – could also have a negative impact, this time on the developer.
However, he added: “I will not be too worried if the upfront payments are 50 per cent… it shows the investor is committed.”
He also said developers have a total of AED29 billion ($7.9 billion) sitting in various escrow accounts for current projects in Dubai.
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