Real estate reported that there is a trend in the Dubai real estate market to reduce developers ’profit margins, in order to increase the revitalization of the market, and to attract new investors to face the repercussions of the spread of the Corona virus, especially on sales traffic.
They explained to «Emirates Today» that this reduction comes in the form of added value through facilities and exemptions from registration fees and services, noting that this is in the interest of the final consumer or investor who wants to buy a property in Dubai during the current period which witnesses a price correction.
Changes
In detail, the real estate expert, Hisham Al-Assaad, said that the increase in the supply of Dubai real estate against demand, with the changes that occurred on the market before the spread of the Corona virus that continued with this global pandemic, was a key factor in the developers ’tendency to provide several incentives to attract new customers in support of sales. , Including reducing profit margin through value added through incentives and exemption from registration fees and services.
Al-Asaad added that the market is currently in the stage of restoring the balance between supply and demand, saying that this puts pressure on developers to reduce their profit margins so that they can end the sales of their current projects, before another developer puts forward new projects. He pointed out that there is a difference in the profits that the developer was earning during the past years, and what he will earn during the current period, there is no doubt that it is in the interest of the final consumer or real estate investor who wants to buy a property in Dubai currently.
Competition
For his part, real estate expert Walid Al-Zarouni said, that developers reduce their profit margin in order to sell their projects in light of the current competition, is a positive trend that will ultimately be reflected in the real estate market in Dubai, as it would move the market and increase its activity.
Al-Zarouni added that the biggest beneficiary of this approach is the buyer or the real estate investor, as this brings good investment opportunities that must be seized under the current circumstances with correcting prices.
Al-Zarouni stressed the necessity of joining efforts from all real estate parties, especially from the relevant government agencies, developers, contractors and consultants in order to activate the real estate market, which ultimately is in the interest of the national economy.
Realistic
In turn, the director of marketing at Al-Ruwad Real Estate Company, Alaa Masoud, said that the profit margin for real estate developers has decreased from previous years and the days of the real estate boom in Dubai, pointing out that a number of developers have become dealing with matters in the market realistically, especially during the current period and the resulting Challenges due to the consequences of the Corona virus.
Masoud said that some developers are currently offering housing units that were previously offered at prices up to twice the price, explaining that this is not done directly through the price, but rather comes in the form of facilities and incentives provided by the developer of discounts on service fees or registration fees or others.
He added that the developer began to give up the high profit margins, which during the last period were satisfied with a profit rate ranging between 5 and 10%, but he pointed out that there are some developers who are still exaggerating in pricing the square foot, with the aim of increasing their profits.
Gradual correction
In the same context, the CEO of the "Harbor" real estate company and the lecturer at the Dubai Real Estate Institute, Muhannad Al Wadi, said that looking at the issue historically, we find that real estate prices went through a gradual correction in the period from 2014 to the end of last year, which reduced the profits of the real estate developer, At a rate ranging between 20 and 30% as a result of this correction, which continued with the beginning of this year, as prices fell by 10% as well. However, the valley indicated that this decline came as a result of the value added incentives provided by the developer, which are related to facilities and exemptions for fees, whether they are registration fees or service fees.
He added that despite this, real estate development remains one of the best economic areas in Dubai to achieve profits, stressing that the profit margin is still in a healthy stage and a profitable return for the developers.
Continuation
To that, the real estate developer and Chairman of the Board of Directors of Al-Walid Investment Company, Mohamed Al-Mutawa, said that the real estate developer, who manages the affairs of his company well is the one who can realistically deal with the current conditions, indicating that lowering the profit margin is not a problem for developers in the event There were good sales. Al-Mutawa asked the developers to deal with the market conditions in a way that ensures the continuity of the economic wheel.
coexistence
The vice president of the International Federation of Arab Real Estate, member of the board of directors of the International Real Estate Federation, Mahmoud Al-Buraie, said that the developers should live with the current market reality, pointing out that this matter should be led by the big companies in the market.
He added that it is necessary to continue to reduce the profit margin for the real estate developer from one period to another in a manner that guarantees the stimulation of the market.
Foot pricing
The real estate expert, Mohamed Hareb, called for organizing the real estate pricing process before offering housing units through the presence of specialized committees, whose task is to determine the price per square foot regionally, in order to stop the exaggeration by some developers of increasing the profit margin, in order to preserve the interest of the real estate parties.
The reduction is in the interest of the final consumer, or the investor wishing to purchase a property in Dubai.
- Experts have confirmed that the profit margin is still in a healthy stage with a meaningful return for developers.