In Dubai, an increasing number of developers are introducing monthly payment options of 0.5 per cent per month to extend the momentum of offplan property sales.
Previously, the typical monthly payment scheme from a few of the top developers in the urban area was set at 1 percent. Currently, a few are providing it for certain projects while others are going above and beyond by expanding the program to all their new releases.
Consider it like a simple payment plan for aspiring homeowners, particularly for individuals who struggle to secure a mortgage or do not meet the requirements.
Recently, developers have begun to provide direct discounts on property prices, reaching discounts of up to 20 percent.
Affordable payment plans and discounts are being offered to address potential buyer concerns about the high entry price on offplan purchases and the 3-4 year wait for handovers on the latest launches, according to market sources. At the moment, offplan properties account for 70-80 per cent of Dubai’s total residential sales every month, with each month in the first half of 2024 seeing an unprecedented number of new launches.
This is how the 0.5 percent monthly payment option can be beneficial. Not only are developers in Dubai providing this, but the trend is also appearing in Ras Al Khaimah, another freehold market witnessing a surge in prices and demand.
A developer said that while 1 per cent used to be the method to attract property buyers’ interest 2-3 years ago, now it is below 1 per cent. The existing offplan demand includes a significant amount of buyers who are end-users, which may be a way to help them see that purchasing a home is affordable for them.
If a buyer must pay off Dh1 million after making a down payment, their monthly payment at 0.5 per cent will be Dh5,000.
Expanding offplan’s control
The launch scene in Dubai is still dominated by master-developers like Emaar, Damac, and Sobha, with newcomer Aldar also making a strong impact. Abu Dhabi’s largest developer by a significant margin has already conducted two major residential community launches and is preparing for a third one.
On the contrary, developers must come up with strategies to rival this. Due to the fact that there are still many potential property buyers available. Let’s remember genuine end-users who aim to transition from renting to owning a home. Recently, there has been a notable increase in the number of end-user buyers investing in Sharjah’s freehold properties.
Florine Rusu, Managing Director of Market Price Real Estate, stated that payment plans, currently under 1 per cent a month, are further motivating investors to buy. Particularly among individuals making their first purchase.
These installment plans will allow them to avoid the entire mortgage process in the future. And including the initial payment required for it.”
From January through June, a total of 134 apartment projects and 38 villa constructions were launched. According to data from Reidin-GCP, March saw the most launches at 36, with May following closely behind with 34.
There were 8 projects that provided prices below Dh1,000 per square foot. Ninety-eight projects had a median price per square foot ranging from Dh1,000 to Dh2,000, while forty-eight projects were priced between Dh2,000 and Dh3,000 per square foot.
According to Usman Jameel from GCP Properties, the most important factor is the budget capacity of property purchasers. The most recent incentives enable developers to act as investors in attracting potential first-time buyers, particularly foreign buyers who are unable to make mortgage payments.
The fact that this trend of less than 1 per cent monthly payment has expanded to Ras Al Khaimah shouldn’t come as a shock. And may also be made available in additional emirates.
