Distressed deals are rapidly gaining popularity in Dubai’s real estate market, and for good reason. This term refers to situations where a buyer has purchased an off-plan property but can no longer keep up with the payments or needs money quickly. As a result, these properties are often offered at or even below the original purchase price.
Why the Number of Distressed Sales is Increasing in Dubai
There are several reasons why more of these deals are coming onto the market. Firstly, many large project developers now require that at least 50% of the original price is paid before a property can be resold. Many buyers do not have that capital, especially if they entered the project with the goal of flipping it quickly for profit within a year. Many simply never had enough financial capacity to hold onto the property.
Another important factor is the increasing supply. Many new projects are launched with attractive terms such as just a 10% down payment, which makes it tempting to switch to a new launch instead of holding onto an existing project. Additionally, some developers are slow to start construction work. In many cases, construction only begins 12 to 18 months after booking. Why would someone pay a high price for a plot of sand now if there is no visibility of actual development?
Distressed Deals Offer Immediate Advantage and Faster Growth
For buyers, distressed sales are particularly interesting. By taking over a property from an original buyer at the old price, you often pay 15% less than the current off-plan prices from the same developer. Over the past 18 months, prices for many projects have risen significantly.
Furthermore, there is another important advantage: these properties are often delivered much sooner. Those who buy a distressed unit now are often already 12 to 18 months closer to handover than someone entering a new launch. And in Dubai, off-plan property prices rise the most in the year before handover and upon actual handover. This results in a much higher return per year.
In other words, those looking to invest in Dubai now would do well to consider off-plan resellers. They are cheaper, ready sooner, and offer better returns than new bookings.
Edward Clarke is a seasoned property expert with extensive experience in international real estate investment, with a particular focus on Dubai’s fast-growing property market. Drawing on both personal investment experience and years of client advisory work, he helps investors make informed, realistic decisions when purchasing apartments, villas or off-plan developments in Dubai. With a pragmatic mindset, a sharp focus on returns and a strong commitment to transparency, Edward is a trusted point of contact for anyone considering a property investment in Dubai.
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