Thursday, April 09, 2009

Sale of off-plan properties are defunct, says developer

Major property developer in Abu Dhabi has termed the off-plan sales model as "defunct", which implies that the companies will have to push in more money during the early stages of projects, in order to gain confidence of the buyers.

This off-plan model has triggered-off the construction and property prices boom in the Emirates, as Dubai was the first to begin selling off-plan homes about a decade ago. However, the buying interest has now dried up, due to lack of mortgage and the confidence levels have dropped, affecting several projects.

For instance, Capitala, a joint-venture between CapitaLand of Singapore and Mubadala Real Estate and Hospitality, is also the developer of 147 hectare site on the Abu Dhabi Island. The company is considering a plan to make most of buyers' payments that are due, after the completion date.

The Deputy Chief Executive of Capitala, Peter Wilding, said that the sale of off-plan model is basically defunct, and that the company is yet to make any official changes, but it is currently being reviewed to change the payment plans.

The first project of Capitala, Arzanah, is a development which focuses on health and active lifestyle. The project includes 9000 homes, a mall, three medical centers, and 7km bike tracks and the existing Sheikh Zayed Stadium and other recreational amenities.

Although Capitala has sold 86 percent of its apartments during its first phase, including 14 villas, the challenge remains as to how to find buyers for unsold units, while also trying to maintain the payment schedule of earlier buyers.

Wilding revealed that the company has planned to begin offering homes that are inline with market demand. For instance, the next phases are more affordable set of buildings, called The Lofts'

Changing payment plan to have the most of money due after construction will help in convincing buyers to make investment, Wilding said. After discussing with the Urban Planning Council, some of the heights aspects of the buildings have been altered to prevent them from blocking views of the Sheikh Zayed Mosque and Sheikh Zayed Stadium.

In short, developers across the country are trying to put up with the fewer sales and reduced cash flow affecting their operations. This impact has even touched the contractors.

No comments: