Peter Wilding, deputy chief executive of Abu Dhabi based Capitala, has declared off plan projects as 'defunct' and said his company is looking at a new plan that would have property investors making most of their payments after the completion date.
Wilding said that developers need to change and put more money into the early stages of projects to convince buyers to invest, especially in the current economic climate.
The off-plan model was at the root of the property boom in the Emirates which began when Dubai first began selling unstarted homes at the beginning of the decade. But it has now gone sour as the global economic downturn resulted in plummeting buying interest due to credit drying up.
'The selling off-plan model is basically defunct. We haven't officially changed anything but it is certainly under review to change the payment plans,' explained Wilding.
Capitala is a joint venture between CapitaLand of Singapore and Mubadala Real Estate and Hospitality. Its first project is Arzanah, a development with a focus on health and an active lifestyle.
The project includes 9,000 homes, 7 kilometers of bike tracks, a mall, three medical centres, the existing Sheikh Zayed Stadium and other recreational facilities. But Capitala has managed to sell 86% of the apartments in the first phase, including all 14 villas.
However Wilding says that the challenge remains to find buyers for the unsold units and keep earlier buyers up to date with their payment plans. So the strategy would be to start offering homes that were in line with market demand. One of the next phases, for instance, is a more affordable set of buildings called The Lofts.
Changing the payment plan to have most of the money due after construction would also help convince buyers to make an investment, he said.
