The evolving Dubai residential market

Ian LiborwichIan Liborwich, Director, Real Estate Innovative Real Estate

This land of superlatives, which is also a stopover destination, has other things to offer to those who invest in its real estate market. Ian Liborwich of Innovate Real Estate discusses what is in store for every investor in town.

Property financing
Expatriates are given full ownership if they are willing to pay off the mortgage based on the mortgage agreement. Those who are interested in properties priced under Dh5 million shall be asked to initially pay a minimum deposit of 25 per cent. A 35 per cent deposit is asked if the property goes well above Dh5 million, while a minimum of 40 per cent deposit will be asked if it is a second property.

Expatriates buying their second property are only eligible for a 60 per cent maximum loan of the property’s value. They can also opt for off-plan properties but are required to pay a 50 per cent deposit. However, the same rule applies to UAE nationals.

Factors influencing residential property prices
Mainly, it is the demand as the population is growing quickly. Companies moving here also influence the prices of residential properties.

Obviously, expatriates need somewhere to live and over the last two to three years, interest rates have been low, which attract people to buy rather than rent especially if they see themselves here for three to five years or even more.

With all the factors that triggered the financial crisis in the Middle East, prices have risen as people with money have been bringing it in the UAE. They see the country’s potential as a safe haven which urged a big demand from Russia and other countries. This is one of the reasons why prices have increased dramatically especially last year, with all the Expo 2020 hype. We are now witnessing a lot of Asians looking to buy their first and second properties, seeing that the country is thriving and is a magnetic place to invest in. I think people now see Dubai becoming a major city of all cities for both Asia and Europe. It has all the best between business and tourism – burgeoning things that can only get better in one of the major cities in the Middle East.

Existing property market regulations
The Escrow Law No. 8 of 2007 serves to safeguard clients who are purchasing off-plan properties direct from a developer. The developer has to register their trust account after receiving a registration approval/permit from the Dubai Land Department (DLD). They also need to have an escrow number with the account trustee before they can start selling units off-plan. This is a form of trust account where financial institutions, mainly banks, must be approved by the Real Estate Regulatory Agency (RERA). Any money passed over for the purchase of a property is paid into the account. The ad-ministration of the account is controlled and regulated by the trustee so that money can only be released from the escrow account for that particular project, and monies paid out are all construction-based. Only a small percentage, a maximum of 5, can be used for marketing and other small costs.

The mortgage cap definitely had an effect since the beginning of the year and prices of resale proper-ties have definitely stopped increasing over the last three to four months as clients now need around 32 per cent deposit for their first property purchase not exceeding Dh5 million with all the fees included. Purchase of over Dh5 million now needs around 42 per cent deposit with all fees.

Also, with the sale of off-plan units over the last 18 months or so, this has taken cash liquidity out of the resale market as most investors have purchased these units.

This is a win-win situation for them as they have had a lot of choices, and prices have been slightly lower than in the resale market.

Together with good payment plans, investors have jumped back in.

Dubai mortgage cap regulations
Expatriates buying a property under Dh5 million must pay a minimum deposit of 25 per cent; above Dh5 million, a deposit of 35 per cent. For second properties, a deposit of 40 per cent is required

Emiratis need to pay a minimum deposit of 20 per cent for properties under Dh5 million, 30 per cent for properties over Dh5 million and 30 per cent for subsequent properties

Investors, whether expats or Emiratis, are required to pay a 50 per cent deposit for off-plan properties



Source: Cleofi-Krista Capili, Special to Freehold


For Rent


View more properties

For Sale


View more properties