Is a 40/60 Dubai payment plan better than 50/50 now?

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Is a 40/60 Dubai payment plan actually better than 50/50 now?

Yes, if the Dubai property, price and handover date are the same, we would currently prefer 40/60 because keeping another 10% of the purchase price until completion has real financial value.

Take a AED 2 million apartment. With 40/60, we pay AED 800,000 before handover and AED 1.2 million at completion. With 50/50, AED 1 million goes out earlier and AED 1 million remains. The 40/60 buyer therefore keeps AED 200,000 for longer.

That extra liquidity is especially useful today because cash still earns meaningful interest. The UAE Central Bank's latest EIBOR readings put three-month EIBOR at about 4.13% and one-year EIBOR at about 4.81%. EIBOR is not the return every buyer can earn, but it gives us a useful benchmark for the current value of money.

There is one big condition: the 40/60 buyer must be able to deal with the larger final payment. A buyer who keeps AED 200,000 today but has no credible way to produce it at handover has gained flexibility early and created a bigger problem later.

AED 2m Dubai property	40/60 plan	50/50 plan	Difference
Paid before handover	AED 800,000	AED 1,000,000	AED 200,000 less
Due at handover	AED 1,200,000	AED 1,000,000	AED 200,000 more
Total price	AED 2,000,000	AED 2,000,000	None
Extra cash kept until handover	AED 200,000	—	10% of price

How much is the extra 10% deferred under 40/60 really worth?

For a typical Dubai construction period, the financial advantage of 40/60 over 50/50 is usually worth around 1% to 2% of the property price rather than anything close to 10%.

The easiest way to see this is to value the extra 10% that stays in our hands. If AED 200,000 on a AED 2 million purchase remains with us for three years and we value that money at roughly 4%, the benefit of delaying the payment is around AED 22,000 to AED 23,000 in today's money.

Extend the delay to four years and the figure gets closer to AED 30,000. Use a 6% opportunity cost because we have a more productive use for the money, and the advantage rises to roughly AED 32,000 over three years or AED 42,000 over four.

That gives us a practical ceiling when comparing projects. Paying 5% more for an apartment purely to get 40/60 instead of 50/50 makes little sense when the financing advantage itself may only be worth 1% to 2%.

Extra 10% deferred	3 years	4 years	Value relative to property price
At 4.1%	~AED 22,700 per AED 2m	~AED 29,700	~1.1%–1.5%
At 5%	~AED 27,700	~AED 35,500	~1.4%–1.8%
At 6%	~AED 32,100	~AED 41,600	~1.6%–2.1%
Nominal amount deferred	AED 200,000	AED 200,000	10%

Has Dubai's property market changed enough to make 50/50 safer today?

Yes. Dubai's current housing market makes the larger 60% handover payment more important than it looked during the fastest part of the property boom.

Betterhomes recorded 34,850 residential transactions in the second quarter, down 31% from a year earlier and 22% from the previous quarter. The total value of transactions fell 45% year on year to AED 84.9 billion. Its agreed sales also showed an average price-per-square-foot decline of roughly 7% during the quarter.

That does not describe a frozen market. The same quarter was still Dubai's third-busiest second quarter on record, and activity rebounded strongly toward the end of the period. Average residential prices also remained above the previous year's level.

For our payment-plan question, the important change is that automatic appreciation has become a much weaker assumption. Cushman & Wakefield Core now says price corrections are becoming increasingly visible across apartment and villa submarkets after five years of exceptional growth.

A 40/60 buyer who already has the final 60% available should not care much. Someone planning to fund that 60% by refinancing at a higher valuation has less room for error today.

Is Dubai off-plan property still selling strongly now?

Yes. Dubai off-plan property still dominates the market, even after transaction activity cooled.

Betterhomes counted 26,338 off-plan residential sales in the second quarter, representing 76% of all residential transactions. Off-plan volume fell only 12% from the previous year while ready-property transactions fell 59%.

The change from the previous quarter is even more revealing. Off-plan represented around 68% of activity in the first quarter and 76% in the second. Buyers did not abandon unfinished properties when conditions became less certain. They became even more concentrated in them.

Payment plans help explain some of that resilience. Buyers can control a property while deploying only part of the purchase price during construction.

