Until very recently in Dubai, mortgages were only offered by the major developers in conjunction with domestic lenders because the real estate market was immature and legislation was not fully in place to legalize Sheikh Mohammed bin Rashid Al Maktoom’s 2002 decree which allowed foreigners the right to buy freehold title in Dubai.
It was this very small risk relating to the fact that the necessary paperwork was still outstanding that kept the major banking players out of the mortgage market and actually allowed the likes of Amlak Finance and Tamweel to clean up in the domestic lending field.
But finally in Dubai the mortgage competition has heated up as major banking players enter the market. So far HSBC in Dubai, RakBank, Mashreqbank, The National Bank of Dubai and the Abu Dhabi Commercial Bank are all offering mortgage facilities for customers interested in buying residential property in Dubai and buy to let accommodation as well.
If you’re wondering about the effect this increase in competition will have on the property finance market as a whole in Dubai, expert opinion is in agreement that in the short term all the lenders will jostle for market domination and may be prepared to loss lead. Over the longer term increased competition will result in providers creating more competitively priced mortgage products and keeping interest rates as low as possible.
All this is music to the ears for those struggling to get onto the property ladder in Dubai as rental accommodation prices soar. Never has it been so obvious that the time is right to buy for residents in Dubai; rental prices are set to continue to rise as demand for such accommodation increases and the supply of available property fails to meet this tide of demand.
International interest in the Dubai property market is also intense and those residing in Dubai and hoping to purchase will have a fight on their hands for property as more international real estate investors flood the market each month!
So, with the ‘invention’ of mortgages in Dubai comes good news for property buyers, but the fact that demand for property is still surging ahead of supply means that there are tough times ahead for those who live in rental accommodation in Dubai and who have yet to set foot on the property ladder or who are awaiting the completion of their off plan purchases.