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Generally speaking, off-plan properties traditionally attract a higher percentage of investors and speculators than end-users when there are ample finished properties available for sale in the market.
We are currently witnessing buyer preference more focused on more affordable mid-market products as evidenced by the take-up in recent launches targeting this market segment.
This is a combination of affordable price tags and attractive payment plans offered by developers.
For example, there are various projects where developers are offering a 50/50 payment plan (50% during construction and 50% on completion). Some banks are offering to mortgage the property to the value of 50% on completion which means that the purchaser only has to come up with the other 50%.
With the February 2015 announcement of the Al Rayyan mixed-use project, the first development available on a 100-year leasehold basis for all nationalities in the northern emirate of Sharjah, the emirate is moving into a new phase of market development.
This project, which will offer 504 high quality apartments with two-bedroom units priced at around Dh1 million, presents new opportunities for expatriate investors looking for an entry point into the market but for whom affordability is key and location close to the Dubai border is important.
Located in the busy Al Nahda area, close to the Dubai border, the development will also feature an office tower and a mall, and is due for handover in Q2 2016.
Other popular developments include the US$2 billion, 25 million-square-foot master-planned Tilal City project situated close to the Al Dhaid Interchange and Sharjah’s outlying communities.
Launched in Q4 2014, the project offers plots of land for development and has attracted considerable interest from both developers and end-users looking to construct their own villas.
Asteco reports that villa plots have virtually sold out due to a low entry land price of Dh30 per square foot.
In Dubai, value for money has become more important than property prestige, with a shift in market preference away from high-end luxury to value-for-money projects located in completed or almost-complete developments.
A decline in buyers from Russia and other CIS countries is prompting new opportunities, and we are seeing more GCC investor interest, led by Saudi Arabia and the UAE, in reasonably priced properties including off-plan projects specifically designed for investors.
In Abu Dhabi, prime and high-end residential units continue to dominate demand and command higher rental rates, especially one and two-bedroom apartments, compared with other market locations.
We are also witnessing a significant increase in demand for affordable units this year.
However, we continue to see limited movement in overall villa sales transactions partly due to a shortage of available quality stock and the continued divide in price expectations between purchaser and vendor.
But with a number of new project announcements expected this year, both from large master-developers and sub-developers, this could prompt renewed market movement.
The majority of end-users prefer to buy ready properties providing that they are fairly priced and that they can get mortgage on them; however, affordable off-plan properties with attractive payment plans are also attracting a fair share of end-users.
Source: John Stevens, Special to Property Weekly
Managing Director, Asteco