The managing director of a top Dubai developer has called on UAE banks to provide a non-resident mortgage, claiming they are currently "too timid" in their support of the real estate market.
Damac Properties boss Ziad El Chaar said on Wednesday that banks must return to lending to allow international buyers the opportunity to engage in property ownership in the emirate.
“One of the most important factors which is still holding the market back and has not yet been recognised is the lack of mortgages,” said El Chaar.
“Today, most of the business is still being conducted on equity, not leverage. Cash buyers made up almost 75 percent of the number of transactions in Dubai in the first six months of 2013.”
He added: “I believe the banks remain too timid. What we need is a practical and pragmatic non-resident mortgage. Dubai will then be able to attract more people genuinely interested in owning a property in Dubai - but they can only do that through a proper mortgage.”
He said the idea of a non-resident mortgage is not a new one. It is possible to obtain such a product to invest in the property markets in Canada, the UK, Spain, Australia and many developed nations around the world.
A down payment in the region of 25-30 percent is generally required and the lender will need to see proof of employment with an established company, he added.
“Not everybody can come straight into the market with $1 million and buy a property with cash, in full. If a fully regulated system is implemented, which has the appropriate checks and balances in place, we will see a strong surge in long-term, sustainable investment," El Chaar said.
“Until we have this in place, mortgages will never be a big element of the real estate market of Dubai. To be able to get a mortgage today you need to be a resident of the UAE and you also need to be able to demonstrate a portion of your income is coming from the UAE. So, if you are living overseas and you would like to buy a second property in the sun in Dubai, you can’t,” he added.
El Chaar said: “The regulation in the Dubai real estate market is providing the required reassurance and legal recourse for investors, now the banks need to step up to support the growth and attract a wider international investor base.”
Damac Properties has completed 8,887 units to date and has a further 23,788 units at various stages of progress and planning across the Middle East region.