Innovative Payment Plans Boost Dubai Real Estate

Some developers in Dubai are implementing payment plans to ensure projects are not canceled and are delivered ahead of time. According to industry executives, some developers collect around 40% of payment from buyers within a year of the launch of an off-plan project and up to 50% within 14 months. This influx of cash ensures that projects move quickly towards completion and are handed over ahead of schedule.

Flexible Payment Plans

Developers also offer flexible payment plans to maintain steady cash flow from investors, particularly in affordable areas. Post-pandemic, Dubai's property market has seen massive growth across all segments due to unprecedented demand from residents and foreign investors.

Farooq Syed, CEO of Springfield Properties

 highlighted that developers are cash-rich due to these attractive payment plans. “A major developer takes around 40% of the payment within the first year of the plan and 50% within 14 months of the launch of the project. But the construction has not even reached 10%. This means the funds flow is strong and will ensure the construction of the project on time. There will be no project delays or cancellations in the next few years,” Syed said.

Steady Cash Flow and Fast Completion

Syed added, “If the buyer has paid 40% at the very initial stage of development, there is a high likelihood of the project reaching its completion even if the market sees a slowdown in the next couple of years. Default chances are very low, and construction is taking place at a fast pace with projects being handed over prior to the completion date.”

Developers like Danube Properties, Imtiaz Developments, and Binghatti Developers have completed projects ahead of schedule, reflecting their strong financial strength. Some projects are handed over six to eight months ahead of their completion schedule due to strong demand.

Aggressive Payment Terms

aggressive payment terms in recent developments, such as 80% during construction and 20% on handover, or even 90:10 terms.

Ramjee Iyer, chairman and managing director of Acube Developments

confirmed that developers are aggressive in their payment plans, implementing flexible schedules to attract buyers. These plans are part of a broader strategy to maintain high demand and attract diverse buyers, including investors and end-users.

Pros and Cons

Iyer explained that aggressive payment plans increase accessibility by making properties more affordable to a broader range of buyers, thus lowering the financial barrier for first-time homebuyers. This strategy attracts more buyers, boosts sales volume, and appeals to both end-users and investors. It also ensures a steady income stream, helping developers manage finances and fund projects.

However, delayed revenue collection can strain developers' finances, requiring robust planning to sustain operations. There’s also a higher risk of buyers defaulting on payments, leading to potential legal and administrative costs. The success of these plans depends on the economic environment and market demand; adverse conditions can affect buyers' ability to make payments. Additionally, aggressive payment plans might drive down perceived property values and affect long-term price stability.