Emaar and UP pander to buyers
Property developers attempt to resuscitate Dubai’s market by reintroducing rent-to-own schemes. The market must be really slow for Emaar and UP to bring back schemes they offered over four years ago.
November 17, 2008 11:27 by kippreport
This morning, as Kipp leafed through a copy of The National, we were struck by an enormous, single page advertisement by Union Properties (UP). It read: “Rent, Own, Rent to Own. The choice is yours.”
The last time UP offered buyers the option to rent-to-own was four years ago when it launched Green Community. It offered the scheme as an incentive for intrepid buyers to see and live in the properties before they decide to buy it. But soon after UP launched its scheme, Dubai’s property market boomed, and UP found that buyers didn’t need incentives to buy into the emirate’s vision.
UP, however, isn’t alone. On November 12, Emaar released a press release announcing the return of the rent-to-own scheme, and the introduction of plan-to-own. Like UP, Emaar first offered buyers the option to rent-to-own apartments and villas at the beginning of Dubai’s property market boom with the launch of its Greens and Lakes projects in 2003. Back then, buyers had two years to decide if they wanted to purchase the property or not. If they wanted to buy, half of the annual rent they paid to Emaar would be deducted from the price of the property.
This time around, the scheme is a little different. Residents have 10 months to decide if they want to buy the property they’re renting, and the entire annual rent they paid to Emaar will be considered as a down payment on their apartments.
Emaar’s plan-to-own scheme is entirely different. Buyers are asked to put a five percent down payment and to arrange up to 70 percent financing from a bank. Emaar will finance the remaining 25 percent over a period of five years with a six percent interest rate. According to an Emaar sales representative, the developer will not be charging early settlement fees.
What does all this mean, you ask? Well, Emaar and UP are responding to reports that potential buyers are having a hard time finding financing for their properties. They’re also responding to the concerns that people have about Dubai’s property market, which include that properties are too expensive; the bubble has burst; and, most importantly, banks want nothing to do with Dubai’s properties.
And although offering these schemes prove that the emirate’s market has been struggling to attract buyers, it also shows that property developers are willing to step down from their pedestals and give potential buyers a break.
A small break, but it’s better than nothing.