35/65, 50/50, 70/30: Which payment plan is better?

“Only 35% until handover” tells me when the money is due. It tells me very little about whether the property is worth buying. A payment plan can help cash flow, but the entry price, rental demand and eventual resale still need to work.

Follow the money

For a hypothetical AED 2 million apartment:

• 35/65: AED 700,000 before handover; AED 1.30 million at handover.
• 50/50: AED 1.00 million before handover; AED 1.00 million at handover.
• 70/30: AED 1.40 million before handover; AED 600,000 at handover.

The 35/65 plan preserves more capital during construction. It also leaves a substantial final payment, potentially alongside furnishing costs, service charges and mortgage approval. I would want to know how that balance will be funded before signing.

Four things to compare

First, how much capital will be committed during construction? Money kept available can provide a safety margin or remain invested elsewhere.

Second, what will your finances look like at handover? A buyer with ample cash may prefer 70/30 to reduce the final obligation. Another may need the flexibility of 35/65.

Third, what are you paying for that flexibility? If one apartment costs AED 2.10 million and a comparable property with a tighter schedule costs AED 1.95 million, the difference is AED 150,000. The payment terms need to justify that extra cost.

Fourth, what happens after completion? Rental demand, service charges and competing supply will affect how comfortably the property can be held or sold.

I would compare the price per square foot, total acquisition cost, realistic rent, unit quality and supply at completion before choosing a payment plan. The seven-year exit case belongs in that comparison too.

There is no universally better split. Choose a schedule you can fund comfortably for a property whose economics stand up to scrutiny.

RadheyShyamRealtor.com

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