In 2024, substantial promotions are once again supporting the launches of offplan projects.
Dubai: Build, sell and buy back?
Some Dubai developers are considering the possibility of incorporating ‘buyback’ schemes into their offplan launch offerings, aiming to gain favor with potential sellers. Dugasta, a developer, has recently implemented such a scheme with the Al Haseen Residences project, pledging to repurchase the sold unit in full after 5 years, should the homeowner choose to sell. (The project is situated ‘close to’ Al Maktoum International Airport.)
In the upcoming weeks, buyback schemes may gain more traction as the Dubai property market adapts to new buy-and-sell dynamics. Presently, developers are actively promoting their projects, presenting compelling arguments for their offerings.
However, buyback guarantees have been relatively inconspicuous until now. Historically, developers typically withdrew entirely once the primary sale was completed, and, at best, engaged in managing the rental process on behalf of the owners.
In the Dubai property market, the prevalence of ‘1% monthly’ plans can be attributed to numerous factors.
“These were essentially ‘timeshare’ schemes, with the developer managing units placed in a rental pool,” explained an estate agent. “Owners had the option to stay there for a specified period each year.
“A buyback guarantee represents an advancement, especially if it occurs after 5 years, when compared to coming directly from a developer.”
Price gains
According to Tauseef Khan, Chairman of Dugasta Properties, the deal offers buyers a substantial risk-free opportunity, ensuring a 50 percent return in the initial five years and a guaranteed buyback option after the fifth year. This provides buyers with the potential for significant profit through the resale of the asset, capitalizing on price appreciation.
“This ‘Winter Deal’ extends beyond just property; it’s about unlocking opportunities and creating value.”
Over the past three years, Dubai property values have experienced notable increases, reaching peaks of 20-40 percent from their lows in 2018-19 at certain locations. Property market sources anticipate that, even if the pace slows down, there will still be value gains in the market.
Service charge waivers
With increased competition among Dubai developers in the offplan sector, the latest trend involves offering service charge waivers as a significant incentive. Numerous launches now come with 3-5 year waivers.
The head of a real estate consultancy emphasized the importance of buyers conducting thorough research on service charges in the neighborhood and property values before finalizing any deals. “If the calculations align, a 3-5 year service charge waiver can represent a substantial saving,” the expert advised.
In Dubai, service charges, which property owners pay for the maintenance of their building or community, have experienced a consistent rise over the past year, aligning with overall cost inflation.
