Property Flipping in Dubai

Khaleej Times, a top tier publication in Dubai and MENA region, has recently had an exclusive meeting with the CEO of Samana Developers, Imran Farooq, to understand ticks and trade of the flipping in the real estate in Dubai.

Flipping is an investment tool in financial industry. In property market, it allows the investor to buy an old property, rehab and sell it for profit.

Flipping is an old option in real estate industry. But in Dubai, a few property companies talk about it.  The topic is almost unheard of in the residential property segment in because developers prefer to have 30% to 50% of down payment before the property is put on sale.

In the contrary, there is a lot of flipping in the commercial segment as prices gone up by 300% in the past couple of years.

“As far as demand for residential units is concerned, whether you’re buying under Dh1 million or Dh10 million property, we don’t have a traces of flipping because 90% of the market is controlled by top 15 developers. And reselling of the property by these developers is not allowed until you pay 30 to 50%, depending on the developer. Secondly, in most cases, there is an accelerated payment also. In my opinion, 90% of the people don’t have any intention of flipping,” opines Imran Farooq, CEO of Samana Developers one of the fastest growing developers in Dubai.

He categorises flipping where a property has been sold in under one year. “Most of the buyers are pretty mature and they have a long-term vision and to diversify their investments in Dubai for living and long-term rentability”, he said.

“As far flipping is concerned, the majority of the action is happening in lands, where we have seen 300% appreciation in the last 24 months. That is where active buying and selling is taking place and that is not an end-user item anymore. Commercial land, which was worth Dh20 million two years back, is where the majority of the speculators have stepped in. Limited speculation is happening with flippers in townhouses but that activity is very small. So, flipping has moved from residential to commercial plots,” Farooq told Khaleej Times.

“Nowadays, demand is very high so developers are putting more restrictions. We had quite a high appreciation in prices in a short period since the pandemic. It is not risk-free and easy any more. Because more people know about strategy now than Covid. And now the supply of off-plan is way higher than a few years ago. Because the market started to move again after Covid and there is a huge plan. Developers have tightened regulations around off-plan property. In Covid, it was possible to sell property based on 5 to 15% payment. Many people entered the flipping market and ruined the prices so for the safety of the investors, developers require payment of up to 50% of property value to get the NOC to resell. This restriction made it harder to flip because now developers have put restrictions,” she said during a webinar. Imran Farooq added that the characteristics of the Dubai property market are completely different now as compared to 2008, when people used to negotiate free transfers. “Today, you don’t have that feature because you need to register your Oqood and need to pay 4% upfront. So, the chances of flipping are out completely. Secondly, because there is a ban on flipping the property before you pay 30-50% of the property (price), so gone are the chances of flipping the property. If 90% of developers have these conditions, then flipping obviously doesn’t exist,” Imran added.