Dubai real estate: The curious case of payment plans
Source: REIDIN , Author: Posted by BI-ME staff
Posted: Thu August 6, 2015 11:39 am

UAE. In response to a plethora of exogenous (dollar strength, oil price declines, etc.) as well as endogenous (numerous real estate launches, doubling of transaction fees, Central Bank caps on mortgage etc.) factors, prices and transactional activity have fallen across the freehold markets.

In response, Developers in Dubai have offered a variety of incentives to galvanize sales in the form of payment plans that have often stretched to well beyond completion.

In a paradigm shift, the number of projects that have offered payment plans skewed towards completion and after has been an astonishing 55% of the overall off plan launches by 2Q 2015, up from 29% just two years earlier.

Whilst both Government Related Entities (GREs) and Private Sector Developers (PSDs) have moved towards a regime of skewering payment plans towards completion, it has been the latter that has predominantly shifted the payment plan profile; more than 70% of PSDs had started to offer this scheme to investors.

Whilst primary sales data remains unavailable, secondary off plan market activity indicates that thus far there has been little impact in reversing price declines, and that the purpose of the payment plan (either to entice speculative investors by offering developer leverage or galvanize end user unit sales) has not achieved in offsetting the impact of macro factors such as USD strength and/or Central Bank curbs.

Deferred payment plans are likely to continue to proliferate in an environment of low interest rates and as long as Central Bank curbs remain; however in the event of a rising interest rate regime, we opine that "developer leverage" will likely translate into the form of lower price offers in the primary market as well as an elongated timeline of supply.

To read the full report click here: http://www.reidin.com/blog/en/864-dubai-the-curious-case-of-payment-plans.html

About REIDIN
REIDIN is the leading real estate information company focusing on emerging markets. REIDIN offers intelligent and user-friendly online information solutions helping professionals access relevant data and information in a timely and cost effective basis.

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: April 22, 2018
UAE. As many as 492 hospitality projects worth US$39.4 billion are currently in progress - including tendering stage and under construction; The number of active hotel projects in the GCC reached 724, worth US$78 billion in March 2018.
date:Posted: April 20, 2018
INTERNATIONAL. Focus of the report is how we are nearing the end of the largest monetary policy experiment of all time in a backdrop of ascendant nationalism, staggering inequality and a widespread loss of hope among the younger generation.
date:Posted: April 19, 2018
UAE. Software technology sector saw most number of professionals changing jobs in 2017; Lack of opportunities for career advancement touted as the biggest reason.
UAE. As many as 492 hospitality projects worth US$39.4 billion are currently in progress - including tendering stage and under construction; The number of active hotel projects in the GCC reached 724, worth US$78 billion in March 2018.
dhgate