Firas Al Msaddi … a new initiative.
fäm Properties offers football style sell-on clause
DUBAI, March 19, 2018
Football stars have helped inspire a new move in Dubai real estate to settle the nerves of anxious sellers and buyers.
A new all-weather transactional structure introduced by fäm Properties eases the concerns of property owners that by selling when market prices are low they could miss out on profits that would come when prices rise.
It is based on an agreement in which both parties in a property deal agree to share the net profits on a resale within three years. Buyers are attracted by growth prospects outweighing downside threats, said a fäm Properties statement.
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This clause is based on the sell-on clause which football clubs insert into the contracts of their most promising young players to ensure they get a piece of any subsequent transfer fee, it said.
Firas Al Msaddi, CEO of fäm Properties, says the company has already brokered one such agreement for the sale of a Dh100-million ($27.2 million) residential building in City Walk, Jumeirah.
“Using the same concept on behalf of other investors, we’re now in the process of customising two similar large transactions with one of Dubai’s biggest developers,” said Al Msaddi.
In a typical deal of this kind, an owner who values his property at Dh10 million may accept an offer of Dh8 million to free up cash. But his agreement with the buyer guarantees he gets 50 per cent of the profits on any resale within the next three years.
If the property is sold for more than Dh10 million, the seller’s share is capped at 125 per cent of the difference (Dh2 million) between what he paid and the initial asking price.
“Missing out on rising market prices is what sellers fear most in real estate as in other areas of business,” said Al Msaddi. “The risk is higher for building owners who know that unit prices may climb over the next two to three years.
“The new transactional structure gives them cash to reinvest as well as a share of future profits. At the same, buyers acquire property at attractive rates knowing prospects for growth far outweigh any downside risks.
“Developers have been very receptive to this initiative and we’re receiving enquiries from major players in the industry,” said Al Msaddi. – TradeArabia News Service
