The pressure’s on luxury developers in Dubai to offer one-of-a-kind projects of higher quality, experts say.
A new tax law in the United Arab Emirates could push developers to make their projects more competitive by cutting better deals on off-plan sales and offering unique amenities that help them stand out from others.
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The country introduced a 5% tax on a swath of goods and transactions on Monday, including the sale by developers of newly constructed residential units. But the government is offering developers a break onthe tax forunits sold in the first three years after a building’s completion—upping the ante forthem to sell new developmentquickly, experts say.
In the near-term, that could mean offering more attractive payment plans. But in the future, the tax benefit will likely push cautious developers to do their research before starting a project, particularly in Dubai’s oversaturated luxury sector, Faisal Durrani, head of research at Cluttons, told Mansion Global last month.
The new tax paired with increasingly savvy buyers will require luxury developers to differentiate themselves, according to a report on 2018 market predictions released Tuesday by Luxhabitat.
"The need for differentiation will play a key role in the luxury market in 2018 in my opinion—in terms of integration of outside living with the inside, finishings, quality of fittings and fixtures, and overall attention to detail," said Ibrahim Al Ghurair, founder of Muraba Properties, in the report.
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For example, Muraba hired a Pritzker-prize winning architect, Spain-based RCR Arquitectes, to design Muraba Residences on Palm Jumeirah.
Anton Yachmenev, managing director at Forum Group, said much of the luxury market segment doesn’t hold up against the luxury standard set elsewhere in the world.
"The luxury sector is a unique in Dubai. There is an oversupply in the so-called 'upper scale segment,’, but a huge number of those properties don’t epitomize true luxury," he told Luxhabitat. "We will start to see buyers who understand the pervasive distinction between true luxury and aspirational luxury."