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Dubai: Some UAE developers are taking a closer look at their off-plan sales to see the level of their exposures to overseas buyers, and especially to those from Russia or one of the CIS states. The check is to see whether these buyers can stick with their upcoming instalment commitments given how some of the currencies have been performing in recent days.
For instance, with their currency in a free fall against the dollar, Russian buyers with exposure in Dubai’s real estate will have to use up more of their roubles to stick to their dollar/dirham commitments. Dubai’s leading developers have in the past extensively chased Russian and CIS buyers for their prestige projects, with some even timing their latest global launches through roadshows in Moscow.
“They deal principally in cash transactions and do have extensive income generating assets outside of their home markets,” said one industry analyst. “They could use these to meet any payment commitments on their Dubai exposures and not rely on their rouble-based assets. Local developers need not be overly concerned, but it’s always a sound practice to see where they stand on their sales exposures to overseas buyers.”
The latest off-plan launches also have provisions where a buyer has to meet certain payment targets — anywhere between 25 to 40 per cent of the overall — before they can sell in the secondary market.
According to Chandrakant Whabi, CEO of Acrohouse Properties, there have been no reported instances of Russian/CIS buyers trying to offload their offplan properties rather than stick with them through the payment phase. “Typically, Russian/CIS buyers have built up exposures in select established locations in Dubai and have been active on some of the recent off-plan sales as well,” said Whabi. “But it would still be interesting to see their commitment levels on the latest projects further along the payment cycle.”
In the recent past, there have been such instances, through their impact was limited. In summer, just when the Russia-Ukraine strife was heating up, there was reportedly a Ukranian buyer who decided to forego the down payment he had made on a premium off-plan purchase made in Dubai. It is learnt that there were instances when local developers preemptively worked on changing the terms of their payment terms with such buyers rather than see them go.
Meanwhile, local developers are also bringing in subtle changes in the way they approach their off-plan sales programmes. “There will be a certain period during which developers have to do a wait-and-watch,” said Anand Lakhiani, Director at Indigo Properties. “The currency volatility will mean less reliance on overseas buyers, especially from those markets where they are at a disadvantage because of a strong dollar.
“Indigo will thus focus on regional sales ... we have had a lot of success in the past in Saudi Arabia because of the partners we have had from there. Their credibility should open up more opportunities to sell there. We hope to have a gauge on this likely interest by taking part in property exhibitions in the kingdom some time in early January.”
Source: Manoj Nair, Associate Editor, gulfnews.com