Cash buyers have also become unusually important. Betterhomes says 61% of its purchases during the quarter were cash deals, up from around half in the first quarter. Today's off-plan market therefore includes a large group of buyers who can exploit deferred payment plans without depending heavily on mortgage availability.

Dubai residential activity	Current reading	Change
Total Q2 residential transactions	34,850	-31% YoY
Off-plan transactions	26,338	-12% YoY
Ready-property transactions	8,512	-59% YoY
Off-plan share	76%	Up from 68% in Q1
Cash share of Betterhomes deals	61%	Up from ~50% in Q1

How dangerous is the 60% handover payment on a 40/60 Dubai plan?

A 60% Dubai handover payment is perfectly manageable for a cash-rich buyer and potentially dangerous for anyone who is already stretching to make the first 40%.

The percentage starts to look very different once we convert it into dirhams. On a AED 2 million unit, 60% means AED 1.2 million at completion. On AED 5 million, the final bill reaches AED 3 million. A AED 10 million property leaves AED 6 million outstanding.

The extra exposure versus 50/50 is therefore AED 200,000, AED 500,000 and AED 1 million respectively.

This is where buyers sometimes misread the attraction of 40/60. Lower instalments during construction make the purchase feel cheaper even though the total price has not changed.

We would be comfortable with that concentration when the money for completion already exists or when the buyer could absorb a financing shortfall. We would be much less comfortable if the plan depends on getting the maximum possible mortgage several years from now.

Can a Dubai mortgage cover the whole 60% handover payment?

Sometimes, but a Dubai buyer should never assume that a future mortgage will automatically cover all 60% due at handover.

The UAE Central Bank currently allows expatriates buying a first owner-occupied home to borrow up to 80% of the property's value below AED 5 million and 70% above AED 5 million. For second homes and investment properties, the maximum is 60%. Mortgages on property that is still off-plan are capped at 50%.

Those percentages are regulatory ceilings. Banks still apply income tests, debt limits and their own credit rules. For expatriates, the Central Bank also caps the debt-burden ratio at 50% of gross monthly income.

Valuation creates another issue. A bank finances against the value it accepts rather than simply matching whatever balance appears on the developer's payment plan.

Suppose an investor buys for AED 2 million using 40/60 and owes AED 1.2 million at handover. If the bank values the completed apartment at AED 1.8 million, a 60% mortgage against that valuation is AED 1.08 million. The buyer has to find another AED 120,000.

A 50/50 buyer in the same example owes AED 1 million and has considerably more breathing room.

AED 2m investment purchase	40/60	50/50
Balance at handover	AED 1.20m	AED 1.00m
Hypothetical bank valuation	AED 1.80m	AED 1.80m
60% of that valuation	AED 1.08m	AED 1.08m
Gap versus developer balance	AED 120,000	No gap in this example

Is off-plan mortgage financing getting easier in Dubai?

Yes. Dubai buyers currently have more ways to arrange financing before handover, although some of the new options actually make the 50% payment threshold more useful.

Dubai Holding Real Estate and Commercial Bank of Dubai recently introduced a home-financing programme for eligible properties from Nakheel, Meraas and Dubai Properties. UAE residents and nationals can access financing from the point when construction reaches 30%, provided they have already paid 50% of the property price.

That threshold is directly relevant to our comparison.

Someone following a 50/50 schedule naturally reaches 50% paid before the final instalment. A buyer on a strict 40/60 schedule has only reached 40% and may need to add another 10% before accessing a programme with this requirement.

The programme also offers digital pre-approval, including for eligible salaried and self-employed customers. That gives some buyers earlier visibility over how much they can borrow instead of discovering the answer near completion.

So 40/60 still wins on pure cash deferral, while 50/50 can offer a cleaner financing route in specific projects.

Could a low bank valuation ruin a 40/60 Dubai purchase?

Yes. A weak valuation at handover is one of the clearest ways a highly leveraged 40/60 Dubai purchase can go wrong.

Imagine a AED 3 million investment property with AED 1.8 million due at handover. If a bank accepts a AED 3 million value and the borrower qualifies for the relevant financing, the numbers may work.

