Dubai: Offplan property owners are starting to get deferments on their upcoming instalments, as more developers in Dubai realise they need to offer some give-and-take after the COVID-19 imposed difficulties on buyers.
So far, no developer has come out openly to say they have taken such a decision to delay payments. The best they have done is say they are looking into each buyer’s situation and will act accordingly.
But in face-to-face negotiations (or Zoom meetings, which is must preferred these days), the developers are willing to take a more lenient view. No one, least of all developers, want to see a situation where the buyer decides to exit after making the down payment plus one or two instalments.
“If any buyer wants to make a request to the developer saying he has lost their job or currently has an inadequate cashflow and would like to defer the instalments. I am sure most developers are empathetic,” said Riyaz Merchant, CEO of Realty Force Real Estate.
There are other ways developers are trying to help out as well. “Emaar is allowing people to upgrade to a new and bigger unit in instances where they have no payments to make up to the handover. And when the new project handover will be two years later than what they have currently bought in.
“This gives them breathing space with the payment plans. Some options are being worked out and, after all, these are all good for the market.”
A better response
Based on market talk, UAE developers are better managing their payment situation with offplan buyers than was the case in 2009, when buyers exited from projects en masse after the Global Financial Crisis swept them off. (There were also developers who made an equally hasty exit from their responsibilities and leaving investors in the lurch.)
So far, after COVID-19 struck, developers have shown the needed maturity to reach out to their buyers and come up with tweaks to payment schedules. They feel that it’s likely that a majority of investors will stay the course. “Of course, a few will exit, but that’s always the case COVID or not,” said a CEO at one of the leading private developers.
The latest estimates of new home deliveries in Dubai for the first six months show that the pace of handovers has dropped. Clearly, delays have crept into projects as part of the wider health and safety measures taken by the authorities to curb the virus spread. Construction sites were still active, but operated with a reduced number of workers at any given time.
But again, you will not hear developers come out and say so – “No developer is taking the initiative of saying my project is delayed by three- to six months and that you can pay me a little later,” said Merchant. “That has not happened.
“If they are making such an announcement, they will have to defer their instalments as well.”
Not many heading for exit door
Thankfully, for the market’s long-term prospects, there have not been too many instances of offplan owners hoping to cash out now, even if that means taking a loss. But a nice price gap is building up on offplan properties between what’s sold by developers and what’s available in the secondary market.
That’s what investors – there are a few out there – want to cash in on. “We have been seeing a decline in prices in the secondary market for offplan projects,” said Jason Hayes, CEO of LuxuryProperty.com. “These declines are not following any specific trend in terms of area or property type – they vary from project to project.
“Typically, you can expect to find a discount of between 10-30 per cent in the secondary market. We are seeing discounted pricing across the luxury market.
“Across the board, developers have not significantly reduced offplan prices from what they were at launch. They tend to be more open to negotiation at the point-of-sale, but offer prices remain fairly stable in spite of any other changes in the market.”
Want a bargain?
For the best deals – from a buyer’s perspective – watch where a fresh supply of completed homes is coming this year.
“Where there is massive supply, you will see number of sellers reaching the edge and dropping prices to below current listed rates,” said Merchant. “Wherever supply is limited, even if a seller is still looking to make a deal, he will probably realize he could get a few dollars more because there are not too doing the same.”
Some price gains
Merchant says even in the current market scenario, some locations have actually seen price gains of 2-4 per cent, where availability of new homes are limited. “This has happened in certain ready projects, mainly at Meydan such as District One or Millennium Estates.
“And yet, in the same zone, there are projects being delivered selling under current listed price because the community is not as landscaped and not enough people are moving in.
“Also, in a place like Damac Hills, new availability has become less and developers themselves have reduced prices to meet the secondary market levels. Currently, some prices are below the current market value, which is good for a new buyer to come in at as these are values you will ever get.”