Dubai: In an indication of things to come, Dubai’s developers are “sweetening” the offers on their properties.
RSG International, a new entrant into the local real estate development scene, intends to fund up to 50 per cent of a buyer’s funding needs from its own resources at the time of completion of the project. Not just that, the developer says the funding support will be interest-free and can be repaid over a 60-month period.
“This incentive will be extended to any buyer acquiring an unit in our first project, the Qasr Sabah, at International Media Production Zone (IMPZ),” said Raj Sahni, chairman. “Up to 50 per cent of the property’s value will have to be paid by the buyer during the project cycle, including 20 per cent at the time of completion, and the balance 50 per cent can be tapped directly from us.
“What we are trying to do is ease the path of acquisition for genuine end-users, by spreading the instalment over a longer period and reducing the interest rate burden.”
But, by offering interest-free funding through in-house channels, isn’t RSG International inflating its own costs? “It’s the first project in Dubai for us and we wanted to offer a level of assurance to buyers,” said Sahni. “In many ways, I believe developers have to be seen as doing more to attract end-users and not investors.”
The project entails three buildings — ground floor plus podium plus six storeys format. Unit pricing is being finalised, but could be in the Dh1,000-1,200 a square foot range. Dubai’s secondary freehold locations such as Sports City, Silicon Oasis and IMPZ have seen a marked rise in activity brought on by project completions as well as the fast-tracking of some delayed ones. “IMPZ benefits from having well-defined commercial and residential zones, with the commercial cluster already in a mature phase development-wise,” said Sahni, who expects to complete the project by early 2015.
Sweetening the deal for potential investors is not confined to new developers. Damac Properties recently came out offering overseas buyers a chance to fly into Dubai and check out the properties at the developer’s cost.
“Our main buyer is the non-resident investor and if we take care of the travel expenses, it’s a small incentive as we see it,” said Ziad El Chaar, managing director at Damac. “We launched the promotion in select overseas cities and which usually provide a rich catchment area for us in the past.”
So, are more developers going to turn generous in their sales programmes? Market sources are divided in their views.
According to some, wider use of incentives will only come into play in an oversupplied market where buyers are spoilt for choice. “Then, in order to stand out, developers would see uses for such deals,” said the head of a real estate brokerage. “But new supply in Dubai is still strictly limited.
“What could happen is that the newly set mortgage caps could induce developers to become more flexible on their payment schemes. And developers intent on seeking out end-users will try and be more generous.”
For the smart buyer, it is a question of knowing what to look out for and when.