Thursday, July 17, 2008

UAE mortgage market set for a boom

UAE Mortgage Market boom
The construction boom in UAE has resulted in major surge in its mortgage market, with investors being able to take advantage of various new incentives on the offer to purchase real estate.

According to a new survey, the mortgage market in UAE is currently worth Dh.20bn, and is likely to triple to Dh.64bn during the next three years.

Mortgage advisors are of the opinion that Investors are increasingly relying on mortgages to purchase property, with more than 71 percent of UAE investors requiring mortgage to finance their property purchase. This indicates that there exists considerable demand within local market, which shows no sign of slowing down.

This huge demand could be triggered by various factors, such as, increasingly maturing local mortgage market, with both seasoned and first-time investors taking advantage of attractive mortgage incentives to purchase real estate.

Increasing prices of properties are influencing the investments of property buyers, and low interest rates are continuing to fuel the demand. These offers, together with the introduction of new laws, pertaining to property ownership has enabled the UAE mortgage market to truly thrive.

Earlier, the investors had to either utilize their own funds or release equity on other properties in their home country, due to limited availability of local finance. However, the landscape of UAE mortgage market has seen a tremendous change with several new lenders, including the financial institutions and banks, entering the market to take advantage of the rising demand and work with a wide range of developers.

The survey report states that the UAE mortgage market is getting more complex, with mortgage approvals being one of the major reasons behind delays in purchase of projects by investors. Hence, despite several mortgage options being available to property buyers, obtaining mortgage can still be a major responsibility. A good mortgage broker, apart from identifying the best deal, will also have to facilitate the entire process. The property buyers watch for reputation of the lender, the pace at which the mortgage can be processed and other factors, apart from rate alone. The survey states that speed is everything in UAE property market.

The Survey was carried out last year by John Charcoal Dubai, an independent mortgage franchise operation. The Company works in close co-operation with leading financial institutions, real estate agents, and property developers to bring in speed and transparency to property buying process in the UAE.

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