Logo
  • Order call
  • Call management

Property type
No. of bedrooms
Area
Show offers

Dubai home buyers avoid mortgages in favor of payment plans

14.07.2019
Dubai home buyers avoid mortgages in favor of payment plans

In Dubai, real estate buyers are learning to live without mortgages, as more and more developers offer convenient direct monthly payment plans for the off-plan housing units.

The latest data from the Dubai Land Department (DLD) confirms that the share of real estate sales using bank lending was still 62 per cent in the first six months of the year, but this is already much less than last year. Then, in the first half of 2018, mortgage transactions accounted for the vast majority of 81 per cent of the total real estate sales.

Obviously, more and more property buyers want to avoid paperwork obligatory when someone is trying to secure bank lending for their property purchase.

In addition, mortgage rates over the past 12 months soared to new heights, which also pushes potential buyers to a deeper analysis of alternative property purchase options, except for the bank financing. Mortgage rates in the UAE currently stand at 3.75 per cent for the first year.

And for the second year the rate is already 4 to 5 per cent. But interest rates on housing loans are expected to decline slightly if the US Federal Reserve lowers the base rate by 0.25 per cent at the end of this month, as awaited.

During the first half of this year, 4,073 mortgage transactions were registered in Dubai, which is 26.5 per cent less than in the first half of 2017 (5,396 transactions) and significantly less than in the same period last year (5,539 transactions ).

For developers, generous post-handover payment plan offers turned out to be a winning strategy to attract buyers, at least for now, experts say.

“The decline in mortgage sales from 81 per cent to 62 per cent was recorded mainly in ready real estate sector,” said Samir Lakhani, managing director of one of major real estate companies in the UAE.

"But if we also take into account property sales in the off-plan sector, we’ll see that the percentage of sales transactions using post-handover payment schemes directly from the developer will amount to more than 50 percent of the total number of deals closed in the Dubai property market in H1 2019."

In other words, the share of mortgage sales in the off-plan sector has also reduced significantly. Buyers show enthusiasm with responding to the new payment mechanism offered by developers. As the result, the average housing cost is also decreasing, thus overall property price reduction is not limited to exceptional price segment of the market.

The average payment period for off-plan post-handover payment schemes is now about 3.5 years. Some developers even indulge in a rather “risky adventure” with extending these terms to five or even ten years. But such offers are still quite rare.

Stay tuned to find out whether the owners will eventually have to share the registration fee with the buyer; and which areas now experience a massive payment schemes offering directly from developers. 

To always stay up to date with the latest analytics data and real estate prices in Dubai, subscribe to our newsletter using the form below. And in order to sell, lease or buy/ rent housing or commercial properties in Dubai, contact IMEX Real Estate. Our contacts:

Tel. in Dubai, UAE: +971 (50) 2528188 (Whatsapp, Viber, Telegram)

Toll Free Dubai: 800-IMEX (800-4639)

IMEX REAL ESTATE BROKER LLC, UAE

Office 2502, Marina Plaza, Dubai Marina, Dubai, UAE

Email: pm@IMEXre.com

Latest Availability
SALE
6,800,000
Ref.No: AP1113
3BR Apt
3,003 ft2
2,264 AED/ft2
SALE
8,200,000
Ref.No: AP972
3BR Apt
3,750 ft2
2,187 AED/ft2
SALE
730,000
Ref.No: AP165
Studio Apt
630 ft2
1,159 AED/ft2
Latest property news
Send us an enquiry or request a call back
Your name *
Phone
E-mail *
Your message *
*- indicates required
Request a call back
SOGA1  SOGA2
Call management
SOGA1  SOGA2
Lease process (Rent out)
Contract of the lessee and agency.

1 hour

Contract of the lessee and agency.

Required documents:

  • copy of the passport
  • copy of the certificate of ownership
Ad placement

1 day

Ad placement:
  • 20 real estate portals;
  • client base of the agency;
  • profile exhibitions, etc.
Signing of the lease agreement

Up to 2 days

Signing of the lease agreement
Expenses of the seller:

None

Additional services:

Property management

Lease process (Rent)
Contract of the lessee and agency.

1 hour

Contract of the lessee and agency.
Real estate search.

Up to 5 days

Real estate search.

Selection of optimal options.

Signing of the lease agreement

Up to 2 days

Signing of the lease agreement
Expenses of the lessee:

-5% agency commission of the annual contract price

Additional services:

None

Purchase process
Contract of the tenant and agency.

1 hour

Contract of the tenant and agency.
Property Selection

~ 2 weeks secondary

~ 3 weeks new building

Property Selection

Selection of optimal options

Registration of the contract of purchase / sale

1 Week

Registration of the contract of purchase / sale
Customer charges:
  • 2% from purchase at transaction
  • 4% - registration of the transaction at registration
Additional services:

Property management

Sales Process
Contract of the lessee and agency.

1 hour

Contract of the lessee and agency.

Required documents:

  • copy of the passport
  • copy of the certificate of ownership
Ad placement

1 day

Ad placement:
  • 20 real estate portals;
  • client base of the agency;
  • profile exhibitions, etc.
Signing of the lease agreement

Up to 2 days

Signing of the lease agreement
Expenses of the seller:

None

Additional services:

None

the management process
Contract of the owner and agency

1 hour

Contract of the owner and agency
Rendering of management services

1 year

Rendering of management services
Reporting

1 day

Reporting
Expenses of the owner:

5% of the annual rental price

Additional services:

None

Investment Process
Contract of the tenant and agency.

1 hour

Contract of the tenant and agency.
Selection of optimal investment options

From 3 days

Selection of optimal investment options
Registration of the contract of purchase / sale

1 Week

Registration of the contract of purchase / sale
Expenses of the investor:
  • 2% when investing in the secondary market
  • 0% when investing in a new building
  • 4% - registration
Additional services:

Property management