Damac calls for non-resident mortgages in Dubai
Dubai, October 23, 2013
Damac Properties, a leading developer in Dubai, has called upon UAE banks to provide a non-resident mortgage and support the resurgence in the real estate market.
Managing director Ziad El Chaar said the banks must return to lending to allow international buyers the opportunity to engage in property ownership in the emirate. “One of the most important factors which is still holding the market back and has not yet been recognized is the lack of mortgages,” he noted.
“Today, most of the business is still being conducted on equity, not leverage. Cash buyers made up almost 75 per cent of the number of transactions in Dubai in the first six months of 2013,” he added.
He said the UAE banks remained too timid. "What we need is a practical and pragmatic non-resident mortgage. Dubai will then be able to attract more people genuinely interested in owning a property in Dubai - but they can only do that through a proper mortgage," he remarked.
According to El Chaar, the idea of a non-resident mortgage is not a new one. It is possible to obtain such a product to invest in the property markets in Canada, the UK, Spain, Australia and many developed nations around the world, he stated.
A down payment in the region of 25 to 30 per cent is generally required and the lender will need to see proof of employment with an established company, but the process is quite simple and has helped to drive these markets forward and attract new investment streams, he added.
Within a four hour flight path to Dubai there are nearly 70 countries, making up a third of the world’s population, and many of the residents of these countries cannot even consider owning a property in Dubai.
"Not everybody can come straight into the market with $1 million and buy a property with cash, in full," he pointed out.
"But if a fully regulated system is implemented, which has the appropriate checks and balances in place, we will see a strong surge in long-term, sustainable investment," he said.
El Chaar said: "Until we have this in place, mortgages will never be a big element of the real estate market of Dubai. To be able to get a mortgage today you need to be a resident of the UAE and you also need to be able to demonstrate a portion of your income is coming from the UAE."
"So, if you are living overseas and you would like to buy a second property in the sun in Dubai, you can’t," he stated.
A launch package in a new project in Dubai now needs to include the RERA approval documentation, the title deed of the plot and details of the dedicated Escrow account to give reassurance to investors.
For example, with just a 20 per cent down payment on the villas at Akoya by Damac, the buyer will be given a Preliminary Registration Certificate (PRC) from the Dubai Lands Department.
“The regulation in the Dubai real estate market is providing the required reassurance and legal recourse for investors, now the banks need to step up to support the growth and attract a wider international investor base,” said El Chaar.
Damac Properties, he said, has completed 8,887 units to date and has a further 23,788 units at various stages of progress and planning across the Middle East region.-TradeArabia News Service