When It Comes To Ready-To-Move-In Homes And Longer Payment Terms, Developers See Opportunities.
Dubai developers are using the rising cost of rent as a justification to persuade potential end-user buyers to purchase a home rather than continue to rent. In addition, developers are supporting that with enticing offers for homes that have just been delivered or that will do so soon.
Their sales message is straightforward: invest today for a return in 3 to 8 years. Additionally, keep the payments at levels that are comfortable for these end users’ incomes. Developers who have finished work at upscale locations like MBR City, Al Furjan, and Jumeirah Village are making these offers.
Potential buyers are carefully examining their options when rent increases reach 20–30% or more. (According to CBRE, Dubai’s rental growth was averaging close to 25% at the halfway point, while house prices were up 9%.)
Developers are extending the payment deadlines for yet another reason. Mortgage-backed sales have decreased ever since successive 0.75 % rate hikes in local mortgage rates. In addition, since property values have also increased significantly, this essentially means that end-user buyers feel it is becoming too expensive to consider purchasing a home right now.
A developer who recently reduced the down payment and increased the payback period on a recently finished project from three to five years stated “the real estate market requires end-users to remain interested.” Off-plan sales are once again the majority of transactions in Dubai, but most of those buyers are investors or people interested in the Golden Visa programs and are not in a rush to move into a property.
Do You Think The Rent Gain In Dubai May Be Slocking?
There are no indications of a citywide slowdown based on the data that is available, including data from the summer. In fact, some areas that had experienced 10-15% growth over the previous 12 months are now experiencing faster growth.
The center of the city, which includes Dubai Marina, Downtown, as well as Business Bay, is showing clear signs of spreading rent increases to more areas of the city, according to an estate agent. Even in some of the older buildings, non-freehold locations are experiencing noticeable rent increases. The data from September should give a better idea of what to expect.
When it comes to attracting end users, rent gains may prove to be the best ally for developers.
An Additional Rate Increase
The third significant rate increase from the US Fed will be served up this week. And local lending rates will follow suit. Dubai and UAE property market experienced its best summer in more than ten years thanks to recent rate increases. Which also maintained the pace of sales. However, builders are aware that they must still play a role. In addition, newly delivered homes are an integral part of their strategy. Recent real estate offers reveal definite trends. The developers are emphasizing longer payment plans and lower down payments, whether in JVC or MBR City.
Real estate agent: “We find that end-user buyers are gravitating more toward new/ready homes than off-plan.” Finding a different way to pay rent is their top priority. That function is served by ready homes. These buyers are entering the mid-market to purchase homes priced between DH750000 and Dh1.2 million. These buyers were looking at annual rent increases of 15-20% and were paying between Dh50,000 and Dh75,000. Dubai developers will concentrate on finding more of these types of customers.