Confidence in the Dubai property market is certainly growing.
In a report, top real estate broker Allsopp & Allsopp has seen a rise in inquiries from first-time buyers in recent months, however, many residents of Dubai are struggling to make the jump into to buying because of the high down payment needed to purchase a property.
“The recent introduction of the retirement visa and long-term visa by the UAE cabinet has had a huge positive effect on market confidence. As well as this the International Monetary Fund has recently commented that the UAE’s economy is projected to strengthen to 2.9% this year and 3.7% in 2019 and global companies are setting up a base here in the Emirate,” said Allsopp & Allsopp.
Lewis Allsopp, CEO of Allsopp & Allsopp says “Dubai is a very appealing city to live in. It has so much to offer people from all over the world of all ages. The opportunities to advance in a career or advance personally are endless. Many expats move with the intention of saving money and sending it home to make a better life for themselves and their families in years to come. However, we are increasingly seeing that mindsets are changing, and more people are investing in both their lives and their money in Dubai.”
Professionals including; doctors, scientists, lawyers, accountants and innovators, as well as high-end investors, technological entrepreneurs, and influencers can be eligible for the 10-year visa.
“This has changed previous mindsets that Dubai is temporary. The availability of a 10-year visa has encouraged said professionals to put down roots in Dubai and enquire into buying their first homes,” Allsopp says.
“Likewise, retirees can now plan to stay in the city after they finish working so long as they own a property worth AED 2 million ($545, 000), have AED 1 million ($272,000) in savings or have an income of AED 20,000 ($5,450) each month. The retirement community who meet these conditions is eligible for a 5-year visa.”
A large majority of first-time buyers have the confidence to buy, nonetheless, they don’t have the affordability for a down payment, according to Allsopp.
Expat First Time Buyers will need a 25% deposit for a property under the value of AED 5 million. For properties valued over AED 5 million ($1.36 million), a 35% deposit is needed. On top of this down payment, there are approximately 7% fees which include the 4% transfer fee, the 2% agent’s fee and 1% affiliated fees.
The affiliated fees are often overlooked but should be taken into consideration as they include; mortgage arrangements, moving costs, sales progression, transfer appointment fee, and the transfer admin fee.
According to Allsopp, many real estate participants and professionals have urged the central bank to relax the loan-to-value (LTV) ratios across the board or even solely to first time buyers, especially that in a recent Allsopp poll revealed 74% of people said they would prefer to buy than rent.
Real estate consultancy Jones Lang Lassalle reported that Dubai developers are offloading existing inventories by offering increasingly generous payment plans to investors.
“Further declines in Dubai property rents and sale prices are projected over the next 12 months,” a new research from real estate consultancy JLL said, adding market conditions were still subdued.
“The implementation of new policies and the relaxation of regulatory restrictions, in line with the Vision 2021 goal of further diversifying the Dubai economy, will provide a boost to the real estate market in 2019,” said Craig Plumb, head of research, JLL, MENA.
JLL said that the Dubai office sector remained subdued in Q3, with rental prices decreasing further in light of the growing available supply of new and existing space.
JLL added that the retail sector is the most challenged sector of the Dubai market in the face of increased supply and the growth of online retailing.
“While the longer-term prospects for the retail sector remain positive, this sector is likely to decline further in the face of very high supply levels over the next 2 years,” JLL said.