Payment plans in Dubai: flexible financing for primary market investments

The Dubai property market is known for innovative investment solutions. One of the most attractive tools, especially for experienced investors, are the payment plans offered by developers. They are a form of “free credit” for the construction period, letting you buy a property without committing all your capital at once.

How does a payment plan work?

The mechanism is simple and transparent:

a reservation fee, usually 20 percent of the property value at the start,
instalments during construction, smaller tranches, for example 5 to 10 percent every six months,
the largest instalment on handover, for example 40 percent of the price when the keys are handed over.

This kind of schedule is known in short as 60/40. If the split is 70 percent during construction and 30 percent on handover, we have a 70/30 plan.

PHPP, Post Handover Payment Plan

An even more interesting option is the PHPP (Post Handover Payment Plan). This means that, for example, the last 30 percent of the price is paid after the developer hands over the completed unit. It gives the investor extra financial comfort and time to arrange capital (for example from renting the apartment).

Why is a payment plan attractive for an investor?

financial leverage, the investor does not lock up the full property value at once,
portfolio diversification, the option to buy several apartments at the same time without an excessive cash burden,
flexibility, different developers offer different splits, which lets you match the schedule to your own means,
additional financing, the last instalment can often be covered by a mortgage from a local bank.

What to watch out for?

A payment plan is a convenient tool, but it calls for vigilance:

analyse the dates and amounts of the instalments carefully,
with several investments at once it is easy to miss overlapping payment dates,
plan your liquidity to avoid a situation where an attractive project becomes a burden on your portfolio.

Summary

Payment plans in Dubai are a flexible and extremely popular financial solution that lets investors make the most of the primary market’s potential. Using them skilfully gives a strategic advantage and lets you grow your investment portfolio with a limited commitment of your own capital.

In a separate article we cover the options for financing the final instalment through local mortgages, it is worth a read to get the full picture of the investment.