UAE developers weigh up the cost of VAT on construction

Dubai’s developers will have to work out ways to handle the VAT (value-added tax) on contractors during a project development phase. This could even have an impact on how developers end up pricing their property values, an industry source said.

Based on developer feedback, project costs typically average around 55-60 per cent of a development, from land acquisition to designing and then on to finally handing over the keys to the property’s owner.

“Now, if a contractor passes on his VAT related costs on to the developer, I assume that it will end up having a 2.5 per cent impact on a developer’s selling price.” It may not seem much, but property buyers in Dubai are turning increasingly price-sensitive. Any sudden spike in launch prices — however small — could tell on demand. More so, as there would still a lot of inventory that carry pre-VAT price tags.

Source Credit: Khaleej Times
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