Dubai developer World of Wonders Real Estate Development promising the city's cheapest-ever monthly mortgage on a AED1m home
Developers in Dubai are continuing to look at innovative ways to attract buyers.
While the deals offered by developers like Damac Properties some years ago, with the promise of a Mercedes Benz or Aston Martin along with a property purchase, may not be as prevalent these days, in a market that continues to struggle, incentives are still proving popular.
This includes extended post-handover payment plans ranging from three years to up to 20 years, rent-to-own schemes and guaranteed rental returns. There is also cut-price school fees, a buy-one-get-one-free model and waved completion fees.
Richard Waind, group managing director, Better Homes, told Arabian Business: “The bigger players have been offering extended post-handover payment plans for the last few years, while some smaller developers have revisited the rent to buy approach to attract first time buyers and end users.
"Lower down payments and stepping payments to the point of handover is attractive to buyers who are not able to pay the full 25% deposit needed to secure a mortgage in the secondary market.”
The latest offer has come from Dubai developer World of Wonders Real Estate Development (WOW RED), promising the city’s cheapest-ever monthly mortgage on a AED1 million home – with payments as low as AED1,150.
WOW has struck the deal for the payment plan with Dubai Islamic Bank.
Yahya Alkan, CEO of WOW RED, said: “We approached DIB in April and signed in May. It was round-the-clock meetings and the product is the most affordable around.”
It has been designed to get young professionals off the rental market and onto the property ladder, slicing huge amounts off typical monthly rents.
The payments last seven years on a 25-year plan and is available on all 371 studio, one- and two-bedroom units in the $550 million SLS Dubai Hotel & Residences, which overlooks the Burj Khalifa.
A further example of the type of incentives offered is in Dubai real estate giant Emaar, in partnership with the Dubai Multi Commodities Centre, who will offer buyers of its Executive Residences in Dubai Hills Estate, a free three-year renewable business licence, a free three-year renewable family residency visa as well as 100 percent business ownership.
Nick Witty, Chestertons MENA, managing director, told Arabian Business: “This unprecedented move will allow entrepreneurs to legally start a home-based business and will assist with absorption rates of a particular segment of properties.”
According to most recent research from Chestertons, the market for completed units witnessed an increase in transactional volumes in Q2 2019 with a 2 percent increase compared with Q1 2019. The volume of off-plan transactions was up 4 percent on Q1 2019. This follows a 10 percent increase in Q1 2019 and a 33 percent increase in volumes in Q4 2018 compared with Q3 2018.
Witty added: “This could be a result of the attractive incentives offered to entice buyers, coupled with the fact that inventories are mostly focused on mid-market, affordable properties.”
However, Waind said that while things like reduced DLD fees and waivers in service charges have been successful in recent months, proper value for money is still the best incentive investors can be offered.
He said: “We have seen lots of incentives, and some gimmicks, over the last 12 months to attract buyers, with developers offering anything from a new car to a second property when you buy a home through them. While these incentives can make people sit up and take notice, by and large educated investors in today's market are more interested in the quality of the product they are buying and what extra value they can derive in the deal.”