Off-plan property sales must be stopped, says chairman of Al Habtoor
The chairman of the Al Habtoor Group has called for an end to off-plan property sales as Dubai housing completions reach their highest levels in almost four years.
Khalaf Al Habtoor, who runs one of the country’s biggest conglomerates, urged authorities to prevent property developers from taking money from investors before construction was well under way on new homes.
“You should not take people’s money,” he said in an exclusive interview with The National. “You should sell when the building is more than 30 or 40 per cent completed. I would recommend to stop [off-plan sales] completely.”
Rampant off-plan property development during Dubai’s boom years was blamed as one reason property prices collapsed in late 2008 and construction work on thousands of homes ground to a halt.
However, the subsequent introduction of mortgage lending caps aimed at limiting the scope for speculation and future boom and bust cycles has led to developers offering extended payment schedules – allowing for small down payments.
Some analysts see this as one explanation for the apparent paradox of booming off-plan property sales at a time of static or falling prices for completed homes.
“If I want to buy something, I want to buy something I can see, that I can touch. I don’t want to see something on a plan,” said Mr Al Habtoor.
“Imagine you are paying money now and receiving it in 10 years. This is not right.”
The scale of current development is reflected in data released by the property broker JLL yesterday.
It shows more homes were completed in Dubai in the past three months than in any quarter in almost four years.
The completion of 5,400 residential units during the third quarter of this year was the highest since the fourth quarter of 2012, when about 6,200 units came to the market, it said.
As many as 11,000 units are due to enter the market in the final three months of the year with some 2,500 of them located in the Akoya project by Damac. Not all are likely to be delivered as scheduled, according to JLL.
Mr Habtoor, whose business interests include a global hotel empire, car dealerships and real estate, is developing the vast Habtoor City project in Dubai.
But not all analysts see the off- plan model as a negative.
“The most conservative payment plan observed to date included a 75 per cent payment at handover,” said Jesse Downs, the managing director of Phidar Advisory.
“This is more in line with off-plan sales strategies and policies in developed markets. It shifts some of the risk away from the investor and toward the developer and their debt and equity sources.”
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