With developers in Dubai increasing flexibility around payment plans for off-plan projects, the off-plan market added nearly 5,200 units in June, equating to AED13 billion ($3.54 billion) worth of new inventory, according to UAE-based Unique Properties.

 

This inspired influx has seen mortgage volumes rally 40.5%, despite the market witnessing its largest rise in interest rates in decades. With mortgage hikes expected to continue toward the tail end of this year, Dubai developers have re-introduced longer post-handover payment terms and increasingly accommodated 1% monthly installments to alleviate buyers’ concerns.

 

Unique Properties, a leading full-service real estate investment consultation agency headquartered in Dubai, UAE, has shared its insights on how developers are increasing flexibility towards payment plans for off-plan Projects based on a report unveiled by ‘Property Finder’ a leading web-based solution for the property industry.

 

Strongest June on record

During the first half of 2022, just under 43,000 transactions were registered with 88% of these sales representing the residential sector. To close out the first half of the year, Dubai registered its second strongest June on record with 8,865 transactions and its ninth highest month of volumes, of all time. 

 

This progress came despite prices in the month declining for the first time this year, by 0.31%. Unique Properties has observed several trends in the sector and highlights that while the current boom cycle is set to conclude, this momentum has inspired optimism to see new development launches surge.

 

Post-handover payment plans typically last anywhere between three to five years, on the other hand, 1% monthly plans are now becoming more common among affordable properties where entry-level investment stands at AED500,000. Both of these market solutions offer buyers greater flexibility with budgeting and mitigate the risk of losing potential investors who may find current mortgage rate hikes daunting.

 

Accelerated return

An accelerated return to pre-pandemic levels of normalcy in the UAE has contributed to investors’ growing interest in the country’s real estate market. The UAE recently topped 11 indexes as the best destination for expatriates; 75% of those surveyed credited the simplified process of finding a house, compared to the global average of 54%. 

 

Moreover, 83% of surveyed people cited the ease of applying for a residence visa, compared to the global rate of 56%, as a driving factor of appeal.

 

Arash Jalili, Founder and Chief Executive Officer of Unique Properties, commented: “Observing current real estate market dynamics, the global landscape of economics, and the manner in which UAE developers are striving to incentivise potential investors, we anticipate overall mortgage volumes to revert to the long-term pre-pandemic average of 1,200-1,300 loans per month. Off-plan properties offer investors a multitude of benefits from lower prices and increased payment options to higher capital gains. 

 

Higher rental yields

“Higher rental yields and Dubai’s implementation of property laws which protect buyers are equally as appealing, and will continue to be, especially as the already existing wide range of off-plan projects grows wider.”

 

Recent moves by developers to increase flexibility around payment plans for off-plan projects have effectively incentivised real estate investment by making purchases more affordable and practical when compared to properties in already constructed developments. 

 

With more than 88% of the UAE made up of expats, and this steady influx being constant for the country, housing in any form - villas, apartments, or other - will retain its value to remain a solid investment; whether the purpose of purchase revolves around holding the property for personal use, renting it, or selling it to make a profit down the road.

 

Protection for buyers

Moreover, Dubai’s enactment of the Real Estate Regulatory Authority (RERA) and Dubai Land Department (DLD) to protect buyers, investors, and developers against delays, cancellations or fraud ensure that each party involved is safeguarded at all times. 

 

Unique Properties has an assortment of projects that abide by these regulations and offer flexible plans to accommodate investors’ best interests, cementing them among the UAE’s leading real estate players.-- TradeArabia News Service