In this month's Talking Point we ask mortgage brokers Peter Lee, general manager of Independent Finance and independent mortgage broker Chris Allen to tell us what expats are looking for in the UAE property market.
Do you think that expats feel more confident buying property here in view of the new RERA regulations? Do you think that other emirates will follow? Suit?
Peter Lee: Yes I believe so. These have been introduced by Dubai's Real Estate Regulatory Agency (RERA) to regulate the buying and selling of real estate in the UAE, which will help expats avoid bad practice.
It will also ensure transparency across the industry when buying and selling properties. I'm sure other emirates will follow, soon.
Chris Allen: Yes, Without doubt this sort of legislation gives the buyer a greater "Comfort Factor" and confidence in the advice given. At this time I cannot answer about whether or not other emirates will follow suit but I am sure that we will soon find out.
What sort of properties are expats looking for?
PL: Most end users are now looking for their own property to live in as owner occupier due to high appreciation demands on rentals. Mainly expats are looking for apartments and villas close by or within their work areas and also within easy reach of school and shopping facilities.
CA: I guess buyers see the amount they can afford first, then speak to agents to see what falls into their price bracket. Expats looking for buy-to-let will be looking at the return on investment. Expats looking to live in the property will have a different approach.
They will be looking at shops, schools, proximity to work and the overall area they feel comfortable to live in. Quality will always shine through.
What would be an average mortgage, what types of mortgages are on offer and over what period of time?
PL: It really depends on what property type. For apartments, mortgages are generally around AED 1.75 to AED 2.20 million and for villas around AED 2.70 to AED 3.50 million.
Most mortgage loans offered by lenders are standard variable rate. There are some which offer fixed rate, but usually only for a short term with high interest rates.
Lenders are keen to lend with a tenor between 20 - 25 years, as long as their age does not exceed 65 years of age during the loan agreement.
CA: The average mortgage, I would say, would be 60% of the purchase price, given that the mortgage market here is so new there is not much to choose from in terms of "types of mortgages".
The repayment method is the standard however there are a few "Interest only" loans available. However "Cap and Collar" "Deferred Interest" "Tracker" and many others are not available yet.
How easy is it for expats to get mortgages to buy property in the UAE and what is the most popular type?
PL: It is very easy. For example, if a salaried client who has been working for the same company for at least six months or more, can produce six months of banks statements plus their residence visa sponsored by the employer, that should do it.
Of course we take other factors into account before final assessments are approved. The most popular buys are apartments and villas.
CA: As long as the client has all the paperwork to give the broker, along with a completed application form and fees then an offer shouldn't be too difficult. Self employed and non residents can prove to be trickier.
However a broker will know exactly what the lender will require and package the case accordingly.
Who is buying in the UAE in terms of age groups, gender, nationalities and income brackets?
PL: Age groups starting from late 20's and early 30's. Major Nationalities: British, Indians, South Africans, Americans and Australians. Income bracket on an average base from AED 25K and above.
Ratio of men to women buying is seven to three. There are lots of singles looking for mortgages but we get more married couples.
CA: I can only speak for myself, most of my clients over the last three years have been busy successful executives, who prefer to employ a broker to do all the legwork and negotiations with the lender to get the best rate.
This applies not only to people who live in the region but also to non resident purchasers. I have helped a whole range of clients including a client based in the UK who bought a whole corner of a building from first floor to the top and another client who had bought several Emaar Properties over the years and wished to refinance.
The most unusual was a self employed clairvoyant who needed a mortgage for her Palm Property.
Who are the big lenders here and why do expats feel safe with them?
PL: Any bank that provides full retail banking products under one roof. i.e: current, savings, loans, investments, customer service centers, retail branches, ATM and online banking are popular as mortgage lenders.
CA: The biggest home finance lenders here are Tamweel and Amlak.
HSBC, Lloyds and Barclays are the international banks who lend here however not all developers are on their lists therefore it may not be possible to obtaining financing from those banks for properties in Dubai.
What is the overall mortgage market likely to be worth this year and will it go up or down?
PL: A lot of projects are being built and the market still continues to grow. The numbers of mortgages are expected to increase this year.
There are a lot of properties near to completion and there will be more demands for housing loans in such a sophisticated property market.
I also see that property market prices will correct. soon, expect to see a slow increase rather than a rapid one. My advice to everyone... get it while you can, it is still not too late.
CA: I spoke to several local banks and asked for their estimates, AED 26Billion would seem a fair figure. I believe that the mortgage market will continue to grow exponentially.
What are the ‘hot areas' for the 20-30 year-old expat buyers?
PL: Mostly apartments in Dubai Marina, Greens and Downtown. JLT area is also getting popular due to reasonable prices.
CA: I would guess "Old Town" and those types of developments are the most popular among the 20 to 30-year-old bracket that are buying properties in the UAE. The most most popular developments tend to be those that are close to shops, hotels and cinemas.
What about the older couples with families who want good areas to bring up children in view of the shortage of villa accommodation?
PL: Villas are better buy than the apartments for families as they tend to come with gardens. I see a lot of villas for sale on the newspaper adds.
CA: I have got to say the Meadows, Arabian Ranches, the Springs. All of those developments provide buyers with lovely accommodation with all the parks, cycle areas, schools and amenities families in particular will need.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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