Dubai real estate: 1% payment plans trigger major shift in house buying patterns
This, in turn, is prompting developers to look at more innovations for house purchases, including back-loaded payment plans and value added schemes.

Widespread adoption of the 1 percent monthly payment plan for house purchases in Dubai has triggered a major change in the buying patterns, with more and more investors opting for higher category residential units, especially in the luxury and premium segments, industry insiders said.

Dubai real estate: 1% payment plans trigger major shift in house buying patterns
This, in turn, is prompting developers to look at more innovations for house purchases, including back-loaded payment plans and value added schemes

Dubai real estate
Widespread adoption of the 1 percent monthly payment plan for house purchases in Dubai has triggered a major change in the buying patterns, with more and more investors opting for higher category residential units, especially in the luxury and premium segments, industry insiders said.

This, in turn, is prompting developers to look at more innovations for house purchases, including back-loaded payment plans and value added schemes, offering greater financial flexibility post-handover to buyers.

Some of the projects are learnt to be offering competitive down payment options to buyers as low as 0.5 percent.

The value added schemes being considered by some of the leading developers in Dubai include rent-to-own options and discounts on expenses such as school fees, making their properties even more appealing to potential buyers.

“Dubai’s real estate market in 2024 is in a transitional phase, captivating the attention of both developers and prospective buyers alike, thanks to the introduction to flexible payments, especially the 1% payment plan,” Ramjee Iyer, Chairman and Managing Director of Dubai-based Acube Developments, told Arabian Business.

“It [1 percent payment plan], besides triggering a surge in the number of enquiries for property purchases, is also leading to a significant change in the buying patterns of customers, with many of them now wanting to purchase houses in the higher categories because of easing of pressure on heavy upfront down payments,” he said.

“Taking cues from the latest industry trends and successful initiatives by real estate players across UAE, we’re considering back-loaded payment plans, offering greater financial flexibility post-handover,” Iyer said.

Senior officials at few other Dubai developer firms and real estate consultancies also confirmed the move on more innovative payment options and incentive schemes.

This shift also reflects a growing preference for more manageable upfront commitments, coupled with the assurance of quality and timely handover by developers, they said.

Flexible payment options, changes in Golden Visa rules work complementary to each other

Industry insiders said the current demand surge in Dubai’s residential real estate sector is due to a combined boost from the flexible payment options by developers and the recent government move on relaxations on upfront payment for properties for seeking Golden visas.

“The recent demand has also kicked in post the UAE government amending the Golden visa laws pertaining to property investments,” a senior official at a city-based real estate consultancy said.

Property owners can now apply for the long-term visa if the property’s value exceeds AED 2 million, regardless of whether they opt for a payment plan or mortgage.

“This revision not only enhances accessibility to the Golden Visa but also incentivizes investment in Dubai’s real estate sector by offering more flexible avenues for prospective buyers,” Iyer said.

Earlier, individuals were mandated to make a minimum down payment of AED 1 million to qualify for the Golden Visa.

Apartment segment seeing maximum demand post flexible payment plans

Industry players also revealed that the residential apartment segment has emerged as a prominent choice for discerning buyers so far in 2024, surpassing traditional villa preferences.

The data in the Property Finder report 2024 also showed a growing inclination towards luxury residential units, driven by factors such as lifestyle convenience, amenities, and prime locations.

Despite the allure of villas, the appeal of residential apartments has gained traction due to their versatility and modern demand, according to the Property Finder report.

Iyer said buyers are increasingly drawn to the convenience and prestige associated with luxury apartment living, fuelling demand in prominent residential developments across Dubai.

The shift in buyers’ preference is also leading to closing the gap in the rate of capital appreciation between villas and apartments, with a recent ValueStrat report showing that the rate of capital growth in the residential apartments (134%) market is steadily approaching that of the villas (211%).

The trend reflects that sooner or later, residential apartments will overtake villas in UAE in terms of capital appreciation, the report said.