The reductions are intended to be an incentive to investors to keep up payments.
Mada'in cuts home prices by 30%
Mada'in Properties, a Dubai-based developer, has cut the price of its properties to existing homebuyers by 30 per cent, citing lower construction costs. The reductions are intended to be an incentive to investors to keep up payments on off-plan properties, including the 60-storey Marina Arcade tower in Dubai Marina, as prices have fallen sharply and defaults are spreading across the industry.
"We have studied the market conditions and have formulated a strategy that deals with the past, the present and the future," said Abdul al Awar, the chief executive of Mada'in Properties. "Bearing this in mind, we have made the decision to assist our customers in their investments, not only in good times, but also in the current market conditions. The construction costs have been reduced significantly allowing us to pass on the savings to our current customers."
Investors in the company's developments will receive revised contracts and have their remaining payments rescheduled. The revision will give customers a reduction on the original price. Mada'in is not the only developer to revise its prices. Union Properties recently offered existing buyers a 10 per cent discount on their remaining payments. In Abu Dhabi, where launch prices last year rose above Dh2,500 (US$680.65) per square foot, Bloom Properties announced a price cut last month. Bloom said it was lowering prices in its key project, Bloom Gardens, and the discounts would extend to buyers who had already purchased a villa.
Arady, an Abu Dhabi-based private equity group focusing on the property sector, said it would cut prices at The Helix towers on Reem Island by about 20 per cent. "There are only a few mechanisms you can use to keep existing investors in projects," Vincent Easton, the sales director of Sherwoods, a property broker, said last month. "One is financing, which is very difficult at the moment. One is revised payment terms. This shows the intention of the developer to continue to build and should inject confidence."