The real estate sector in Dubai has always been innovative in the product offering space as buyers enjoy an array of options to choose. Dubai, for long has been an attractive investment destination for investors from across the globe, with real estate being a premier option of investment for both the investors as well as the Dubai economy. With the announcement of the Expo 2020, investors are even keen than before to look at Dubai and so are the locals, to make best of the opportunity that the current market scenario offers. There are great deals for one to pick in all sectors of real estate. Whether you are looking at an office space, a new home or moving to a bigger place, now is a great time as prices of projects are in an exciting range of value for the end customer. Another plus that makes it the perfect time is the flexible payment plans offered by developers to give buyers add the added advantage and make buying easier than before.
Generally, developers tend to keep the payment plan variable to meet the requirements of their prospective buyers. However, to understand the science behind payment plans, it is important to first categorise and simplify the types of payment plans offered and understand how each segment responds to the offered plans. As you read on, you will get more clarity and hopefully be guided to choose a plan that best suits your need.
Post-handover Payment Plan
Initially launched in late 2013 by developers of larger sized projects, private developers soon jumped into the game with payment plans as low as 1 percent per month.
Post-handover payments are targeted towards investors who intend to invest around 50 to 70 percent of the property value, until the property is handed over, with the rest of the payment they can earn from rentals. As a result, they end up buying property for half the price on most instances. Additionally, the return on investment scales up to 15 percent because of lower investment coupled with higher rent.
Apart from these investors, a large number of buyers also avail this plan as they want to own the property without having to involve banks as they can self-fund the purchase, thereby skipping the hassles of dealing with banks and the due diligence paperwork challenges.
One must consider certain parameters here as a price increase can directly affect the return on investment and the value derived. A simple technique is to check the post-handover payment and conventional payment amounts by comparing the price per square foot of the property against a similar property, ideally within the same community. This gives one a fair idea whether the property is worth investing in or not.
Mortgage-friendly Payment Plan
This is the 30/70 plan which starts with a 5 or 10 percent booking amount. Here, it’s noticed that buyers have saved up for the initial payment and as the projects construction progresses, which ideally is a one and half to two years period, they save and make payments at stipulated intervals of progress. Upon handover, they have the option to pay the remaining 70 per cent through mortgage.
A vast majority of end-users prefer to own homes this way. This includes salaried residents and small families who are currently renting homes and wish to now purchase their own place.
The 30/70 plan has been a tried-and-tested method in the market. Occasionally though, 40/60 and 35/65 plans are also offered by developers and financial institutions as flexible other options.
Aggressive 10/90 Payment Plan
The increased dynamics in the Dubai real estate industry has brought about greater changes. The industry has witnessed a trend where developers offer 10/90 payment plans for optimistic investors and end-users who are short on funds or plan to invest a smaller amount due to the risk of incompletion. For them, a 10 percent payment upon booking and the balance 90 percent can be paid over a period on 5 years post moving in. Another benefit here for buyers who wish to rent out their property would be the rental taking care of the pay outs to a large degree.
Development with handover dates closer or less than 12 months usually launch this scheme, and cash buyers who look for mitigated risks in real estate investments are the usual takers.
Rent-to-own Payment Plan
Although popular in other parts of the world, the availability of this plan is very limited in Dubai. This payment plan is based on ready properties and is solely targeted towards end-users who do not have monetary resources ready and yet intend to invest in a home.
To conclude, we request you to get a good understanding of the plans that best suit your need. Basically make an informed decision and make your home buying experience a joyful one with happy memories along the way.
We wish you the very best for your home/office purchase. Do feel free to connect if you wish for any assistance, as we will gladly help you with our expertise and experience to get you the best deal in town for that perfect space that’s yours.