'Cost of land sets unit prices'

04.11.2014
In Dubai, land related costs make up between 25-35% of the total project value and even a small percentage difference can have a telling impact on the eventual end-user pricing set by the developer. High cost of land in Dubai is one of the main reasons that developers have little choice in changing their pricing scheme, according to a Gulf News report.
Ideally, land related costs should make up between 20-30% of the overall project value, but in Dubai this tends to be between 25-35%. Even a small percentage difference can have a telling impact on the eventual end-user pricing set by the developer.
“The government is putting infrastructure in place — such as Mohommad Bin Zayed Road or Dubai Bypass — that is opening up new areas and allowing developers to access land further out from the more mature — and higher priced — locations,” said Ian Albert, regional director at Colliers International. “This could potentially solve some of the pricing issues related to land."
“Another issue that developers typically face are the upfront payments for the plot purchases. This means they will have to start paying off their loans from Day One. If there is some cooperation on the part of everyone involved to change the payment plans it would reduce the financial burden on the developer at the back end.”

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