Dubai: The Dubai freehold property market’s yawning gap in affordable homes is being addressed — a developer has launched the first phase of a project, branded MAG 5, in Dubai World Central that will eventually see it create more than 3,000 homes there. The first phase will feature 1,118 units spread across mid-rise apartments, with launch prices starting from at Dh499,000 for a one-bedroom.
This phase — expected to cost around Dh800 million — is scheduled for handover in 2018. There will be 13 ground plus six storey buildings.
If more developers come out with similar priced projects and convince more residents that now is the time to buy, it could have a decisive influence on the rental market too in the next two years.
“Our estimate suggests that 70 per cent of Dubai’s resident base remain cut off from the freehold property market, principally because values are seen as out of reach for them,” said Talal Al Gaddah, CEO of MAG Property Development. “We have conceived and priced MAG 5 as a development where the salaried workforce can make the switch to living in rented homes to buying their own.”
To make that happen, the developer is offering direct financing, by which 24 per cent will need to be paid in the first 12 months, including 10 per cent as down payment. The remaining can be spread over 52 months, including 24-30 months post-handover. (For MAG, it is also the first venture into the affordable category, having focused entirely on premium and super-premium high-rises for its developments until now.) “These payments made to us will carry 0 per cent interest and the way we see it, being transparent on the payback schedule and rates are critical to convince mid-income buyers to finally buy,” said Al Gaddah, who added the land was acquired “recently”. “All of the units are priced in a way where upfront payments can be met by buyers’ equity, but does not prove a financial burden on them.”
The developer also has set strict rules on ‘bulk bookings’. Buyers can still go in for multiple unit purchases, but will have to hold on to them until the project’s handover. In other words, flipping is not on. “The project could interest organisations to buy units for their staff residences, which is why we have not put a blanket ban on bulk buys,” said Al Gaddah. “But there will be no trading in these units during the build out phase.”
On when the subsequent two phases will be launched, the CEO said they will take a call on this going by the sales response to the first. Al Gaddah reckons that sometime in the next six months would be a doable. Each phase will add 1,000 units plus.
The MAG 5 launch should also consolidate Dubai World Central’s emerging status as the go-to location for projects skewing towards affordability. Developers have been unanimous in stating that land valuations at any of the existing infrastructure-ready locations make it impossible to price their project for a ‘budget buyer’.