Dubai: How about a developer issuing cheques to the buyer for a change? Yes, you heard that one right.
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Sun & Sand Developers is to sign on the dotted line and issue four cheques a year to buyers who want to sublease their units at its SunCity project in International City Phase 2, next to Dubai Silicon Oasis. “We will sublet the apartment and start offering 5 per cent net RoI (return on investment) of the property’s value to the owner,” said Sailesh Israni, Managing Director.
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“The first cheque will be issued immediately after the handover — in all we will write eight cheques over a two-year period to the owner. Plus, we will take care of the service charges for these two years. The only requirement for the unit owner is he should have cleared all his payments due to us on handover.”
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Substantial
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The numbers involved can be substantial for the unit owner. By Sun & Sand’s number crunching, an owner of a one-bedroom would thus get Dh25,750 for each of the two years. Plus, he wouldn’t need to pay the Dh7,900 as service charges for the period. (A one-bedroom at SunCity is selling for Dh515,000.
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And a two-bedroom unit owner would get Dh34,000 apiece for the two years, plus a Dh9,900 waiver. The cost of buying the property would be Dh680,000.
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Bullish on rentals
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So, what’s in it for the developer? “Even in today’s soft rental market, we are quite confident of renting these units out at an optimum rate,” said Israni. “But we assume the responsibility of handling all rental agreements and the upkeep of the property. And through these two years, the owner gets a guaranteed return of 5 per cent net …. when a bank deposit would only fetch 1-3 per cent.”
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Current rentals in the wider Al Warsan area are Dh43,000 for a one-bed and Dh56,000 for a two-bed.
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Sharpening their end game
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It’s not at the off-plan stage that developers are focusing their marketing push. If post-handover is the name of the selling game in off-plan, guaranteed rental returns are what developers push on projects nearing completion.
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Market sources say in the current market, landlords/investors can still generate 5-7 per cent from their rental income. (They would, however, need to keep in mind that Dubai real estate authorities have in the recent past talked about a bringing in a three-year rental freeze.)
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The property consultancy Core says the weakest performing clusters right now are Discovery Gardens (down 13 per cent) and Dubailand (12 per cent) in the 12 months to September, “as competition intensifies in the affordable market segment with more options becoming available, either within the community or in nearby areas.
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“Centrally-located districts such as Business Bay, Dubai Marina and DIFC have observed relatively lower levels of rental falls when compared to outer areas. We expect rental prices to remain under pressure in 2019020 and the rental market to continue being tenant-friendly.”
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A straight discount
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Reportage Properties is offering a straight 10 per cent discount at its projects in Dubai and Abu Dhabi up to September 30. Buyers can also tap an annual net return of 8 per cent after handover and without paying any service fees for the first three years.
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The developer recently launched Phase 2 of the Rukan project in Dubailand, which includes 349 villas, in cooperation with Continental Investment. It will also develop Oasis Residence 1 in Masdar City, Abu Dhabi, and expected to be delivered during the second quarter of 2021. The project provides for 612 apartments.
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