Half the buyers in a Dubai Sports City apartment project are defaulting on their purchases, underscoring the problems facing developers in the Dubailand development.
Many of the defaulters in Rufi Twin Towers are investors who bought at the height of the market, said Rameez Rufi, vice resident of Rufi Real Estate.
“People who are looking (at the apartment) as an end user or to rent, they are still paying,” Mr Rufi told the National.
Buyers backing out of their purchases in the face of dropping prices and changing economic situations has been a major problem for developers in Dubailand, the Dh235 billion ($63.9 billion) master-planned development off Emirates Road.
Many developers have delayed construction due to non-payments when they were unable to arrange financing.
“There are a lot of unfinished buildings standing around in Dubailand,” said Hannah Bakshani, sales consultant for Better Homes.
Several buildings in the Remraam development were delayed “due to non-payments from customers,” Dubai Properties Group said in a recent statement.
More than 40 per cent of the buyers defaulted in two towers developed by H & H Development and Investment, chief executive Shahab Lutfi said.
In some cases buyers were offered aggressive payment plans, allowing them to make a down payments as low as 30 per cent and pay the bulk at handover. Many are choosing to walk away from their purchase rather than make the final payment, with prices down as much as 50 per cent in the area from the peak of the market in 2008.
Owners not making their payments often try to sell their units at “any crash price” to get out of the deal, driving down asking prices. But none of those units are selling, Ms Bakshani said.
“There are no buyers for off plan property,” Ms Bakshani said. “Interest is in finished product.”
Mr Rufi has chosen to continue construction on the Rufi Twin Towers and expects to complete the building within a year.
“If 50 per cent are paying we can make construction,” he said.
Rufi Real Estate owns nine plots of land in Dubai Sports City and is currently developing five projects. The developer is swapping properties from delayed projects and renegotiating deals on a “case by case basis,” Mr Rufi said.
“Otherwise people will run away,” Mr Rufi said. “To sit in this market, you have to listen to the buyers.”
Rufi Real Estate is the property development arm of the family-owned Rufi Group, a Pakistan-based company. The company started buying land in Dubai in 2005 and now owns more than 35 parcels of land, Mr Rufi said.
Last week the company began handing over apartments in Rufi Gardens, an 11-storey apartment building in International City, its first project to complete in Dubai.