Real estate developers are offering discounts, fee waivers and other deals as transaction volumes remain soft due to oversupply concerns amid the coronavirus-induced economic slowdown.
Dubai South earlier this month unveiled a rent-to own scheme for new tenants at The Pulse development near Expo 2020 site, while Aldar is offering a range of incentives on properties in Abu Dhabi. Bloom also announced new payment schemes and fee waivers at its properties in Dubai and Abu Dhabi.
“UAE developers have resumed off-plan sales launches following a subdued second quarter, with a renewed focus on promotional offers and creative incentives to attract buyers,” Chris Hobden, associate director and head of strategic consultancy at Chestertons Mena, said.
“Recent incentives have focused on reducing upfront purchase costs, as seen in Dubai South’s recently announced rent-to-own scheme, or incorporate broad promotions such as cash rebates, service fee waivers and extended post-handover payment plans.”
House prices across both emirates have continued to soften over the past 12 months. In Dubai, average apartments have declined in value by 9.5 per cent year-on-year while villa prices are 7.2 per cent lower, according to Chestertons Mena. In Abu Dhabi, average apartment prices are 5.3 per cent lower and villas have fallen by 4.8 per cent.
Aldar, Abu Dhabi's biggest developer, is offering a range of incentives on its properties including a 4 per cent rebate on new home purchases as well as the waiving of service charges and maintenance fees for three years. The company is also partnering with banks in Abu Dhabi to offer home finance at low-interest rates at some of its developments in the capital.
“The vastly changed commercial landscape in 2020 has presented a pressing need and an important call to action for the leading players in the market to adapt quickly and provide more flexible and sensible solutions for tenants and homebuyers,” Rashed Al Omaira, an executive director at Aldar Properties, said.
Aldar has taken “timely, critical steps towards bringing convenient solutions and innovative financing offers to our customers, from providing several rent-to-own schemes and the possibility of paying rent by credit or via monthly payment plans, to offering subsidised financing solutions in some of our most sought-after destinations in Abu Dhabi,” he said.
Dubai South, on the other hand, announced a ten year rent-to-own scheme for buyers at any of the communities at its master-planned development near the Expo site.
Dh120m Palm Jumeirah mansion comes with a Ferrari and Rolls Royce
As part of the deal, customers are being allowed to make quarterly rent payments towards their homes while living in them, with the amounts paid contributing towards full ownership after a period of ten years. A two-month rent-free period is being offered as part of the scheme at the start of the contract.
“Given the current environment, we are highly conscious of the challenges faced by many and have created a scheme that gives tenants the assurance of owning their own property without any major upfront investments,” Mohammed Al Awadhi of Dubai South Properties, said.
Bloom Properties is also offering deals at its properties including Park View and Soho Square in Abu Dhabi and Bloom Towers and Bloom Heights in Dubai. Offers range from service charge waivers to 50 per cent reductions on Dubai Land Department fees, as well as attractive payment terms.
“We expect a cautious recovery of transaction activity as the economic sentiment gradually improves. However, we foresee potential buyers remaining hesitant in their investment decisions resulting in continued downward pressure on transaction volumes and sales prices,” David Abood, a partner at Core Real Estate, said.
Although buying activity is improving, there is still a lot of stock to absorb. About 38,000 units are scheduled for handover in Dubai during the second half of the year, according to JLL. Chestertons says 5,200 units are due to be delivered in Abu Dhabi, although both expect completion delays, particularly as social distancing measures have been in place on construction sites.
Some developers, such as Sharjah-based Arada, say they are continuing to sell units without offering any additional incentives to customers.
“We are in a relatively fortunate position, as the demand for well-designed integrated communities in Sharjah still remains resilient, especially in comparison to other markets in the UAE,” Ahmed Al Khoshaibi, chief executive of Arada, said.
“While sales dipped during the lockdown period, they have since surged, especially during June and July, which have been some of the best-performing sales months during Arada’s history.”