Here’s a viable option for cost-conscious buyers, tenants in Dubai
Dubai Sports City has 4,800 units scheduled to be ready by the end of 2017 and a further 1,100 units in 2018.
Launched in 2004, Dubai Sports City combines a mix of residential units and a multi-venue sports complex, constructed on Sheikh Mohammed Bin Zayed Road near Motor City. The three residential districts are a combination of apartment buildings and villas/townhouses, including Canal Residence, Gallery Villas and Victory Heights. Developed by Bukhatir Group, Dubai Sports City has recently become a viable alternative for buyers and renters looking for lower priced units.
According to Property Monitor’s Supply Tracker, Dubai Sports City has 4,800 units scheduled to be completed by the end of 2017 and a further 1,100 units in 2018. However, many projects are yet to reach near-completion stage, with only eight weeks left in the year. Thus, majority of handovers could be delayed into 2018. This is a substantial number of units being delivered into the community within a short period of time.
The increasing supply of apartments in Dubai Sports City may place pressure on the future sales and rents of apartments within the area. The Property Monitor Index shows there has been a 4.3 per cent decrease in residential rental prices in Dubai Sports City in the last 12 months, with the current average rent for a one-bedroom apartment decreasing to Dh65,500. The average rent of a two-bedroom apartment is currently Dh81,375, compared to Dh90,000 in October 2016. The declining rents mean that more attractive options are available for those who are migrating to this area.
As has been noticed in most areas across Dubai, the amount of rental cheques a tenant can pay with has increased. The increase in competition has helped ease the burden on tenants, giving them the power to negotiate on the rental contract and number of cheques is a part of that. The market has seen a gradual shift, with two to three cheques being the norm, and four cheques progressively becoming common.
With regards to Dubai Sports City apartments in October 2016, rental payments of four cheques dominated contracts with 56.5 per cent, while two and three cheques made up 43.5 per cent of rental payments. In the past years, tenants paying in more than four cheques was unlikely, however, instances of 12 cheques are also being seen for Dubai Sports City apartments.
In October 2017, 30.8 per cent of rental payments were in 12 cheques, while 23.1 per cent of rental payments were through four cheques and 46.2 per cent as one, two and three cheques. This trend is likely to continue into 2018 with six and 12 cheques rental agreements expected to become more common.
In recent years, post-handover payment plans have also become more prominent in the market. This, along with favourable mortgage products, has led to a significant upward trend in off-plan sales in 2017. With reference to Dubai Sports City, off-plan apartment studios make up 55.7 per cent of the bedroom mix in the community, with an average sales price of Dh451,700.
Examples of available payment plans include that of Classic Soccer Tower, which requires a down payment of 40 per cent, with the remaining 60 per cent being separated into four payments throughout the development progression of the building. Similarly, the payment plan for Elite Sports Residence 10 requires a down payment of 40 per cent. However, it offers two options of due dates for the remaining 60 per cent of the payment. The first option is five payments, whereas the second option is three payments with 40 per cent being handed in one year after the handover of the building.
In payment plans that are more weighted towards post-construction payment (for instance, 40/60, 30/70), majority of the inflows are linked to completion. Hence, in such cases, the developer is more incentivised to deliver the project in order to realise these cash flows. Such payment plans have contributed to attracting first-time buyers. However, buyers must conduct thorough due diligence on the developer’s track record, among other factors like project quality, comparable market prices and rents, before signing onto such plans.