Thursday, September 18, 2008

Rental properties in UAE witnessing massive demand

Boasting 365 days of sunshine, population growth and reliable economic growth, apart from a booming tourism hub, the UAE is also witnessing massive demand for rental properties. This comes as a tempting package for prospective buyers, states a report in Gulf News.

The new property law which regulates the mortgage process, protecting the rights of borrowers and lenders, making considerable advancements in the home financing market of UAE, offers more choice to consumers than before.

The UAE market is rapidly developing, when compared to markets in places such as the US and the UK, with the central bank data revealing that the mortgage lending in the UAE jumped 55 percent in the year till March.

Another factor worth noting when talking about home ownership in the UAE is the huge demand for rentals in the residential sector. Even the business men who have relocated to the emirates are getting disposed towards purchasing homes in the UAE.

Mortgage lenders are agreeing to offer finance to both end-user and investment purchases, and this makes the prospect of buying-to-rent and second-home purchases even more attractive.
Some confident owner-occupiers who comprise 70 percent of the market are willing to take out finance against existing property to raise cash for secondary purchases which indicates the fair manner in which UAE market is being perceived.

Home financiers, led by Islamic organizations are enjoying a 60 percent slice of the market, and are facing tough competitions from foreign banks keen on getting a slice of the action.

International and local mortgage lenders are striving to make it easier than ever to borrow money for property purchase in the UAE and most mortgage providers can offer customers a list of lenders to choose from.

Flexible and varied home loans are available from various sources, and it is getting all the more easier, to finance commercial, off-plan and under-construction properties, given that the planned property is registered with Dubai Land Department as per the terms of new mortgage law.

Also, it is worth pointing out at this instance that UAE market is standing firm, when the markets elsewhere is witnessing the impact of global slowdown, with the dirham still being pegged to the dollar. This implies that although supply is surpassing demand, rates are sizeable, and the UAE central bank can be forced to track number of US interest rate cuts and home loan rates are lower than during the same period three years ago.

Recent reports state that property prices in Dubai have grown over 70 percent beginning 2007, and more than 20 percent since the beginning of this year. So currently, buyers in the UAE are not looking at two to three percent profit gain in a year, but, the margins expected have grown considerably high. With such profits, interest rates are a secondary consideration.

1 comment:

sunil said...

true at the time this was posted in sep. however things are quite a bit different now. expect a massive correction in 2009 and 2010. the 70% figure you mentioned will come down faster than it climbed, scarry to imagine given the rate at which it increased.