Completed properties are starting to show signs of life while off-plan sales have become "unsustainable", according to a property developer.

"Off-plan property sales have proved to be unsustainable. Sales enquiries for off-plan properties have been stagnant now since the third quarter of 2008 – completed properties are, however, starting to show signs of life," said Mohammed Nimer, CEO of MAG Group Property Development.

The collapse of the off-plan property model affected not only the UAE, but other property markets such as the United Kingdom and Spain.

Those markets moved away from their traditional property buying methods and have seen similar falls with small investors often left holding property with negative equity.

"Mature property markets have turned away from the off-plan model and returned to the traditional buying methods," said Nimer.

"This means a property development is fully financed by a combination of sophisticated private equity investors prepared to take the risk and the banks. The end-user, or owner-occupier, does not become part of the transaction until the near completion of the building.

"This means that the risk of a development being abandoned in a tough selling environment is reduced as both the developer, the private equity investor and the banks are too exposed to do anything other than complete and handover the property," he said.

"In the boom years, we saw small investors take the place of professional private equity investors and, in many cases even the banks, to finance property development with the results we see today.

"With banks now having little appetite for high risk investments, off-plan is an unsustainable business model – the future is the traditional, completed property transaction," said Nimer.

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