Top developers may delay immediate payments as a short-term measure for relief.
Dubai’s top developers are contemplating deferring immediate payments from off-plan property buyers in response to recent devastating rains. If approved, this measure could grant property owners a reprieve from instalments for the next 1-3 months.
The urgency of these internal deliberations has increased following the UAE Central Bank’s directive to local banks and insurers to defer consumer payment instalments for up to 6 months.
“We understand that some customers may face pressing financial needs, potentially impacting their ability to make payments to us,” stated a senior official from a prominent developer managing multiple ongoing projects. In several instances, sales agreements entail monthly payments of ‘1 per cent’ from buyers.
“We are actively engaging with our property buyers to devise a mutually beneficial solution.”
Additionally, developers are grappling with immediate challenges of their own, including water logging and other damages at construction sites. Collaborating with contractors, they are assessing the scope of necessary restoration work and coordinating with insurers to release funds for these purposes.
Obtaining approval for those claims and receiving the funds will require time. Insurance industry sources refrained from providing specific timelines regarding when they anticipate processing those funds.
Not passing on costs to property owners
Developer sources emphasize one key point: regardless of the extent of damages to their sites, these expenses will not be transferred to investors.
Farhad Azizi, CEO of Azizi Developments, stated, “We are absorbing the costs of this unprecedented natural disaster instead of burdening our valued investors. Whether it’s the disruption of labor or any necessary repairs due to the impact of the rains, which we’ve minimized in our communities.
To ensure our buyers are unaffected, we’ve committed to covering any expenses required to deliver our homes on time and maintain the quality standards our investors expect.
For those who have already purchased properties and still have outstanding payments, we are exploring options to offer more flexibility in payment collection.”
In the upcoming days, we are expected to announce deferment plans specifically for those impacted by the unprecedented rainfall.
Deferred mortgages
Those facing imminent mortgage payments should have already received relief. Following Central Bank directives, banks are expected to notify customers about deferment options in the coming days, if they haven’t already. The deferment period is set at 6 months.
A source commented on the potential number of instalment deferments developers might allow, suggesting that property owners are hoping for between 1-3 deferred payments. Azizi mentioned recruiting two experts from Germany to oversee project site activities, aiming to prevent seepage and water accumulation in under-construction communities, ensuring they can withstand future storms without any water issues.
How quickly can construction commence
Regardless of the circumstances, there will likely be substantial communication between developers and property owners regarding the repercussions of the rainfall. Certain developers have already notified buyers that project completions and handovers will be postponed due to the cessation of on-site operations.
This may lead to a notable decrease in the anticipated number of handovers in the latter half of 2024, thereby affecting developer cash flows. According to existing regulations, developers are allowed an additional 12 months for handover beyond the initially promised completion date in the event of unforeseen circumstances.