Now assume the bank values the apartment at AED 2.7 million. At a 60% investment-property LTV, the theoretical maximum becomes AED 1.62 million. We would suddenly need AED 180,000 more cash than expected.

The risk becomes larger if the bank's valuation falls further or the buyer's borrowing capacity changes before completion.

Current market conditions make that stress test worth doing. Cushman & Wakefield Core has already started seeing price softening across much of the residential market, while Betterhomes found agreed price per square foot down around 7% during the second quarter.

We would model a 40/60 purchase today using at least one scenario in which the finished unit is valued near the original purchase price, and another in which it comes in below it. If the deal works only after assuming a large increase in value, the payment plan is too aggressive.

Does 40/60 give Dubai property investors a higher return?

A 40/60 Dubai plan can boost the return measured against cash invested during construction, although the underlying property still produces exactly the same gain or loss.

Suppose two buyers each purchase an identical AED 2 million apartment and its market value eventually reaches AED 2.2 million. Both have gained AED 200,000 before transaction costs.

The 40/60 buyer has put in AED 800,000 before handover, so that AED 200,000 equals 25% of the cash deployed at that stage. The 50/50 buyer has deployed AED 1 million, making the same AED 200,000 equal to 20%.

That leverage works just as efficiently in reverse. If the property's value drops by AED 200,000, the economic loss is still AED 200,000 and the unpaid balance remains due.

This is why 40/60 can look especially attractive during a rising market. We are committing less cash to control the same asset. The payment plan improves capital efficiency; it does not make the apartment itself perform better.

Is 40/60 better if we want to sell the Dubai property before handover?

A 40/60 plan can be much better for a successful pre-handover resale because less cash has been tied up, but that strategy is only attractive when the developer actually allows us to transfer the property at that stage.

Dubai Land Department allows off-plan properties to be resold, subject to the relevant registration and developer requirements. Buyers cannot assume there is one universal resale threshold across Dubai.

The project's SPA matters. Developers can require a certain percentage to have been paid before issuing a no-objection certificate or approving an assignment. A 40/60 label alone tells us very little about when resale becomes possible.

The leverage can still be powerful. If we have paid AED 800,000 on a AED 2 million unit and later sell the contract based on a AED 2.2 million market value, the AED 200,000 gross increase equals 25% of our original cash paid. With AED 1 million already deployed under 50/50, it equals 20%.

But that calculation works only when somebody will actually buy the contract at the higher price. Today's slower transaction environment makes resale liquidity worth checking rather than assuming.

Does Dubai's new supply make a 60% handover payment riskier now?

Yes. Dubai's large delivery pipeline adds another reason to avoid relying on future appreciation to fund a 60% handover balance.

Cushman & Wakefield Core counted more than 13,200 residential units completed during the second quarter and expects roughly 32,000 more during the second half. Betterhomes puts expected full-year completions at roughly 74,000 units, with an even larger theoretical pipeline scheduled for the following year.

Actual delivery numbers often fall below developers' original schedules, so those headline pipelines should not be treated as guaranteed completions. Even with slippage, a lot of new stock is reaching the market.

That creates very different risks from one community to another. A scarce villa in an established neighbourhood and a one-bedroom apartment surrounded by several thousand competing off-plan units should not receive the same valuation assumptions.

Dubai still has very strong off-plan demand. The supply pipeline simply makes it harder to justify a 40/60 strategy that needs broad market appreciation to rescue the final payment.

Current Dubai factor	What we see now	Effect on a 40/60 buyer
Off-plan demand	76% of Q2 transactions	Supports resale depth in many projects
Q2 transaction volume	Down 31% YoY	Less room to assume instant liquidity
Q2 residential deliveries	>13,200 units	More competing completed stock
Expected H2 deliveries	~32,000 units	More choice for future buyers and tenants
Prices	Corrections emerging in multiple submarkets	Future valuation deserves a stress test

Can a more expensive 40/60 Dubai property still beat a cheaper 50/50 one?

Only by a small amount. A 40/60 Dubai payment plan usually cannot compensate for a meaningful price premium on the property itself.

We can use the value of the deferred 10% to estimate how much extra we should tolerate.

On a three-year schedule, keeping that additional 10% at roughly today's cost of money gives us an economic benefit of around 1% to 1.5% of the purchase price. Four years pushes it closer to 1.5% to 2% depending on the return we assign to our cash.

