The rent-to-buy property schemes are proving to be one of the popular methods for buyers to enter the UAE property ladder, say analysts.
Under this scheme, the tenants get to convert the rent paid into equity towards purchase of their unit.
Aldar Properties, the leading real estate developer in Abu Dhabi, has launched a rent-to-own programme this week for its units at Raha Beach development. The tenants pay a rent for two years, wherein 100percent of first year’s rental and 90percent of second year’s rental is then converter into equity for purchase of the unit.
The tenant, therefore, has no obligation to purchase, apart from being provided with option to transfer the equity into another tenant if they decide not to buy following the two-year period.
Similarly, Sorouh Real Estate had launched its first rent-to-buy scheme in Abu Dhabi this year for its Sun Tower apartments on Reem Island, while Emaar Properties launched this scheme in November 2008 for developments in Downtown Dubai.
The idea has proved to be quite popular already, and it can be more successful, provided, the developers are clear and transparent with terms and conditions, said Priyesh Patel, real estate agent at Aston Pearl Real Estate in Dubai.
The Head of Research and Consultancy at CBRE, Matthew Green, said that although it is good to note the growth of such schemes, tenants should ensure that the rental rates and end sale prices offered by developers are realistic.
Dubai was one of the worst hit markets following the global economic turmoil, with several projects being put on hold or with prices dropping by nearly 60percent from their peak.
Therefore, developers began to consider such schemes to try and inspire confidence among the buyers and reduce the risk factor of purchasing properties within UAE market.
However, Patel cautioned that buyers should purchase such schemes directly from the developers, rather than from individual landlords.