|
|
UAE Freezones Biz News Updates
|
|
|
More Dubai tenants consider buying property
Rising rents, low mortgage rates drive shift in attitude, industry experts
say
 The Marina
Walk in Dubai.
The concept of renting and hopping from one apartment to another has become
unrealistic for some tenants in Dubai and many are now warming to the idea
of owning a home.
Property experts in the UAE have observed a change in attitude towards home
ownership and say this shift is driven primarily by rising rents and easier
mortgage terms.
Residential rents have been rising recently, owing to the recovery of the
real estate market. During the first six months of the year, rental values
across Dubai went up by 11.3 per cent.
As a result, more residents are “considering the option of making the
transition to property ownership”, according to Faisal Durrani, associate,
Cluttons research. “There are a number of drivers for this, primarily
favourable lending rates and as a way to avoid being caught out by further
advances in rental values across Dubai,” Durrani told Gulf News.
Interest rates on mortgages in Dubai have dropped over the last three to
four years from 9 per cent to 4.5 per cent per year. Banks are also offering
other incentives to would-be homeowners, such as discounts on processing and
valuation fees, and reduced interest rate during the first year.
“As a matter of fact, people who got a mortgage in 2008 to 2009 can benefit
significantly by switching to cheaper loans,” said Preeti Bhambri, managing
director and founder of Moneycamel.com. Bhambri said rates have been falling
primarily due to the lower cost of funds and a stable environment. The
competition among banks is another factor that has led to better mortgage
conditions.
“The excess liquidity that banks have been enjoying for the last few years
has pushed the cost of funds down. On account of a better regulated property
market, where mortgages are available only for ready properties, banks now
face a lower risk and hence charge a lower risk premium,” she said.
Dubai’s real estate sector, which was impaired during the global recession,
has started to recover recently amid increased money inflows and high oil
prices. The UAE’s political stability during the Arab Spring has helped
attract foreign capital to the country.
According to Durrani, property buyers in Dubai are still mixed, with the
proportion of first-time buyers, GCC nationals and smaller investors looking
to own properties to let remaining largely unchanged. “Furthermore, Dubai’s
perceived safe haven status continues to drive inward investment into bricks
and mortar, as investors shy away from some of the more troubled areas
across the broader region,” Durrani added.
Buyers are largely interested in owning properties in premium locations such
as Dubai Marina, Downtown Dubai and Emirates Living. Other “centrally
located submarkets” like Business Bay are also seeing an “upturn in buyer
interest”.
Development of Business Bay
“The infrastructure in Business Bay has come a long way over the past 12
months, particularly in the strip closest to Shaikh Zayed road. In addition,
with direct access to Downtown Dubai and more residential schemes starting
to get handed over, we are starting to see the birth of a new community,
which is expected to spur further interest in this submarket,” said Durrani.
As of the second quarter of the year, apartments in Dubai Marina cost
Dh1,317 per square foot (sq. ft). Emirates Living villas were a little bit
more expensive, at Dh1,409 per sq ft. In Business Bay, flats were more
affordable, selling at Dh858 per sq. ft.
August 27, 2013
|
| |
Courtesy Al Nisr Publishing LLC
|
|
