Cash is king in Dubai's real estate market

Sunday, 24 February 2013 8:35 AM

Andrew Day’s heart was pounding, his hands sweaty as they grasped a bank cheque writing away the life savings of both he and his wife. Sitting opposite, a real estate agent dangled keys to a three-bedroom apartment on the Palm.

“It was a bit scary,” Day tells Arabian Business.

“We could see the keys in his hand. The money was in mine and it was quite literally [a matter of] swapping the two.

“The land department guy disappeared for half an hour. Forty-five minutes later - purely because of the traffic - we were in our new house; it’s that simple, it’s done.”

Buying his first property had taken Day all but a few hours – enough time to flash a cheque and bargain down the price by AED300,000 to AED1.7m ($463,000).

But rewind two years and the long-term Dubai expat’s attempt to purchase a home was not so simple. Armed with only a bank’s pre-approval for a mortgage, Day was persistently thwarted by an endless chain of buyers sporting cash.

“It quickly became apparent that the bank’s backing was not enough,” he says.

“We went to see lots of places but we got the pretty strong impression that turning up with a mortgage meant we were treated like a second-class citizen. They transferred you to some bloke that had nothing better to do. You’re basically wasting their time.

“But if you have cash, a top agent will turn up to meet you.”

Cash accounts for 70-80 percent of property transactions in Dubai, according to the industry. That equates to $30-33 billion in real money splashed across the emirate last year.

Sam Wani, general manager of mortgage adviser Independent Finance, says the level of cash payments in Dubai real estate is extraordinary compared to the rest of the world.

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Posted by: dubai property Monday, 25 March 2013 2:54 PM[UAE] - UAE

money flow in dubai real estate is increasing.. there is no reason to say it will come to a halt

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Posted by: Steady Wednesday, 27 February 2013 11:16 AM[UAE] - UAE

An old saying with a slight twist " those who can't do, whine"! To the old groan gang take a stroll to the RERA office off the creek and see how detached you are from reality!

Posted by: realiste Thursday, 28 February 2013 3:18 PM[UAE] - uae

and check where they are from and the cash too!
Sums it all up really.

Posted by: Wildwine Thursday, 28 February 2013 1:01 PM[UAE] - UAE

Oh yeah, it's all happening again, RE prices are going through the roof and deals are aplenty. Only thing still missing is "off plan" properties. That is the truth.
Reality; lot of people are going to lose money again!!

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Posted by: Paolo C Wednesday, 27 February 2013 12:30 AM[UAE] - Italy

A lots of hot air! Wondering how can someone risk putting 1 AED into the country after it's clearly proven that the legal system is not working at all.

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Posted by: jon Wednesday, 27 February 2013 12:29 AM[UAE] - hahahaland

i don't understand the big deal about this article because any market in the world, any city, when it comes to real estate cash is always king. it doesn't matter the region or country.

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Posted by: Tic Tac Tuesday, 26 February 2013 2:49 PM[UAE] - Canada

Well, well, that explains the reason for no hurry to have the laws about jointly owned properties implemented. The guys laundring the money are shoort term investors; get the cash in, sell the property after a few years and show a clean cash; These guys don't care about HOA's or even building maintenance; They are ready to lose up to 20% if needed. that also explains why dubai real estate has no futur. It is all short term.
All developers know that. They will just care about cashing in, build some infrastructure and when everything is demoloshed, the infrastructure remains and paid for. Good business for Dubai, bad business for genuine investors.

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