Author: badmin

UAE banks stick to aggressive home finance offers, and that is helping buyers

Planning to buy a home in the UAE? And worried that the latest interest rate hike and chances of more to come & will be an extra burden if you take out a mortgage?

You needn’t be, according to a top official with the mortgage – focussed fintech Huspy.
“We must remember that the UAE not only has some of the most competitive property prices among global cities, but the interest rates are very attractive,” said Fouad Chemlati, General Manager for Mortgages at the Dubai-based company.

In the US, for example, the average interest rate for a 30-year mortgage is over 7 per cent right now. The UAE market had already priced in the interest rate increases. That’s why with the last two rounds of (by US Federal Reserve and repeated here) hikes, we actually saw interest rates being reduced, benefiting homebuyers.

Right now, the lowest 3-year fixed mortgage available is 4.24 per cent. On average, interest rates are at approximately 4.7 per cent for residents and 5.14 per cent for non-residents.

H1-2023 numbers confirm it:
Mortgage appetite during the first six months has been quite healthy, even with the 10 rate hikes since March 2022. This is why there is no lack of confidence among bankers that the trend will continue deep into this year. Even with yesterday’s additional 0.25 per cent hike, and the Fed saying they are not done with the increases.

What does all this mean for a home loan?
Right now, for instance, a Dh1 million mortgage over 25 years at a rate of 4.75 per cent on the capital and interest would cost Dh5702 per month,” said Chemlati.
With the 0.25 per cent increase to 5 per cent, the same mortgage would cost Dh5845, or an additional Dh143 every month.

For homeowners in the UAE, the 3-month EIBOR was 0.56 per cent in March 2022, a difference of 4.8 per cent currently, which equates to Dh4000 per month on Dh1 million over 25 years.

Clearly, today’s property buyers in the UAE are willing to take that in their stride.

More lease deals show landlords willing to cut their asking rates

The new rental contracts as well as renewals come at higher lease rates, but more landlords are now not getting their asking prices. And willing to negotiate a rental agreement at a lower sum.

This trend is starting to show up more forcefully in recent leasing deals, and across communities and popular residential locations in Dubai. If the trend persists through the final four months of 2023, it would mean that after three years of high-powered growth, rents in Dubai are starting to stabilize.

Even then, that still represents relief for Dubai’s growing resident base, with many of them having had to shell out between 10-30 % more as rent than what they would have paid in 2019-20. And for the city’s new residents too, any leveling off on what they have to pay as rent would come as a big break as they settle down into their new homes in towers and communities.

This is what Asteco, the property services firm, has to say about rental trends:
“There are signs that they may be reaching a ceiling. One such indicator is the difference between listing (rental prices) and (actual) contracted rates, as recorded by the Dubai Land Department.”

“According to the data, apartment and villa units are often renting at the lower end of the (asking) range, despite the fact that they are not advertised as such.”

In other words, landlords are being realistic enough about what they should reasonably be expecting.
Some industry sources had been saying that further turbo-charged growth in rentals would have meant the property market overheating.

Island community records Dh4.2 billion in land sales in H-1

A premium plot on Palm Jumeirah has been sold for Dh190 million. The plot covers 56,295 square feet, with a construction area earmarked at 120,000 square feet, and the plot will be transformed into a luxurious residential hub.

Dubai’s real estate market has witnessed Palm Jumeirah standing out as a crown jewel, registering 7.5% of the city’s total residential sales this year, according to data released by the Dubai Land Department. Furthermore, the residential property segment has observed a 16% surge in sale prices in the latter half of 2023.

The island community recorded Dh 4.2 billion in land sales through 210 transactions in the first half of this year, marking an upturn from 137 deals last year.
Moreover, according to Knight Frank’s Q1 2023 report, villa prices in Palm Jumeirah have risen by a whopping 126% since the pandemic, with a 14 % increase in Q1 2023 alone.

Last year, one 59,500 square feet plot and built-up portions on Frond N of the island community sold for Dh600 million. The next highest-priced deal was land sold for Dh206.52 million on the Palm.

City keeps redefining itself, and each new project icon adds investor’s prospects

Dubai’s real estate is evolving and distinguishing itself from the established global markets. It offers unprecedented opportunities; this is not about superiority, but because Dubai is laying down its foundational dynamics and rules. And has already showcased the capability to execute ambitiously.

These are the pivotal trends shaping Dubai’s real estate landscape:
👉 Disruptive masterplanned developments: In stark contrast to established investment markets, Dubai continues to roll out mega master communities in coveted locations, whether that’s Creek Harbour, Port De La Mer, Citywalk, or the much-anticipated Palm Jebel Ali.

👉 Surge in luxury residences: Before the Covid era, luxury branded residential projects in Dubai were limited. In a mere span of three years, this number has skyrocketed by over tenfold.

👉 Infrastructure and landmarks: A hallmark of a standout real estate market is always about its robust infrastructure. Dubai’s global prominence is accentuated by its infrastructure. The city’s progression not only influences real estate demand but also its intrinsic value. The key takeaway is that as Dubai’s infrastructure is still in development, with new mega-landmarks and masterplans, it promises once-in-a-lifetime opportunities not found in mature markets that are largely fully developed.

👉 Holiday home revolution: The introduction of fully government-regulated holiday homes not only diversified the rental market but also provided landlords with avenues to tap into a broader tenant base beyond Dubai’s permanent residents. This had a remarkable impact on the rental demand and returns in Dubai.

👉 The lack of decades-long historical reoccurring market trends mandates a sharper focus and nuanced strategy for navigating this market’s unique opportunities. Investors venturing into Dubai’s real estate are advised to collaborate with seasoned experts.

Registration for off-plan villa sales is now open

Often look at the mansions lining the lush fronds of Palm Jumeirah and wish you’d been in the running to snap up a property before it launched?

You’ve got a second chance at a home on one of Dubai’s iconic man-made islands as Palm Jebel Ali opens sign-ups for off-plan villa sales.
Pre-registration for interest in purchasing five to seven-bedroom villas is now open, starting from Dhs18 million, and the development aims to be an “aspirational residential destination” with a vision to be home to 35,000 families.

Back in June, Time Out Dubai reported that construction was resuming on Palm Jebel Ali, the 13.4 square km island put on hold in 2008.
If you thought Palm Jumeirah was impressive, brace yourself for Palm Jebel Ali.
This will be twice the size of the original Palm, with 110 km of shoreline and 80 hotels, malls, and attractions.

While the opening date has not been confirmed, the pre-launch of property sales suggests construction could be ramping up.
The relaunch of Palm Jebel Ali is part of the Dubai 2040 Urban Masterplan, launched by His Highness Sheikh Mohammed, prime minister of the UAE and ruler of Dubai, in 2022.

Palm Jebel Ali will also contribute to Dubai’s global tourism appeal and the government’s goal to double the Emirate’s economy by 2033.