Off-plan properties in Dubai: Some developers need payment in full within 14 months

Published Date: 27th Aug, 2024

Off-plan properties in Dubai: Some developers need payment in full within 14 months

Industry insiders report that within a year of an off-plan project's launch, some developers grab about 40% of the purchasers' money, and within 14 months, up to 50%. Because of this, developers have an abundance of cash, which guarantees that projects are completed promptly and turned over ahead of schedule.


On the other hand, some developers also want for consistent income flow from investors and are quite flexible with their payment arrangements. The more affordable areas are the focus of these payment arrangements.


Due to previously unheard-of demand from locals and foreign investors, the Dubai real estate market has experienced tremendous expansion in all of its segments since the pandemic.


Springfield Properties CEO Farooq Syed claimed that because of their alluring payment arrangements, developers are relatively well-off.


For instance, a significant developer receives about 40% of the remuneration during the initial year of the agreement and 50% within the first 14 months of the project's commencement. However, just 10% of the building has been completed. This indicates a robust cash flow that will guarantee the project's completion on schedule. In the upcoming years, there won't be any project cancellations or delays, according to Syed.


Developers are gathering more money to prevent default as the current Dubai real estate cycle peaks. Even in case the market experiences a decrease in the next years, there is an extremely good likelihood that the project will be completed if the buyer pays 40% of the total cost at the very beginning of development. With development moving quickly and projects being turned over before their scheduled completion dates, default prospects are now extremely low, he continued.


A number of developers, including Imtiaz Developments, Danube Properties, and Binghtti Developers, have said that their projects will be completed ahead of time, demonstrating their robust financial standing.


According to Syed, there is a high demand for some of the major developers' projects, with almost 2,000 units selling in a matter of days. "Some of the constructions are getting turned over six to eight months advance of their completion schedule," he said.


Betterhomes team head Sijo Jose reported that recent developments had aggressive payment terms, such as 80 percent during building and 20 percent upon handover, or possibly 90:10 conditions.


Plans for flexible payments

The managing director and chairman of Acube Developments, Ramjee Iyer, also stated that developers are adopting flexible payment schedules in an effort to attract consumers, adding that this aggressive approach to payment plans is common. This blatantly reflects a larger plan to keep demand high and draw in a wide spectrum of purchasers, including investors and end users.


Aggressive payment plans don't always indicate that developers are wealthy, even though they are meant to draw customers and increase sales. These strategies may occasionally be used as a tactic to control cash flow and guarantee consistent income over time.


Developers can help with continuing projects and financial management by maintaining a consistent cash flow over a number of years by providing longer payment plans. By making homes more accessible to a wider variety of purchasers, aggressive payment plans promote market competitiveness and consequently increase sales volume and share of the market, the speaker stated.




Date: 27th Aug, 2024

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