The chairman of the Al Habtoor Group has called for an end to off-plan property sales as Dubai housing completions reach their highest levels in almost four years.
Khalaf Al Habtoor, who runs one of the country’s biggest conglomerates, urged authorities to prevent property developers from taking money from investors before construction was well under way on new homes.
“You should not take people’s money,” he said in an exclusive interview with The National. “You should sell when the building is more than 30 or 40 per cent completed. I would recommend to stop [off-plan sales] completely.”
However, the subsequent introduction of mortgage lending caps aimed at limiting the scope for speculation and future boom and bust cycles has led to developers offering extended payment schedules – allowing for small down payments.
“If I want to buy something, I want to buy something I can see, that I can touch. I don’t want to see something on a plan,” said Mr Al Habtoor.
“Imagine you are paying money now and receiving it in 10 years. This is not right.”
The scale of current development is reflected in data released by the property broker JLL yesterday.
The completion of 5,400 residential units during the third quarter of this year was the highest since the fourth quarter of 2012, when about 6,200 units came to the market, it said.
As many as 11,000 units are due to enter the market in the final three months of the year with some 2,500 of them located in the Akoya project by Damac. Not all are likely to be delivered as scheduled, according to JLL.
But not all analysts see the off- plan model as a negative.
“The most conservative payment plan observed to date included a 75 per cent payment at handover,” said Jesse Downs, the managing director of Phidar Advisory.
“This is more in line with off-plan sales strategies and policies in developed markets. It shifts some of the risk away from the investor and toward the developer and their debt and equity sources.”
Source: “The National”