With banks curbing loans because of the global financial crisis and real estate agents finding it difficult to sell properties, developers in Dubai are wooing potential home buyers with lucrative payment options.
A recent survey found that more than 50 per cent of real estate agents in Dubai did not close a single deal last month. As a response, large companies including Emaar, Union Properties (UP) and ETA Star are offering innovative payment schemes to potential buyers ranging from rent-to-own to long-term payment plans.
The Dubai-based UP is the latest to offer flexible payment options.
“UP initially introduced the rent-to-own scheme over four years ago to support the sales at the first Green Community project,” UP’s chief property officer Lesley Sayle said while announcing a relaunch of the scheme.
“It was a plan that was successful, and by reintroducing the rent-to-own scheme, we are giving residents and businesses the flexibility to plan for their homes and office space,” she added.
Under the plan, a customer can rent a property in a select UP project for one to two years. Then, if the client decides to buy the property, the rent that has been paid for the one or two years is converted into a down payment, followed by a regular instalment payment plan.
Sayle says about 98 per cent of UP’s rent-to-own tenants have converted their option and become owners.
Though Sayle said her company did not bring back the plan as a result of cancellations or mortgage defaults. However, the scheme may lure investors still seeking to buy property in Dubai after banks reduced home loan amounts to 50 per cent to 60 per cent of the a property’s total value.
Last week, one of the United Arab Emirates’ (UAE) top developers, Emaar Properties also introduced similar incentives. Under Emaar’s new ‘Plan-to-Own’ option, a buyer can have the flexibility to pay 25 per cent of the property price over five years after the sale closes.
This would make it possible to bridge the current gap due to lower loan to value ratios offered by banks and financial institutions, the company said.
Emaar will help potential home owners and commercial customers who qualify for a mortgage through a bank to bridge the gap by extending their payment plans.
The extended payment plan of up to 25 per cent of the property value will be paid back by the customer in single annual instalments for five years, with the first payment beginning one year after possession.
Under the ‘Rent-to-Own’ option, buyers can first rent a property in one of Emaar’s upscale projects and then decide whether to purchase it.
Tenants can convert 100 per cent of the first year’s rent paid into home financing if they decide to purchase the property within 10 months of living in the home, Emaar stated.
The property price will remain fixed for one year. Customers also have the option of acquiring the ‘Plan-to-Own’ programme if they decide to buy. During the rent period, tenants have the first right to buy the property and those who do not wish to buy can still have the option of renewing the tenancy.
“The ‘Plan-to-Own’ and ‘Rent-to-Own’ programmes are aimed at further strengthening the property sector by facilitating easier purchases and making property more affordable for our customers,” Emaar’s CEO Issam Galadari said.
Meanwhile, ETA Star Property Developers, part of the ETA-Ascon Star Group, is making plans to offer tailor-made payment plans for buyers.
The companies are introducing these plans even as a new survey said property agents here believe the fall in demand for property is due to bank curbs on loans.
By Aroonim Bhuyan
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