Swiss bank UBS in its latest Global Real Estate Bubble Index study focused on the likelihood of the so-called “property bubbles” in different countries, indicates that although
“Dubai real estate has become generally more affordable, although revenues have declined amid somewhat slower economic growth,” the report said commenting on a likely scenario for further development of the real estate market in Dubai.
“Despite the strongest population growth among all the cities included in the study, the market remains crowded with
Property prices in Dubai decreased by an average of 35 per cent compared with the peak level in mid-2014. “We expect prices to hit bottom soon, but nonetheless we strongly recommend all investors to make their purchase decisions right now,” said Ali Janudi, the head of the Department at UBS Global Wealth Management.
Moreover, a new wave of mortgages defaults is also unlikely to threaten the Dubai real estate market, as it was during the previous world financial crisis, according to a study conducted by another company — Capital Economics.
In the annual report issued by the Central Bank for 2018, with reference to data from the Dubai Land Department, it is said that real estate investments worth less than AED10 million in Dubai amounted to AED45.6 billion in monetary terms, of which AED38.5 billion or 84.4 per cent were paid in cash, and another AED7.1 billion, or 15.6 per cent with borrowed funds.
In addition, the regulatory measures adopted by the Central Bank regarding mortgages also reliably protect the stability of bank mortgages. These include caps on loan-to-value, debt burden ratio limits and the requirement for financial institutions to implement appropriate processes and procedures to correctly assess the borrower's ability to repay the loan.
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