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When Dubai announced two years ago it would double property registration fees, some industry insiders expressed concern the move, which was intended to curb speculative activity in the real estate market, would also discourage legitimate investors and homebuyers. Their fears were somehow validated when transaction numbers and values declined sharply this year, although one could argue there are a lot more factors that have contributed to the slow market. Still, 4 per cent of a property’s value is a hefty sum, especially for seven-figure deals.
This has prompted some developers to reconfigure their payment schemes to help ease the burden on buyers. Some have gone as far as assuming responsibility for the 4 per cent property registration fee payable to the Dubai Land Department (DLD). This could be a timely move after the DLD announced early this year that sold units must be registered within 30 days of purchase, effectively increasing the purchaser’s initial cash burden. Before the new property registration regulation was announced, property buyers were allowed to settle the registration fee anytime, even during handover.
The new regulation has effectively marginalised a number of potential buyers, but it is the developers who are feeling the pinch more than anyone else. Many Dubai developers, both small and big, have therefore come forward to partially or fully cover the property registration fee to lure more buyers to their projects. Ashraf Khan, Off-Plan Sales Manager at Exclusive Links Real Estate, says some of the biggest developers in Dubai are now offering such incentives. Emaar is offering to pay half the registration cost for buyers of its Mulberry and Acacia projects in Dubai Hills, while Dubai Properties is offering to pay the full amount for its Dubai Wharf properties.
Even the payment plans of these units are being made more attractive. For Acacia, Emaar is offering buyers up 60 per cent to be paid during construction and the remaining 40 per cent on handover. According to Khan, Emaar has never offered such a scheme in the last four to five years. For Dubai Wharf, buyers can pay 49 per cent of the price during construction and 60 per cent on handover.
Waiving the DLD fee is catching up among developers and Khan believes more developers will follow suit. He believes most will likely offer to pay half the registration cost.
“I hope that all the developers will follow this trend to assist and encourage buyers and [stimulate] sales transactions,” says Khan. “As registration is paid with the initial payments, it will help buyers with their initial cash outlays. It will surely help the market and [offer] a good discount for new buyers. Also, developers paying the registration fees that are calculated as a percentage of a sale price will encourage them to keep their prices attractive and competitive.”
Laura Adams, Managing Director of Carlton Real Estate, says Azizi Developers also offers to cover the registration fee on behalf of buyers of some of its Al Furjan projects, although the offer is limited. Union Properties is also offering to pay half the registration fee of its next launch in Green Community, says Adams.
“The registration fee is an added cost that buyers have to pay along with the 10 per cent down payment at the beginning of the purchase. So if you are buying a two-bedder worth Dh1.3 million, for instance, you will be paying Dh130,000 instead of Dh182,000. That’s a saving on the first payment of Dh52,000,” says Adams.
Developers are also making their payment schemes as flexible as possible, with some offering extended payment plans of up to six years, which makes property purchases more attractive and affordable to buyers.
Dounia Fadi, CEO of Elysian Real Estate, notes that Dubai developers are now more flexible than before. However, she points out that these offers are not available to all buyers and all projects. “Some developers have offered to pay the full fee on behalf of the client for specific developments, but the offers are for a limited period and do not include previous buyers, only new ones [who availed of the offer] within the specified time,” says Fadi. “However, I believe that if buyers are responding positively to it and grabbing the opportunity, then other developers should not limit themselves.
“We have seen a lot of offers and flexibility in selling off-plan projects, wherein some developers like Seven Tides and Viceroy are offering guaranteed return on investment. We have seen very good payment plans provided from many developers like Deyaar, Damac, Dubai Properties and Danube, while several are also offering furniture vouchers, free service charge, etc., to entice buyers.”
While most offers are genuinely attractive, Fadi strongly advises buyers to do their homework and compare projects with others on offer in the market. It is also necessary to check the background of the developer. “The best thing now is that the DLD has introduced a new app called Mashrooi, where you can check all the details and track the progress of every project in Dubai,” says Fadi.
Source: Hina Navin, Special to Property Weekly