The chairman of the Al Habtoor Group has called for an end to off-plan property sales as Dubai housing completions reach their highest levels in almost four years.
Khalaf Al Habtoor, who runs one of the country’s biggest conglomerates, urged authorities to prevent property developers from taking money from investors before construction was well under way on new homes.
“You should not take people’s money,” he said in an exclusive interview with The National. “You should sell when the building is more than 30 or 40 per cent completed. I would recommend to stop [off-plan sales] completely.”
Rampant off-plan property development during Dubai’s boom years was blamed as one reason property prices collapsed in late 2008 and construction work on thousands of homes ground to a halt.
However, the subsequent introduction of mortgage lending caps aimed at limiting the scope for speculation and future boom and bust cycles has led to developers offering extended payment schedules – allowing for small down payments.
Some analysts see this as one explanation for the apparent paradox of booming off-plan property sales at a time of static or falling prices for completed homes.
“If I want to buy something, I want to buy something I can see, that I can touch. I don’t want to see something on a plan,” said Mr Al Habtoor.
“Imagine you are paying money now and receiving it in 10 years. This is not right.”
The scale of current development is reflected in data released by the property broker JLL yesterday.
It shows more homes were completed in Dubai in the past three months than in any quarter in almost four years.
The completion of 5,400 residential units during the third quarter of this year was the highest since the fourth quarter of 2012, when about 6,200 units came to the market, it said.
As many as 11,000 units are due to enter the market in the final three months of the year with some 2,500 of them located in the Akoya project by Damac. Not all are likely to be delivered as scheduled, according to JLL.
Mr Habtoor, whose business interests include a global hotel empire, car dealerships and real estate, is developing the vast Habtoor City project in Dubai.
But not all analysts see the off- plan model as a negative.
“The most conservative payment plan observed to date included a 75 per cent payment at handover,” said Jesse Downs, the managing director of Phidar Advisory.
“This is more in line with off-plan sales strategies and policies in developed markets. It shifts some of the risk away from the investor and toward the developer and their debt and equity sources.”
scronin@thenational.ae
Follow The National's Business section on Twitter
The Last White Man
Author: Mohsin Hamid
192 pages
Published by: Hamish Hamilton (UK), Riverhead Books (US)
Release date: out now in the US, August 11 (UK)
UAE PREMIERSHIP
Final: Dubai Hurricanes v Jebel Ali Dragons
Saturday, 8.15pm, Al Ain Amblers
Semi-final results
Dubai Exiles 20-26 Dubai Hurricanes
Dubai Tigers 32-43 Jebel Ali Dragons
Table
1 Dubai Tigers, 33 points
2 Dubai Exiles, 24 points
3 Dubai Hurricanes, 18 points
4 Jebel Ali Dragons, 14 points
5 Abu Dhabi Harlequins, 14 points
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
2017 RESULTS: FRENCH VOTERS IN UK
First round
Emmanuel Macron: 51.1%
Francois Fillon: 24.2%
Jean-Luc Melenchon: 11.8%
Benoit Hamon: 7.0%
Marine Le Pen: 2.9%
Second round
Emmanuel Macron: 95.1%
Marine Le Pen: 4.9%
SPECS
Engine: Supercharged 3.5-litre V6
Power: 400hp
Torque: 430Nm
On sale: Now
Price: From Dh450,000
CREW
Director: Rajesh A Krishnan
Starring: Tabu, Kareena Kapoor Khan, Kriti Sanon
Rating: 3.5/5
Sarfira
Director: Sudha Kongara Prasad
Starring: Akshay Kumar, Radhika Madan, Paresh Rawal
Rating: 2/5
UAE currency: the story behind the money in your pockets
MATCH INFO
Uefa Champions League quarter-final, second leg (first-leg score)
Porto (0) v Liverpool (2), Wednesday, 11pm UAE
Match is on BeIN Sports
Try out the test yourself
Q1 Suppose you had $100 in a savings account and the interest rate was 2 per cent per year. After five years, how much do you think you would have in the account if you left the money to grow?
a) More than $102
b) Exactly $102
c) Less than $102
d) Do not know
e) Refuse to answer
Q2 Imagine that the interest rate on your savings account was 1 per cent per year and inflation was 2 per cent per year. After one year, how much would you be able to buy with the money in this account?
a) More than today
b) Exactly the same as today
c) Less than today
d) Do not know
e) Refuse to answer
Q4 Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”
a) True
b) False
d) Do not know
e) Refuse to answer
The “Big Three” financial literacy questions were created by Professors Annamaria Lusardi of the George Washington School of Business and Olivia Mitchell, of the Wharton School of the University of Pennsylvania.
Answers: Q1 More than $102 (compound interest). Q2 Less than today (inflation). Q3 False (diversification).
UAE jiu-jitsu squad
Men: Hamad Nawad and Khalid Al Balushi (56kg), Omar Al Fadhli and Saeed Al Mazroui (62kg), Taleb Al Kirbi and Humaid Al Kaabi (69kg), Mohammed Al Qubaisi and Saud Al Hammadi (70kg), Khalfan Belhol and Mohammad Haitham Radhi (85kg), Faisal Al Ketbi and Zayed Al Kaabi (94kg)
Women: Wadima Al Yafei and Mahra Al Hanaei (49kg), Bashayer Al Matrooshi and Hessa Al Shamsi (62kg)
The biog
Name: Marie Byrne
Nationality: Irish
Favourite film: The Shawshank Redemption
Book: Seagull by Jonathan Livingston
Life lesson: A person is not old until regret takes the place of their dreams
How to get there
Emirates (www.emirates.com) flies directly to Hanoi, Vietnam, with fares starting from around Dh2,725 return, while Etihad (www.etihad.com) fares cost about Dh2,213 return with a stop. Chuong is 25 kilometres south of Hanoi.
McIlroy's recent struggles
Last six stroke-play events (First round score in brackets)
Arnold Palmer Invitational Tied for 4th (74)
The US Masters Tied for 7th (72)
The Players Championship Tied for 35th (73)
US Open Missed the cut (78)
Travellers Championship Tied for 17th (67)
Irish Open Missed the cut (72)
SPECS
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now