Mortgage cap could boost Dubai rents

Steady Wednesday, 9 January 2013 3:07 PM - UAE

Off course rents will go up! less finance will reduce buying demand resulting in reduced delivery of fresh housing stock. Smaller floating stock of good quality in established communities will be in demand from investors with cash getting a healthy ROI. And to those who think that developers will rent instead of selling guess what! developers never build on their own money they need buyers to pay them to build!

SA1 Thursday, 10 January 2013 2:42 PM - UAE

Just due to mortage cap the rents will not go up...infact the mortage cap helped in putting some floor to the rents as more end-users become landlords the less number of tenants.

For the rents to go up, the most important thing is recovery of the overall economy and not just real estate.

From my view I don't see any hiring drive from the companies here. In fact many companies are still in cost-cutting mode. And government entities are yet to fully manage their debts.

Steady Wednesday, 9 January 2013 7:49 PM - UAE

@Kingkaiser; I think we will know in less than a month the impact on rents and prices so let us wait and watch! but where is the existing stock? and if you are referring to the stalled projects coming on stream i think their status has not changed for 4 years with this cap will probably slow down their rehab even further, i bet on a short term spike in rents rather than a long term one!

kingkaiser Wednesday, 9 January 2013 4:59 PM - UAE

Thats a 7 year view assuming constant stock, but increasing population. In the short term, the difference would be minimal. There are only a few transactions a month by end users, not millions of transactions. Existing stock will come along anyway, with no one to buy them.

Btw: with an SME focus, Dubai cant allow costs to get out of control, if it wants to see any real growth in this segment.

Rich Dad Poor Dad. Wednesday, 9 January 2013 3:05 PM - United Arab Emirates

Love it , so you really cant loose if you are a property owner.

Great so I will say either you buy from me for the price I am asking for .............OR you rent from me for the rent I am asking for.

Cheers , it's time to celebrate.

I love Dubai.

gordon Wednesday, 9 January 2013 12:47 PM - dubai

and there was me thinking the rents were subject to supply and demand, silly me..

I always thought that so long as occupancy rates did not exceed 95% there would be limited upside pressure...
I must have been studying the wrong books.

Telcoguy Wednesday, 9 January 2013 3:06 PM - UAE

@Gordon, Nasir, yes for each unit not sold because of this requirements, we have a unit that will be put on rental. Then of course you could have something that really changes the market (like some kind of huge REIT snapping a significant chunk of property and becoming a price setter) but i doubt that
@RBH, you realize that London, NY and Monaco have serious issues to build more units, right? Look around you in Dubai... there is plenty of space. When I buy an apartment in Monaco I know I am buying a 'token' whose supply is tightly controlled (and get me a tax-free card), i know i can sell it in 5, 10, 20 years and the value will be there. As currency goes Dubai RE is qutie easy to debase
@expert, yes you are right that things can get messy for people caught into this

RBH Wednesday, 9 January 2013 12:47 PM - Lebanon

All this is a scheme to re-gain back what's lost throughout all these years during the recession. Dubai had a vision then which is transforming itself into another NYC, Tokyo or even Monaco, and allowing itself to be the place of the rich, the famous and... the rich! Increasing property prices means land becomes expensive, and so Dubai is then perceived and valued as an expensive piece of land and that's power for this emirate. Therefore, no recession or property crisis is going to change the vision of "the only way is up." If ever a recession happens again, just know that if property prices go down, then that's only temporary. You're in Dubai? You have to pay for that. You don't like this? Find another place to live.

nasir Wednesday, 9 January 2013 12:47 PM - uae

I dont think the rent has to increase.

The units kept empty for buyers will become avaibale for rent incresing market availability.

Most of the morgage buyers are already renting a place.

only reason rent should increse is when more poeple come to UAE and less new units are released.

Adnan Wednesday, 9 January 2013 11:32 AM - UAE

Oh you Property brokers always finds ways to hike the price! I live in a JVC villa which was rented last year for 80K now they are asking for similar villa 125k .. thats not fair!

Nasser M Wednesday, 9 January 2013 11:32 AM - UAEW

Biggest problem is Dubai property market is flipping (buying off plan property by paying 5-10% cash advance and selling it immediately with higher price). This affects indirectly the price level of existing and ready properties. One way could be to forbid off plan property re-selling for a year.

expert Wednesday, 9 January 2013 11:31 AM - UAE

An other thing that is going to happen is floating rates from banks on existing loans will go up. Current mortgage holders will not be able to sell because people can't afford loans and cash buyers are just waiting for prices to drop on the one hand. On the other hand they would not be able to refinance because they owe more than 50% of the property value to their bank. Banks will have no incentive to refinance, au contraire, they will bring interest rates higher. An other source of stress for the economy.....

Hassan Tuesday, 8 January 2013 5:32 PM - UAE

It will be a golden opportunity to introduce new financing alternatives such as lease to buy and balance of sales.

Fahad.S Tuesday, 8 January 2013 5:31 PM - UAE

I dont see any way capping mortgages LTV to 50% for expats will help in the CB's goal to curb real estate prices. As is correctly mentioned in the article, it is the speculators (not end users) who drive prices up and who have ready cash to make such purchases. This cap would really affect those (like me) who were planning to escape paying rent costs by moving into my own property thereby offsetting my rent payment with the mortgage payment. Im sorry but such fiscal policies are not in favor of the middle-class in UAE who are effectively the engine running the economy. As a result, rent prices will now begin rising and we will be back to square one! Not Cool !

chetan palan Wednesday, 9 January 2013 11:32 AM - UAE

hi fahad,
Do not worry, Infact this will reduce unnecessary speculation,& will reduce your overall outflow as overall prices which are kept High artificially will come down.

Which in turn will reduce rents also.