Property deals to help you buy real estate in Dubai
As new real estate projects continue to come online in Dubai, developers with stock to shed are pulling out all the stops to lure buyers in — from instalment plans for as little as Dh120 a day to rent-to-own schemes for as long as 20 years. With a variety of financing options available, some analysts say it is the perfect time to get on the property ladder.
“All in all, right now is a great time to buy. There are a lot of really good deals and you have a lot of options,” says Lynnette Abad, director of research and data at real estate listings portal Property Finder. “Sellers have realised the market that we are in, so they are lowering prices and negotiating more than before.”
Villas and apartment prices in the first half of 2019 were around 12 per cent cheaper than they were in 2017 and approximately 4 per cent cheaper than in the second half of last year, according to the latest Property Finder Trends report. Although apartment transactions were down by 5 per cent, villa sales increased by 35 per cent, the report said.
Dubai recorded Dh106 billion worth of real estate transactions in the first five months of this year, up 12 per cent compared to the same period last year, according to the Dubai Land Department’s annual report released last month.
Residential property prices in Dubai have been declining since 2014 due to a three-year slump in oil prices and oversupply. Oil prices have since rebounded, and experts forecast a recovery in the property market as new long-term visas are introduced and preparations are underway for Expo 2020. Last month, Dubai formed the Higher Committee for Real Estate Planning led by Deputy Ruler Sheikh Maktoum bin Mohammed to achieve a balance between supply and demand.
But it will take time to achieve that balance. A total of 20,978 residential units were completed in the first half of 2019, according to Property Finder estimates. An additional 38,426 residential units within 152 projects are scheduled to be delivered by the end of the year. Emaar alone has more than 29,000 homes currently under development in Dubai, according to the company’s 2018 annual report.
Increased supply has made new, affordable off-plan offerings in areas such as Dubai South, Dubailand and Town Square popular among buyers, according to Property Finder.
“In the areas where there’s a lot of ready, empty stock, you have many good incentives from the developers,” says Ms Abad. “They’re waiving DLD fees, commissions, and they’re also giving free service fees for five or 10 years.”
Other trends that emerged in the last year include post-handover payment plans and rent-to-own schemes. Emaar, for example, started heavily advertising post-handover payment plans of five, seven and 10 years in the last quarter of 2018, says Ms Abad. Several projects from National Properties, a subsidiary of National Bonds Corporation, started offering rent-to-own.
“They were being offered on 10, 15, 20-year plans,” says Ms Abad. “And these properties are ready. So basically you would enter into the property with a very low payment of 5 per cent and then your monthly rent would be contributed to the purchase of the property.”
Ms Abad says to be mindful, however, that with post-handover payment plans and rent-to-own, the price of the property is higher than a comparable property currently on the market. The benefit is for people who do not have the 25 per cent or more to put as a down payment.
Another challenge in the current market is that valuations are conservative due to price declines. “If you buy a property with a post-handover payment plan at Dh2.5m today in our market whereas in reality, it’s worth Dh2.2m, the problem that you’re going to have is if you decide to get a mortgage on a property, the valuation is not going to come through,” Ms Abad says. “If it’s something that you’re thinking of staying in for five to 10 years, fine. But if it’s something that’s going to be short-term, no.”
It is important to also “do your homework, make sure you know very well the property and the community you’re buying in, make sure you know very well the developer that you’re choosing and the developer track record,” Ms Abad says.