Damac boss calls for non-resident mortgages in UAE

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Damac Properties managing director Ziad El Chaar.

Damac Properties managing director Ziad El Chaar.

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.

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Posted by: shaheen

I doubt this will ever happen. It is too risky for Banks at least in the western world to give mortgages for property in a very politically uncertain region of the world. Only a few months back the west were making plans to attack Syria. And after various exchanges of threats. At last Vladimir Putin counter threated that an attack on Syria by Saudi Arabia's (insistance) would result in Russia launching a war against Saudi Arabia. Some how I cann't see western Banks offering residents and citizens in the west mortgages for property in the middle east and the UAE.

Posted by: Victory

I think DAMAC are 'too timid' in the completion of their backlog of projects!!

Ask those poor souls who have been funding Damac for the last few years with little or no progress on projects they have bought and hold mortgages on..........

This would be funny if it wasn't so serious!

AKOYA - the Beverley Hills of Dubai.........really?!?!

Posted by: Billy

If I owned a Bank here in Dubai I too would be very timid when offering mortgages and the prime reason would be the complete lack of trust in developers like Damac. Mr Chaar you have made your bed now lie in it....

Posted by: Calvin

his comments are totally on the ball, I am a Canadian investor and would LOVE to participate in Dubai real estate market, the only obstacle is a near 100% down payment and no mortgage which provides no leverage and significantly lowers the potential return.... I really hope Dubai govt. act on this fast.....and Dubai RE could see some real boom times ahead!

Posted by: Guest

Just want to add that there are some financial institutions who offer non-resident mortgages in the UAE, including Abu Dhabi Finance, HSBC, RakBank, United Bank Limited and Dubai Islamic Bank. Just have to look a little harder!

Posted by: Not from Canada

@Calvin

You are clearly talking cods whollap tosh, however thank you for your interest and please come again.

Please stop going on the internet during school times.

Posted by: Stephen

Thank you for your interest and I understand your predicament, if it can indeed be called that but the last thing we want at these levels is a boom. Many here believe that booms are sustainable although history teaches us they clearly are not.
Equally, the last thing you need to be doing from a vantage point of over 6k miles away is considering purchasing real estate in an unregulated and opaque market, with little prospect of redress and a list of extraordinarily shady developers, including, arguably in prime position, the very group on which this article is based.

Posted by: tareq

seems Akoya didnt sell well, I wont buy anything Damac behind it, history tells me.

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