Ask The Agent: Which are the best areas in Dubai

Dhiren GuptaDhiren Gupta

I am looking for a residential investment. Which are the best areas in Dubai, which can give high yield on ready and off-plan projects?

The Dubai real estate market is currently undergoing a steadiness period making now an optimum time to invest in the emirate.

The current gross returns on investment (ROI) here is somewhere between 7 and 9 per cent, which is marked higher than other developed nations. Yield is based on location, contiguous, connectivity and maintenance. Based on your investment appetite, a studio or one-bedroom apartment purchase in areas such as Dubai Marina, Downtown Dubai, Business Bay, JBR, JLT, Sports City and MotorCity or even in Dubailand promises strong rental returns and a good occupancy rate.

Investing in off plan, with staged payments over the construction period, gives a better ROI. Look for reliable developer projects and the investment community’s future market efficiency.

I am planning to buy a residential unit in Abu Dhabi. Help me to understand today’s real estate market, so I can plan my purchase accordingly.

The steadiness in sales price in Abu Dhabi and increasing leasing prices make investing in the capital more sensible and offer more value for money. The implementation of Law No. 3 of 2015 on the regulation of the real estate sector in the emirate will have a greater impact during the market upsurge. The new law improves the city’s attraction to investors as it contributes to the solid legal framework.

Now coming back to the market performance, indeed, investing in residential units gives the best ROI to investors. If we consider yields in areas like Al Reef, Al Reem, and Al Ghadeer, it is somewhere around 8 per cent. While investments in premium areas such as Saadiyat Island, Al Raha Beach, Yas Island or Khalifa City would also gain in long-term capital investment.

I am planning to repay my mortgage early. What suggestions can you advise? What points should I keep in mind to avoid any penalties?

Before initiating this step, ask if there is no early payment penalty mentioned in your mortgage agreement. If none, then you start adding the principal to your equated monthly installment (EMI). This will reduce your principal amount; thus, the loan balance used for the calculation of interest charges will also be reduced and will empower you to pay off your mortgage earlier.

You can also check other options of refinancing your current loan with lower rates or shorter term.

Since I am not aware of your current situation and financial status, before starting this exercise I would recommend that you to sit with your mortgage consultant and give the detailed review about your existing mortgage and your current financial standing. Accordingly, he can advise which possibility will best conform with your prerequisite and will help you repay your mortgage early.

I bought an off plan in 2007 and recently got the handover letter from the developer. What are my mortgage options and which documents are needed to start the process?

In general, you are definitely eligible for mortgage funding at the project handover stage. The bank conducts due diligence to analyse your eligibility by reviewing your property documents such as the copies of Oqood, sale and purchase agreement, statement of account and handover letter, along with your proof of income and personal documents like your passport, personal bank statements, your identification cards, credit report and salary certificate, if employed.

Since, the project has been completed and at the handover stage, certainly, the bank can offer you a home loan of up to 75 per cent loan-to-value (LTV) based on your requirement and working status; however, the amount would also depend on the current market value of that property. Note that bank approvals take around three to four weeks to arrange a mortgage for your purchase.


Question of the Week

I am a non-UAE resident planning to buy a property in Dubai with a mortgage. Can you explain the difference between a conventional mortgage and an Islamic mortgage? Which one I should go with?

In conventional mortgage, the procedure is quite straightforward. The bank lends money to the buyer to purchase a home and charges an interest rate on that lending amount for a set period of time. However, under the Islamic mortgage, the bank eludes all interest-based transactions or riba, as it is forbidden to earn income from any form of charged interest. Therefore, the Islamic bank buys the property on behalf of the buyer and resells it on a profit rate or leases it back to the customer with a lease purchase contract with contracted rental payments.

In terms of growth rates, the Islamic finance segment has been progressively coming to the fore, surpassing the conventional lending segment. This product is certified halal for Muslim buyers who follow Sharia, whereas for the non-Muslim buyers, Islamic mortgage provides a real substitute for the conventional product.

I would advise discussing your requirement with a mortgage consultant who can certainly benefit you. They can help you do a proper study on both of the funding policies and structure which will assist you in making a wise decision.




Source: Dhiren Gupta, Special to Freehold

Managing Director, 4C Mortgage Consultancy


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