Banks in the UAE are emerging as the new heroes for pushing the country’s Golden Visa programme, aggressively wooing overseas investors with highly competitive fixed-term mortgage rates – as much as two percent lower than countries like the UK and India – and also doubling up as enablers for processing loan applicants’ long-term residency visa process, real estate industry insiders said.
A minimum document policy for non-resident housing loan applicants is another major incentive offered by banks for foreign nationals, attracting them in large numbers to seek both mortgages and Golden visas.
The easy mortgage policies are also giving a major push to the growing property markets in emirates like Abu Dhabi, Sharjah, and Ras Al Khaimah, besides the much sought after Dubai real estate sector.
“One offer that is attracting a lot of demand currently is the support provided by banks for Golden Visas in the UAE,” Fouad Chemlati, General Manager – Mortgages at Huspy, a leading proptech service venture in the UAE, told Arabian Business.
“Banks still remain the most preferred mode of financing, even for overseas investors, as they are transparent and payments are made directly to the seller. UAE banks are making it more attractive with their combo offers of highly competitive interest rates and Golden Visa support service,” Chemlati said.
Lower rates, longer repayment periods make mortgages in UAE more appealing
An analysis by real estate agency Allsopp & Allsopp showed that virtually all banks are now offering mortgages at below five percent in Dubai – a phenomenon unheard of in major destinations known for its influx of expatriates into the UAE like India and the UK.
Some of the banks are even offering a 3,4 or 5-year fixed term rates at 4.69 percent – which can further come down to 4.44 percent with a salary transfer – while the average rate for a 5-year mortgage is around 4.70 percent.
In comparison, India, which currently sits as the second highest buyer nationality as per the Allsopp &Allsopp study, offers a fixed interest rate of 6.34 percent, while the UK – the top international investor group in Dubai in 2022 – offers 6.01 percent for a 5-year mortgage product, the study said.
“A lower borrowing rate translates into higher purchasing power for investors,” Connor Humble, Mortgage Advisor at Allsopp & Allsopp, told Arabian Business.
Chemlati said while cash buyers come in for large, high-value properties, the rest need financial support, and banks have made it easier for non-residents to secure loans locally with competitive interest rates as well as long-term payment plans.
The availability of low document policies makes the process more attractive and easier for those who don’t live in the UAE, he said.
“[The current offers by banks put overseas buyers at a huge advantage as they are able to open local bank accounts, build their base here, and also secure long-term residency without being tied to a job,” Chemlati said.
Property developers sweeten bank offers with flexible payment options
Industry insiders said property developers further sweeten bank offers with flexible payment options – an initial up-front payment of about 40 percent with the remainder 60 percent to be paid post-handover.
Chemlati said the attractive mortgage rates are also helping to boost the upcoming property markets in other emirates.
“While Dubai remains the largest property market in the UAE, we are now seeing increased international investor interests in emirates such as Abu Dhabi, Sharjah and Ras Al Khaimah,” he said, adding that each of these attract different customer types.
While families prefer Abu Dhabi, those buying in Ras Al Khaimah are looking for weekend homes or investments for rentals,” Chemlati said.
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