Al Forsan, the Abu Dhabi-based sports resort and housing complex, has come up with a “rent-to-buy” offer targeting Emiratis.
The government-owned developer said at Cityscape Abu Dhabi yesterday that it was offering rent-to-buy as an option for 50 of the 385 villas and town houses it has completed in Khalifa City A, on the outskirts of the capital.
Under the terms of the deal, Emirati buyers will be able to pay a premium on their rent for five years, which can later be used as a deposit on a mortgage.
This means that for a Dh4.9 million four-bedroom town house, which would normally rent for Dh210,000 a year, under a rent-to-buy deal, a buyer would pay a total of Dh300,000 for five years.
At the end of the five years, Al Forsan would then give the buyer back their Dh450,000 overpayment plus a credit of another Dh1.05 million – enough cash to pay for the 20 per cent deposit required by banks to raise a mortgage.
Although construction on Al Forsan Village started back in 2008, it was not until the start of this year that the first residents moved into the development, which also has 440 apartments.
Al Forsan declined to say how many of the villas and apartments it had sold so far, and how many were leased. But it said that during Cityscape so far it had received bookings from 12 buyers.
Al Forsan denied that it was offering rent-to-buy as a response to the current softening Abu Dhabi market.
“Our market is local and we’re pretty sure that the low oil price will not affect buying ability,” said Rashed Al Qubaisi, the general manager of Al Forsan International Sports Resort and spokesman for Al Forsan Real Estate Management. Brokers do not expect more developers to start offering similar schemes this time around.
“Rent-to-own is really a very poor deal for developers,” said Ben Crompton, the managing partner of Crompton Partners. “It is generally a sign that the developer hasn’t been able to sell off-plan. It’s generally a last resort because developers prefer to sell off-plan if they can and get that cash up front.”
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