Suppose an equivalent unit is AED 2 million on 50/50 and AED 2.06 million on 40/60. The second one costs AED 60,000 more, a 3% premium. The extra financing flexibility is unlikely to recover that difference under normal assumptions.

We should also include developer incentives before deciding. DLD registration normally costs 4% of the transaction value, and developers have lately brought back selective DLD-fee waivers and other incentives as competition for buyers has increased. A genuine 4% fee waiver can matter more economically than the difference between 40/60 and 50/50.

Comparing payment-plan labels without comparing net purchase prices can therefore produce the wrong answer.

Who should choose 40/60 in Dubai today?

A buyer who already knows how the final 60% will be paid is currently the strongest candidate for a 40/60 Dubai payment plan.

Cash buyers are the obvious example. If we already have enough liquidity to settle the property at completion, keeping another 10% for three or four years is useful and creates little additional financial risk.

The same reasoning can work for a buyer with substantial income, conservative debt levels and a mortgage requirement well below the maximum allowed by the bank.

Investors intending to resell can also benefit from 40/60 because less capital is trapped during construction, provided the SPA allows assignment early enough and the project has genuine secondary demand.

Current buyer behaviour supports that logic. Betterhomes says cash purchases recently reached 61% of its deals. Those equity-rich buyers can take advantage of deferred developer financing without making their ability to complete dependent on a future bank decision.

For someone who could comfortably pay 50% today, choosing 40/60 at the same price is usually straightforward.

Who is actually safer with a 50/50 Dubai payment plan?

A mortgage-dependent Dubai buyer can currently be better off with 50/50 when paying the final 60% would require near-perfect financing conditions at handover.

The extra 10% paid during construction lowers the balloon payment and reduces exposure to a disappointing bank valuation. It can also help buyers reach the 50% payment threshold required by programmes such as the new Dubai Holding Real Estate and Commercial Bank of Dubai financing arrangement.

This becomes especially relevant for investment properties because expatriate investors face a 60% maximum LTV under current Central Bank rules. A buyer owing exactly 60% at handover has almost no valuation cushion if the plan assumes the maximum mortgage.

A 50/50 buyer starts with more room. The property can receive a lower valuation, the bank can offer less than expected, or the buyer's financial situation can change without immediately making completion impossible.

Buyers should be suspicious when 40/60 looks attractive mainly because 50/50 feels unaffordable. That is often the profile for which the bigger final payment creates the most risk.

So is a 40/60 Dubai payment plan better than 50/50 now?

Yes, 40/60 is currently the better Dubai payment plan when the property costs the same and we can comfortably fund the handover; 50/50 becomes better when completing the purchase depends heavily on future financing.

The pure financial calculation favors 40/60. We retain another 10% of the property's price for years, and today's interest-rate environment gives that delay measurable value. On a normal three- to four-year project, we estimate the benefit at roughly 1% to 2% of the purchase price.

Dubai's current market makes the second half of the decision more important. Off-plan demand remains huge at roughly three-quarters of residential activity, yet overall transactions have cooled, price corrections are appearing in several submarkets and a substantial volume of new homes is reaching completion.

The strongest 40/60 buyer today is therefore someone who could have afforded 50/50 anyway. That buyer gets the liquidity benefit without needing rising prices or maximum bank leverage to complete.

For a buyer who needs a future mortgage to cover virtually all of the 60% balance, we would lean toward 50/50. The additional cash paid early buys a meaningful cushion against a lower valuation, tighter bank lending or weaker resale conditions.

There is a simple way to test the decision. Assume the apartment is worth no more at handover than we paid for it, then assume the bank lends somewhat less than we expect. If the remaining balance is still comfortable, 40/60 is usually the better deal today. If those assumptions make completion difficult, the apparently less generous 50/50 plan is the safer choice.

Fact-checked and reviewed by our local expert

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Ines Benaddi 🇲🇦🇫🇷

Real Estate Agent, Dubai Real Estate

Ines is an expert in Dubai’s property market and her insights were precious to help us write this blog post. With her experience and the support of a leading agency, she provides personalized guidance to help you maximize your investment and achieve your real estate goals in Dubai.

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