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Another outlook on Dubai’s Economy

Imran Farooq, CEO of Dubai based Samana developers, shared his insights regarding the return of the realtors and buyers in the year 2021 for the purchase of properties. International buyers seems to have lost interest in buying property from Dubai in the year of pandemic but the CEO is sure that they will return in the year 2021 as Dubai made necessary changes in its health and trade sectors.

His company saw a decline of international buyers previous year.  The numbers used to somewhere from 60 to 65 per cent of international buyers. But this year it was 80 per cent of buyers who were the residents of Dubai and not international buyers. The complete change is ratio suggested that there was a decrease in international buyers.

The first quarter was a challenge given to all sectors world wide and the strategies on how to overcome the crisis declared the winners. Not just to Dubai but to the whole of United Arab Emirates too. Dubai being the hub of the lavish properties it took a turn in the first few months. “By the second or third quarter, strong participation from UAE residents combined with normalization of flights, and the fact that the Expo is starting in October 2021 … we are very bullish about 2021.” Said the CEO of Samana developers.

Dubai having a beautiful lifestyle and community , safety keeps getting better and better might convert visitors into buyers. The explore option that the people of Europe , America and Asia have given them the availability of having Dubai as their second home. This is only possible after the flights start to fly regularly.

There will be two launches in the month of May 2021, a whoopinh 155 million Dirham ( $42 million ) project in the Jumeriah Village Circle and the second project Is being valued at 100 million Dirhams ( $27 million ) in Dubai Studio City. Being in the approval stage with planning authority and complying with RERA’s ( Real Estate Regulatory Agency ) escrow requirements they are set to taken on the market again.

RERA has passed new rules of depositing 50 per cent of the project’s construction cost upfront which was only 20 per cent last year. Which is believed to be beneficial for Dubai’s real estate sector.

“It will weed out non-performing developers since motivation will be extremely high for developers to focus on construction. They will be pushed to complete the project sooner to close the escrow account and release the equity.” Commented on RERA’s new rules initiative by Imraan Farooq.

He believes to that the forte has always been to build and deliver on time. Always running on a conservative model and the rule set by RERA goes well with their model.

Adding to this , due to the off-plan supply being reduced the investors will be looking at ready properties and this will put the brand Dubai in much demand!  The rule of %) per cent deposition will help reduce over supply in the market as it slows down the off-plan launches. “A developer (has) to come up with 250 percent additional cash flow, so automatically, the number of developments he can push should reduce by half. That’s how I expect the supply of off-plan projects to come down.”

In the previous month , CORE – a real estate consultancy said that their off-plan market activity had decreased by 32 per cent year on year in 2020 due to the buyers preferring the units which were already ready in order to avoid the uncertainty of future. The project costing might raise by 75 per cent because of the new rule and to have the escrow amount, the land has to be fully paid. So that will be 50 per cent of the constructing cost and the amount of the land purchase which will sum up to 70 per cent of the total cost of the entire project being paid upfront. The builders should abide by it as RERA has its mandates.

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