To sustain the momentum in off-plan property sales, more developers in Dubai are beginning to provide monthly payment plans of 0.5% per month.
In the past, some of the city’s top developers had a one percent monthly payment plan as standard. At this point, some of them have begun to offer it for particular projects, while others are going above and beyond by expanding the program to include all of their new launches.
Consider it a simple installment plan for prospective homeowners, particularly those who are ineligible for or have difficulty obtaining a mortgage.
Developers have also begun to directly lower the price of properties in recent weeks, with some even offering steep discounts of up to 20%.
These incentives, which include discounts and reasonable payment plans, are being offered at a time when market sources indicate that prospective purchasers are worried about the high entry cost of off-plan purchases and the fact that handovers for the newest launches are still three to four years away. As of right now, offplan sales account for 70–80% of all residential sales in Dubai every month. The first half of 2024 has seen record new launches every month.
The option to pay 0.5% each month can be helpful in this situation. Not only are developers in Dubai offering it, but Ras Al Khaimah, another freehold market that is seeing a surge in both demand and prices, is beginning to see the same trend.
“If 1 percent was the way to get property buyers’ attention 2-3 years ago, now it’s sub 1 percent,” said a developer. “Current off-plan demand has a sizeable number of end-users buying, and this probably one way of making them feel a home purchase can be within their means.
“If after a down payment, a buyer has to pay off Dh1 million, then at 0.5 percent, the monthly payment comes to just Dh5,000.”
Extending Offplan’s dominance
The launch scene is still dominated by Dubai master developers like Emaar, Damac, and Sobha, but newcomer Aldar is also causing a stir. The latter, by far the largest developer in Abu Dhabi, has already launched two enormous residential communities and is about to launch a third.
Other developers need to come up with strategies to compete with this. because there are still a sizable number of prospective property buyers out there. Not to be overlooked are sincere end-users who wish to become homeowners rather than tenants. (Sharjah’s freehold has recently seen a large influx of end-user purchasers.)
“Payment plans that are now below 1 percent a month are adding to the impetus for investors to purchase,” said Florine Rusu, Managing Director of Market Price Real Estate. “Especially among those who are buying for the first time.
“These monthly payment schemes will help them sidestep the entire mortgage process later on. And even the upfront down payment that comes along with it.”
There were 38 releases of villas and 134 launches of apartment projects between January and the end of June. Reidin-GCP data shows that there were 36 such launches in March, the most, followed by 34 in May.
Eight projects offered values less than Dh1,000 per square foot. Additionally, the median price per square foot for 98 projects was between Dh1,000 and Dh2,000, while the range for 48 projects was between Dh2,000 and Dh3,000.
“It is all about the budget capability of property buyers,” said Usman Jameel of GCP Properties. “The latest price sweeteners allow developers to play the role of financiers in getting first-time buyers, especially overseas buyers, for whom mortgage payments are not an option.
“It is no surprise that this under 1 percent monthly payment trend has also spread to Ras Al Khaimah. And will likely be offered in other emirates as well.”
