Customers to do their research before buying off plan property said Damac spokesperson
According to Damac spokesperson, customers to do their research before buying off plan property ‘Loose’ payment plans offered by developers could end up hurting the Dubai real estate market, according to Damac Properties’ senior spokesperson, Niall McLoughlin. Speaking to Arabian Business at real estate show Cityscape Global, McLoughlin, senior vice president, marketing and corporate communications at Damac, said some developers in Dubai propose payment plans that are “too good to be true.” “What worries me? Payment plans. I look around and you have big developers in Dubai that have big balances, corporate funds and access to capital.
These developers can offer payment plans that are very attractive, but I read something the other day that had 10 percent deposit, and [the other] 90 percent due 10 years after delivery. How can that thing be built?” he said, adding construction costs are 60 percent of total costs. “So if it’s AED100 to build, you need AED60 to construct. If you sell all of them and collect 10 percent, you only have 10 percent. Where is the other 50 percent coming from? And we’re seeing payment plans three years after delivery, four years after delivery.
It worries us, because we as one of the main players, who have AED10 billion in escrow, we could do that, because we have good money to fund it. “But when we look at the market, we’re just very concerned that loose payment plans may result in a point where a lot of projects need to go to banks looking for big checks that may not be forthcoming. We could end up in a situation where big buildings with customers defaulting and that would not be good for the real estate market,” he said.
McLoughlin advised customers to do their research before buying property, including checking the title deed and mortgage fee on the land. Consumers should also make sure the developer has paid for the land in full, appointed a main contractor and has 20 percent in escrow before they start selling. “If it’s too good to be true, it’s probably not true. We tell every customer, before you buy property, ask for proof of all of this.
And after that, look at payment plans. If it’s 90 percent after 10 years, ask yourself, how are they going to build this? Who’s going to pay to build this? And we encourage smart consumers to ask developer the difficult questions. Don’t just take it in face value; that it’ll be built and everything is rosy. Due diligence, due diligence, due diligence,” he said.
Damac Properties' Just Cavalli villas, designed by the Italian luxury fashion house and located in its mega project Akoya Oxygen Damac Properties launched its own attractive payment plan in September with its Just Cavalli villas, designed by the Italian luxury fashion house and located in its mega project Akoya Oxygen. Prices for a three bedroom villa start at AED1.3m, payable over three years.
The company has seen over AED4bn in sales in the first half of 2017 and expects to exceed the AED7bn mark it hit last year by the end of the year, according to McLoughlin. “We talk the talk and we walk the walk. Nothing proves customer sentiment like our sales figures,” he said.