In Dubai property market, will 'buyback' schemes be a new sales strategy for developers?
In 2024, offplan launches are once again being backed by heavy promotions
Dubai: Build, sell and buy back?
Some Dubai developers are mulling the option of offering ‘buyback’ schemes as part of their offplan launch offers, and win them points with potential sellers. One such developer, Dugasta, has just done so with a project, Al Haseen Residences, where the promise is to buy back the sold unit in full after 5 years. If the homeowner wants to do so. (The project is located ‘close to’ Al Maktoum International Airport.)
Buyback schemes could get more traction in the coming weeks as the Dubai property market works on new buy-and-sell factors. Already, there is a wave of promotions going on as developers make a strong case for themselves.
But buyback guarantees have been relatively less visible until now. The general trend so far had been for developers to step back completely one the primary sale is done. At best, they would enter into handling the renting of the units on behalf of the owners.
“These were essentially ‘timeshare’ schemes where the developer would handle the units placed in a rental pool,” said an estate agent. “And the owners could opt to stay there for a certain period each year.
“A buyback guarantee is a step up if coming from a developer.”
More so, if it’s a buyback after 5 years.
Price gains
According to Tauseef Khan, Chairman of Dugasta Properties, “The deal provides a significant risk-free opportunity for buyers who are guaranteed not only the 50 percent return in the first five years, but a guaranteed buyback option after the fifth year. The buyer could cash in on the price appreciation and make hefty profit from the resale of the asset.
"This 'Winter Deal' is not just about property; it's about unlocking opportunities, creating value."
These last three years, Dubai property values have recorded significant gains, touching peaks of 20-40 per cent from their 2018-19 lows at some locations. The expectation from property market sources is that while value gains will still be there even if the pace slows down.
Service charge waivers
As competition heats ups among Dubai developers in offplan, service charge waivers are the next big deal. More launches are happening with 3-5 year waivers.
“Depending on the location and property price, this can be a significant saving for buyers,” said the head of a real estate consultancy. “Before entering the deal, they should do their homework on what service charges are in the neighbourhood – and what the property values are.
“If the sums add up, then a 3-5 year service charge waiver can be quite a good saving.”
In Dubai, service charges - what property owners pay for upkeep of their building or community - have seen a general increase in the last year and more, in sync with general cost inflation.